07.22.13

Software to get your share

Posted in Culture of Lickspittle at 9:25 am by George Smith


PARIAH Big Sharing Issue! “Powering the We Get Yours Economy!”

At Google images, “sharing economy” returns the Silicon Valley pissed-in birthwater of the future. The sharing economy, as defined here, is just a euphemism for installing network technology that atomizes labor costs, unleashes the economy into free-lance downward bidding wars, taking larger pieces of a stagnant economic pie for the owners of the technology. In other words, they always get the share, no matter how much smaller the total economic swag
becomes. (And, as is always the case with snake-oil sellers, they’re backed up with other fine-sounding euphemisms, in case “sharing economy” just isn’t enough. In this instance, Google offers “collaborative consumption.“)

iTunes and Apple are the greatest examples of the benefit of the sharing economy.

When digital conversion of music resulted in the collaborative sharing of recorded songs and albums, rendering them almost worthless as a way for all individuals not already the very biggest stars in the world to make any money through them, iTunes and Apple were coincidentally perfectly positioned to turn the aggregate into a company enriching form of rent-seeking.

Most can’t make any money in the iTunes store selling music. But the millions and millions of “you’s” who still try to can be used by the globally aggregating tools of the sharing economy to make good money for Apple to launder through Luxembourg.

In this way Apple neatly replaced record companies which, while far from perfect, took on the costs and risks of finding and developing new art. Apple’s iTunes, and similar competing structures, dispense with this as an extraneous cost and risk to be put entirely onto the makers of content. Apple doesn’t develop pop music. When Google gets into a similar business it won’t develop music. No one will.

They broke the method and replaced it with a new one, one in which they get all the spoil.

On Sunday famous Tom Friedman got to the sharing economy, specifically with the example of AirBnB:

The sharing economy — watch this space. This is powerful.

Friedman has been relentlessly pilloried on the web for a certain lack in critical thinking and detail work for the sake of grandiose claims and assertions.

On Sunday, in flugel-horning for AirBnB, he was still in form.

AirBnB, Friedman wrote, was started by Brian Chesky when he and a roommate leased three air mattresses in their place to San Francisco convention-goers who couldn’t find rooms in 2007. The rates were not particularly cheap — $80 for one night on an air mattress (?!) — and there’s no mention on whether or not the buyers were able to give it a good or bad rap on Yelp.

The latter is important because Friedman and Chesky employ it to make the argument that distributed global swarm hospitality service is self-correcting. This is because you can give anyone a bad review if they deserve it in their great automated web of trust.

“On July 12, Chesky told me, ‘Tonight we have 140,000 people around the world staying in Airbnb rooms,” writes Friedman. “Hilton has around 600,000 rooms,” continues Chesky.

Stop right there. The critical thinking cops are here to snap on the manacles.

Hilton invests in maintenance of an infrastructure. AirBnB does not
and advertises this as an asset.

Hilton, and competitors, must maintain a level of use every night and day or slide into ruin and go out of business. AirBnB does not. In fact, AirBnb’s room numbers cannot be realistically compared with Hilton’s because it does not matter whether a majority or minority are stagnant for long periods of time.

This is easily seen by running AirBnB on your town, which probably isn’t a tourist destination.

I ran it on Pasadena and, yes, AirBnB rentals are here in force. But added AirBnB capacity does not add more hospitality business to Pasadena anymore than building new motels and hotels on Colorado Blvd. or Lake. There are times during the year when there are influxes of businessmen and tourists and these follow predictable patterns. AirBnB gives visitors some more options.

AirBnB adds capacity from pre-existing structure. It does not provably increase the size of the economic pie generated by rental of hospitality space because that is a constant (sometimes changing) in most cities, determined by other factors. Occupancy does not directly grow with capacity.

But if you look more closely at AirBnB property, you will see that some of the rooms are also offered as monthly rentals, revealing the desire of the owner to be an apartment manager. Of these, we already have loads in Pasadena — and in your city — and they use Craigslist, too.

Others, when examined, are renting all the rooms in a given house, which may look nice on the outside, turning it into a stealth motel. One must assume that some are illegal. Pasadena and all cities do have various ordnances for apartment complexes, hotels, motels, probably increasing in importance if the rented structures are not built in the business district.

This is the case with granny cottages here.

Most of them are illegal, in one way or another, under strict municipal code enforcement. But they are a staple in southern California where people have converted garages into them in trying to build revenue. And AirBnB makes it easier to rent them out, perhaps not that much easier than Craigslist.

In any case, this puts AirBnB in the role of virtual slumlord, although that may not be the large part of its business.

Hilton, however, cannot afford to be seen as a slumlord.

The model of AirBnB, as it is with seemingly everything in the so-called sharing economy, is in shoving all the risk of the main business off onto the free-lancers and partners.

Friedman:

[Guests] and hosts rate each other online, so there is a huge incentive to deliver a good experience because a series of bad reputational reviews and you’re done. Airbnb also automatically provides $1 million in insurance against damage or theft to nearly all of its hosts (some countries have restrictions) and only rarely gets claims.

Online ratings. Yes, everyone knows that solves everything. And although I do not know the giant hospitality industry intimately, I would be willing to assume the actual insurance liabilities taken on by AirBnB are not comparable with those that must be taken on by a company like Hilton, or even Motel 6.

None of what AirBnB does, in the practical sense for renters and tourists, is innovative. What has been the innovation in the sharing economy is the rapid proliferation of networks tools to distribute risk from a parent business to laborers and resources a corporate business puts no real investment into within the free-lance gig economy.

It does not increase the economic pie. Someone who has seen their income diminish and who is now renting a room (or rooms) in their house in Pasadena … well, most of them aren’t going to flourish on it.

The slumlord experience of mining that for maximum revenue was already well-developed before the sharing economy. I saw it during the census, the carving up of spacious homes into separate living spaces for the servant class. Further empowering it with something like AirBnB isn’t progress.

The rest of the Friedman’s column is given over to the usual veneration of opportunity for the topmost. In this case, the ability to rent Lichtenstein (really) directly through its ruler, Hans-Adam Jerk Peter, or:

Chesky then fires up his iPad and shows me on Airbnb.com the rooms and homes being offered for rent: “We have over 600 castles,” he begins. “We have dozens of yurts, caves, tepees with TVs in them, water towers, motor homes, private islands, glass houses, lighthouses, igloos with Wi-Fi; we have a home that Jim Morrison used to live in; we have treehouses — hundreds of treehouses — which are the most profitable listings on our Web site per square footage. The treehouse in Lincoln, Vt., is more valuable than the main house. We have treehouses in Vermont that have had six-month waiting lists. People plan their vacation now around treehouse availability!”

This in service to his always larger point: If you can’t be super-special to the American — read global — plutocracy, you’re fucked. So might as well cannibalize your home and shit while you still can.

“[Average] is over — the skills required for any good job keep rising — a lot of people who might not be able to acquire those skills can still earn a good living now by building their own branded reputations, whether it is to rent their kids’ rooms, their cars or their power tools,” he writes.

Chesky emphatically adds it’s time to free up your power drill for the sharing economy.

If you are (or were) a thoughtful American high up in the government you are beginning to become very worried by this train of progress. You’ll know you can’t have a stable democracy of over 300 million where everyone has been turned into a self-cannibalizer or free-lance worker.

Because, inevitably, the sharing economy will come for everyone and you’ll be the worse for it.


AirBnB imagery on Google illuminates the sharing economy culture — which is of plutocracy. Here, for example, we have the rental of a house built with a jet plane fuselage extension and the AirBnB guys, made over from the unbearable to prancing maximum hipster cool.


Addendum, more fine print:

If one checks AirBnB listings for your city (again, use Pasadena) you find that when compared to standard transient rooms along Colorado from the 2-star to 4 and 5 star places, the swarm offerings from the sharing economy are not that great.

In some you don’t get privacy, but location. One had a no alcohol rule — which I bet is a real big attraction for people coming in for the Rose Parade.

Privacy, and a separate bathroom, naturally, are must-haves in real motels and hotels for many reasons which are not necessary to delve into here if you know what I mean and I think you do.

Other listings, if the city actually went into them, I’m betting would clearly be found to violate a municipal code or two. This doesn’t make them bad rentals per se — again this is normal in soCal — but it does separate them from legitimate businesses that invest in hospitality infrastructure.

Others are guest houses mobilized on the wealthy properties around the Rose Bowl and CalTech, the plutocracy doing its grasping thing.
And while some of these deals aren’t bad nothing is particularly cheap in Pasadena.

Other entries in AirBnB’s database are the sublet and subdivided properties of people who want to own and rent their own apartments (or sub-sublet inside something they’re renting).

What they really want are long-term tenants who take on a lease and, one assumes, you can find all, or most of them, also on Craigslist. In fact, at least one the AirBnB rentals listed didn’t want to rent for brief stays at all with a minimum booking of “365 nights.” Ha-ha.

So if many of AirBnB’s “rooms” are also listed on Craigslist, or some other rent-a-room realty service, does that make them all the new paradigm, rising in comparability to Hilton? (Craigslist, one adds, was one of the first into the new economy, taking all the share of newspaper advertising, causing the business model of a sustainable independent free press to collapse. Which it’s still doing, newspapers now having business tech writers enthusiastically covering the sharing economy that’s destroying their livelihood as another round of lay-offs rips through the newsroom.)

[Emit horselaugh.]

You see, this is another of the great magics of the sharing economy. You can be a transparent bullshitter and find someone like Tom Friedman (in the Sunday NYT) to publish all the grand humbugs about your business being like the Hilton without batting an eye.

Watch this space. The sharing economy is powerful stuff.

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