The rise of the collaborative economy offers both significant challenges and opportunities to local governments. The traditional lines between the public and private spheres are blurring. It is increasingly unclear where private activity turns into entrepreneurial activity, as consumers can at the click of a button become hoteliers, sellers, lenders, transporters and producers. This has consequences for many important pillars of our society such as taxation, insurance and regulation. First of all, there are potential advantages, such as a growth of civil participation in the creation and consumption of public goods and services, as well as an assumed positive environmental impact because existing resources are used more efficiently. Secondly, there are risks such as unfair competition between “old” and “new” companies. When people start to produce, consume and trade more among one another on peer- to-peer marketplaces, there will be an impact on existing industries. Thus the challenge for local governments is to grasp the opportunity and promise of the collaborative economy, while smoothing the transition by safeguarding public interest and different stakes that exist in our society. One of the ways in which local governments can deal with these challenges and grasp the opportunities is by becoming a “sharing city”.
Sharing Cities around the world
By the year 2012 Seoul had reached breaking point, according to the Seoul Metropolitan Government. With an ageing population, high youth unemployment, pollution issues, 25 million inhabitants in the Seoul metropolis and a population density five times that of New York City, something needed to change. Accumulating more goods, cars and building even more roads was no longer an option. A fundamental switch in urban policies occurred from focusing on tangible infrastructure such as roads, schools and car parks, to the more intangible online infrastructure that enables a more efficient use of existing resources such as space, objects and talent. The Seoul Metropolitan Government explains the sharing city concept as a “new alternative for social reform that can resolve many economic, social, and environmental issues of the city simultaneously by creating new business opportunities, recovering trust-based relationships, and minimizing wastage of resources”.
By September 2012, mayor Park Won-soon officially declared Seoul the world’s first sharing city. The main policy directions are promoting and sup- porting private sector and civilian sharing programmes by providing the in- frastructure for a sharing city. The “Seoul Metropolitan Government Act on the Promotion of Sharing” was enacted in order to provide the legal grounds for supporting sharing organisations. Both start-ups and established com- panies received help to build sharing services. The Act includes key provi- sions such as principles for sharing public resources, designating sharing Non Profit Organisations (NPOs) or sharing corporations, providing admin- istrative or financial support, and organising a sharing promotion commit- tee. Early in 2015 Seoul’s sharing city ambitions are well underway with the recently launched “Open Data Plaza” as one of its highlights. At this “plaza”, more than a thousand data sets have been opened to the public, so that citizens can develop their own applications to enable more sharing. However, creating awareness remains one of the main obstacles in becoming a sharing city.
Lessons from Seoul
The challenge of creating awareness goes much further then Seoul alone. The decision of Seoul local government after 30 months to re-focus on promoting collaborative economy services could be a warning for any city that wants to embrace the collaborative economy. Findings from a research project involving 1330 Amsterdam citizens confirm this too.3 Even though the willingness to take part in the collaborative economy is significant, 90 per cent of respondents were not aware of existing marketplaces. Seoul’s answer to this challenge is to go hyperlocal. Schools, churches and community centres are being activated to promote sharing through information and events. Dutch sharing economy developer, Juul Martin, realised his own version of a “sharing shop” in the city of Nijmegen early in 2015. In this “shop” people are welcome to start sharing, both online and offline. Developing more of such shops could become a part of any sharing city programme, and lead to more awareness and thus boost adoption of collaborative economy services.
Seoul acknowledges that there are aspects of the collaborative economy that conflict with existing industries or contradict existing laws. Seoul aims to establish the “sharing economy ecology” in order to vitalise the collaborative economy. The city is reviewing the individual ordinances that hinder sharing activities, and is working with the relevant departments to revise such laws. The city will also take a closer look at taxation and is examining the incorpo- ration of an insurance system suitable for collaborative economy services.5 As this is work in progress, real lessons are to be learned from ongoing experiences in Seoul. Translated to the context of Amsterdam, there are positive developments around the negotiations between the Amsterdam city council and short-stay marketplace Airbnb. While the challenge of integrating these new services into the city in a way that is acceptable for all stakeholders remains an ongoing and difficult task, the philosophy not to ban, but rather experiment with collaborative economy marketplaces is promising. This co- operation should be an example for other policy areas. Given the fact that the collaborative economy is still young, experimentation is the way forward. Dutch insurance companies have developed an interest in the collaborative economy during the past two years. Possibly there is no need for government intervention in this field as proper insurance policies are already being developed by the market. In terms of taxation there is a lot of work to be done. In this sense the solution of Airbnb, where the marketplace collects tourist tax, is only the beginning.
Sharing public assets is one of Seoul’s success stories. Since the launch of the sharing city programme, 970 public spaces have been rented out 23,000 times. Instead of using fixed prices, rates depend on the turnover of the particular organisation. This program has led to more awareness among policy-makers of the sharing city programme. On the other hand it increased access of entrepreneurs and organisations alike to office space that would other- wise be underutilised. Deelstoel.nl is a Dutch collaborative economy platform where public civil servants can share work spaces among one another. This service could be extended to the general public.
Seoul has actively kick-started collaborative economy services by providing subsidies, office space and consultancy.7 It is unclear to what extend this programme is responsible for the current state of collaborative economy platforms in Seoul. However, in a few years many sharing markets have started and are growing significantly. Parking places, private homes, books, cars, children’s clothing, rides, knowledge and food are among the sectors where tens of thousands of Seoul citizens have started to participate. The extent to which such a stimulation programme is necessary for start-ups to thrive is unclear, as many start-ups elsewhere are still in their early stages. However, support from the government is also a way of confirming that collaborative economy marketplaces are of value to society. This in turn could boost confidence among citizens in these marketplaces and thus remove barriers to entry.
Progress made in Seoul has not been paralleled by any other city around the globe. The possibilities of the “sharing city” however, have spread widely. One of the accelerators is grassroots organisation Shareable, which is a “non-profit news, action and connection hub for the sharing transformation” (Shareable.net, 2015). This organisation has kick-started “sharing activists” all around the globe to start making their cities more shareable. This was done through events, a policy guide and a sharing cities toolkit, which is an evolving compilation of resources comprised of a mix of how-tos, project guides, sample policies and tried and true models and advice.8 Thus far, peo- ple from 54 cities around the globe (35 from the USA) have started to devel- op their “sharing city”. However, due to the grassroots approach it is unclear if, and when other stakeholders, including local governments, in those cities will take steps to join the initiative to develop a sharing city together. Euro- pean-based grassroots organisation OuiShare has developed a similar toolkit called “Sharitories”. The focus of this toolkit is more on regions than cities and offers local policymakers who wish to implement collaborative or shar- ing initiatives in their local areas the tools to do so. Last but not least, the United States Conference of Mayors signed a resolution in support of policies for shareable cities at their annual conference in June 2013.
Collaborative economy marketplace Airbnb has started its own “shared city” scheme by partnering with Portland in March 2014. As part of this partnership, Airbnb will be “expanding its community’s positive impact in Port- land by collaborating on campaigns to attract sustainable forms of tourism, send visitors to local businesses, and support disaster relief programs. Airbnb will also collect and remit taxes to the city of Portland on behalf of its hosts and make it easy for Portland hosts to donate the money they earn from Airbnb to a local cause, matching those donations as a percentage of its fees.”
Even though the idea of a sharing city has spread widely and both grassroots organisations and governments are making an effort, no other city has followed the example of Seoul hitherto, except for Amsterdam.
Why Amsterdam wants to become a Sharing City
From our experience at ShareNL, the Dutch knowledge and network organisation for the collaborative economy, we noticed an increased interest among very different stakeholders in the collaborative economy in the Netherlands in general, and in Amsterdam in particular. Insurance companies, banks, investors, and other private sector institutions are looking for projects to experiment with, and learn from, the collaborative economy; knowledge cen- tres too are looking for projects to investigate; local governments are looking for ways to determine how to deal with the phenomenon. Amsterdam has a well-developed digital infrastructure and its citizens are tech savvy. There are a number of leading start-ups active in the collaborative economy based in Amsterdam. Last and most important, citizens are up for it too. During the summer of 2013, together with the Research and Statistics Department of the municipality of Amsterdam, we surveyed a non-representative sample of 1330 Amsterdam citizens. The survey looked at seven different collaborative economy services (gardens, goods, rides, cars, houses, skills, meals). On average 43 per cent of the citizens would like to use these services as a user, and 32 per cent as a provider, and 84 per cent of respondents would like to take part in at least one example of the collaborative economy.
The city of Amsterdam has declared the ambition to become a sustainable metropolis and acknowledges the collaborative economy as an important as- pect of a more circular economy. Within the city there exists a well-developed network of businesses, the local government and knowledge institutions ca- pable of working together towards sharing city goals. Thus far, Amsterdam has been welcoming to the collaborative economy. The collaboration with Airbnb is a good example of this. The collaborative economy is part of the city’s roots. Amsterdam historically flourished by co-operatively creating a playing field in which the individual can flourish. The collaborative economy is a contributor to this ethos. Last but not least, a European Sharing City did not yet exist. Taking the lead not only helped the city itself, but potentially many other cities around the world as well. A presentation shows several reasons why Amsterdam should become a sharing city.
Amsterdam Sharing City initiative
The rise of the collaborative economy offers both significant challenges and opportunities to the city of Amsterdam. In this section, challenges are described, followed by opportunities and how the Amsterdam Sharing City project deals with both of them.
Challenges and opportunities
One of the challenges the collaborative economy offers us is laws and regula- tions that do not apply seamlessly to new organisational models, such as the peer-to-peer marketplaces of the collaborative economy. Several pillars that we are using to organise our society are likely to function suboptimally when looking at the changes we are faced with. One of the main difficulties is the increasingly blurred line between individual and entrepreneurial activities. When does someone who occasionally rents out his house become an en- trepreneur? What does this mean for taxation? This blurred line also affects zoning regulations, governments used to create different areas for commer- cial, residential our industrial purposes. These zoning systems are becoming outdated as areas are becoming multifunctional. The same issue creates diffi- culties around licensing and insurance. As a society we need to redefine how we organise ourselves. An immediate challenge is the likelihood of unfair competition between the new organisational models and the older regulated models. Whenever independent actors offer services through online market- places that are similar to services offered by those older regulated models, an unlevel playing field might emerge. Another important challenge is the lack of empirical evidence around the impact of the collaborative economy. We simply need much more research on environmental, social and economic im- pacts of different collaborative economy services. This is of great significance for governments and companies in order to be able to develop a comprehen- sible vision and strategy.
Inherent to the collaborative economy there are promises and opportu- nities for environmental, social and economic sustainability. When looking through a pair of collaborative economy glasses, the city looks quite differ- ent, because suddenly an abundance of unused goods and capital is visible. The collaborative economy beholds the promise of having a problem solving capacity in many public tasks such as housing, mobility, waste, healthcare, jobs, etc. Technology is now rapidly making the unused goods and capital not only visible, but also available. In this way, rides, cars, rooms, offices, skills, equipment, time, knowledge, money, energy, etc. are increasingly ex- changed through online collaborative economy marketplaces. Cities are the prime beneficiary of this new digital infrastructure placed on our societies. Because of the high density of people in cities, transaction costs are lower, and “wants” and “needs” can easily find each other, leading to increased so- cial cohesion and assumed environmental benefits as existing assets are used more efficiently. Additionally there are assumed economic benefits, based both on more solid social cohesion as well as an increase in local transactions that could boost entrepreneurship. This contributes to resilient local economies. However, attracting collaborative economy start-ups will also boost local creative and technological industries. Ultimately the technological layer can create a better liveable city. “Cities that can take advantage of platforms available for collaborative consumption [sharing platforms] will tap into vast new opportunities to create jobs, attract talent, promote local investment and community-building, and offer a healthier place to live” —Young Global Lead- ers Sharing Economy Working Group.
Amsterdam Sharing City (ASC) vision, pathways and stakeholders
The objective of Amsterdam Sharing City (ASC), is to enable the city to deal with both the challenges and the opportunities of the collaborative economy. This is based on the vision that we are best able to effectively deal with the challenges and grasp the opportunities by facilitating cooperation between all stakeholders that are affected by the rise of the collaborative economy. This has resulted in a two-way approach: one way directed at informing the local government and creating awareness among local policymakers, the oth- er way directed towards all other stakeholders within the city of Amsterdam.
The “local government pathway” started with a presentation by shareNL in front of a room full of policymakers during the annual conference of the city’s Research and Statistics department in November 2013. This event led to a collaboration with the Amsterdam Economic Board. In this institution, representatives from governmental agencies, research institutes and the business world have jointly taken responsibility to work towards strength- ening the economy of the Amsterdam Metropolitan Area. The Board strives to stimulate and support sustainable collaboration, innovation and growth in the region, and strengthen international competitiveness. With support from the Board, shareNL was able to write a comprehensive sharing city report (in Dutch). This report is used within the government to define its strategies to- wards the collaborative economy. The main lesson for those wanting to make their city a sharing city is that it is crucial to work together with governmen- tal organisations. Otherwise it is difficult to have an impact as the govern- ment is not only an important stakeholder in creating a level playing field, but in addition, the government represents “the public”, and thus it makes a lot of sense to work with it when reshaping a city into a sharing city. In the end, all public assets should be shared as much as possible.
The “social pathway” is an ongoing process in which shareNL invites rel- evant partners from its network to become sharing city ambassadors. In or- der to welcome as many ambassadors as possible, a rather low threshold is applied to join the sharing city ambassadors programme. All ambassadors are asked to fill in a form that asks them three questions that are explained in more detail in the following paragraphs: why does [ORGANISATION] align itself with the vision and mission of ASC? How does ASC connect with the stakes of [ORGANISATION]? What will [ORGANISATION] do to make ASC happen?
The vision of ASC is the assumption that we are living in a transitional time. Consumers, governments, industry and other organisations are go- ing through fundamental transformations. Technological advancements are changing complete industries/sectors, natural resources are getting scarcer and people are becoming more dependent on one another. The collaborative economy is a significant driver of this transition, and thus holds a way of un- derstanding and possibly influencing the transition. The mission of Amster- dam Sharing City is to develop the collaborative economy into an integral part of the city, by uniting the forces of all stakeholders to create “playgrounds” where the collaborative economy, and thus the city can flourish. But also by learning from these playgrounds to be better able to deal with its challenges. Based on the vision and mission, we define ASC as follows:
Amsterdam Sharing City recognizes the sharing economy as a vital driver towards a sustainable, rich in social capital and economically resilient future, and acknowledges the need to consider and incorporate sharing economy principles [such as access instead of ownership] when re-creating the political, economical and social landscape.
The stakes of the different ambassadors are important as they are a pre- condition for active participation. Examples of why existing companies are connecting to the idea of a sharing city are: optimisation of customer knowledge, resilience, reputation, finding new revenue models, testing new prod- ucts, contributing to a healthy business climate and knowledge gathering. Citizens’ organisations’ motivations for participation are: better access to goods and services, lower thresholds to entrepreneurship, more social and safer neighbourhoods, more local, air quality improvement and more time for family and direct environment. For knowledge institutions the sharing city project offers a living lab where real life lessons can be learned. Among the stakes for the local government are: growth in local investments, more efficient use of public assets and services, sustainable and affordable trans- port, innovation, boosting of creative industries, jobs, more efficient use of resources, increasing citizens’ social participation, safety, decreasing the number of socially isolated citizens and opportunities for new public private partnerships.
Thus far (April 2015) more than 30 organisations have become ambassadors of Amsterdam Sharing City. From community centres to multinationals, from start-ups to knowledge institutions, and from media to the local govern- ment. Together, the ambassadors will harvest much of the already existing energy by cooperating in several projects that contribute to making Amster- dam a sharing city. The official launch of Amsterdam Sharing City took place on 2 February 2015 in the presence of all ambassadors, including counsellor Kajsa Ollongren, Alderman for Economic Affairs and vice-mayor of the City of Amsterdam, who took the stage on behalf of the city government. “The consumer has in recent years become increasingly powerful. The sharing economy is a huge opportunity. It just fits well with Amsterdam. That’s why we want to be known as a Sharing City.”
Amsterdam Sharing City: the view of the City of Amsterdam's CTO
In an interview with Ger Baron, the City of Amsterdam's CTO, the relationship between Amsterdam and the collaborative economy was discussed.
Is there a real need for Amsterdam to respond to the upcoming collaborative economy?
I would not call it a real need, but Amsterdam definitely sees a lot of opportunities and challenges regarding the collaborative economy. Sharing is of all time, we have always shared our knowledge and goods with our families and friends. The difference is that due to the recent technologies, there are more possibilities. You can reach more people, the sharing economy is a worldwide trend. For the city this provides opportunities, more effective use of products can lead to a more liveable city. Sharing can be a trigger for community building as well.
What will the city government contribute to Amsterdam Sharing City?
At the moment the city is following this trend closely. We are looking at the opportunities and how to stimulate these, but also at the challenges and how we have to cope with these. Sometimes the city will stimulate and facilitate, for instance if a social sharing business wants to start in Amsterdam. We want to provide start-ups with a great start in Amsterdam.
Sometimes we have to enforce, but at the same time we will have to check if rules and regulations are still accurate. Who and what is being stimulated or protected by these rules and what is the contribution of this new business in this context?
We say: “practise what you preach”. We want to make an inventory of our goods. What can the City share with the city?
What are its best opportunities and greatest threats?
- Increase in innovation (possibilities)
- More efficient and sustainable use of resources
- More and easier and cheaper access to services and products
- Increase in social cohesion
- Opportunities for local businesses and new businesses, e.g. creative start-ups, this can lead to growth in local investment and
- Anyone can be an entrepreneur
- As a government we have to focus on quality, safety and a just market
- Innovation is always disruptive, which can be both positive and negative
We have to make sure there is a level playing field, and prevent some business creating a monopoly, with no room for other companies.
- Determining when it is sharing and when it is business, and then other rules are applicable.
Now the real work starts
The official launch of Amsterdam Sharing City marks the milestone of having gathered a unique group of stakeholders who support the mission and vision of Amsterdam Sharing City. It is the starting point of a new phase in which the coalition of stakeholders aims to turn the ambition into real-life projects. The goal is to realise at least three of those projects within 2015. The initial focus will be on projects that raise awareness among citizens about what the collaborative economy offers, as well as more research on its impacts. We hope that enthusiasm of the stakeholders, synergy between stakeholders, to- gether with serendipity will produce innovative and previously unthought-of projects and initiatives. The lessons learnt and knowledge resulting from the first projects will be shared through the “Amsterdam Sharing City Model”. By the end of 2015 we intend to have set a new example that is followed by at least a dozen other cities across Europe and the world.
NOTE: this article was written by Pieter van de Glind and Harmen van Sprang (co-founders of shareNP) already early 2015. It has been published by EUKN in October 2015.