It wasn’t so long ago that the phrase “sharing economy” would’ve met with blank stares all round. But the rise of global companies like Uber and Airbnb have changed that: their services have become part of the mainstream, single-handedly normalising the prospect of hopping into a stranger’s car or sleeping in their spare room.
Now, though, a slumping stock market and Big Tech-damaging interest rate hikes are taking their toll on these household names. This could force the sharing economy to return to its roots of community and collaboration, and give fractional ownership platforms a surprising edge in the market. So let’s take a look at where we’ve come from, and how fractional art investing fits into where we’re going next.
“Power tools to parking spaces”
The sharing economy has arguably existed in some form since eBay first made armchair salespeople of us all. But it wasn’t until Uber burst onto the scene that it really took off: suddenly there were platforms left, right and centre that offered a way to share your apartment, power tools or parking space.
Simply, the sharing economy is the name given to the market of individuals who provide a service using their own assets. The concept of sharing what you own for a fee isn’t what’s new here; a driver might have been willing to drive someone two miles before Uber, but the cost and logistical difficulty of pairing driver with passenger would’ve made the transaction more trouble than it was worth.
Technological developments changed this entirely, by reducing transaction costs and making services significantly more scalable. That’s not only popularised the practice itself; it’s popularised the idea that we should be able to get whatever we need, whenever we need it. That is to say, why own a car, or pay for a hotel, or rent an office, when there’s someone out there with space to spare?
The sharing economy’s big challenge
For all the initial fanfare around the sharing economy’s startups, there have been challenges.
WeWork is the obvious example here: the co-working company notoriously went from $47 billion at its peak valuation to – via a series of calamities – around $950 million at time of writing. And it’s not the only business to have lost investors’ favour or sustained significant losses. That’s partly down to unfavourable public markets, but it’s also down to an increasingly discerning consumer.
The consumer, after all, sits at the heart of the sharing economy. It’s true that they don’t want to go back to a world where their only choice is between a hotel or a friend’s couch. But they also know the difference between paying simply to access a service, and paying to share in the value of a service. And with the balance tipping towards the former, the search for real value is at the forefront of their minds.
Now, it’s important that “value” isn’t just thought of as low fees. It’s actually about leveraging those fees to facilitate a broader purpose that benefits everyone in the community. This was the founding principle of the sharing economy: a network of people who simultaneously contribute value to and derive value from the transaction. A shifting consumer appetite, then, could be the driving force in bringing this principle back to the foreground – giving fractional investing platforms a unique opportunity.
Fractional investing: the next sharing economy?
Fractional investing platforms don’t often pop up in the same breath as Airbnb and DoorDash. But there is an argument to be made that they’re doing a better job of tapping into this value-conscious consumer behaviour.
Consider art fractionalisation at Mintus, for instance. In principle, we obtain an iconic work of art and break it down into shares, giving investors the chance to benefit from any value appreciation without risking significant capital, in the multi-million-dollar range, for the privilege. This means that there is a network of investors who simultaneously facilitate the purchase of the artwork and who benefit financially when we sell it on. In other words, all the stakeholders – from Mintus to its investors – have a shared interest in us buying artworks with the most potential at the best possible price, and offloading them at the perfect moment.
This is the sharing economy consumers are looking for: a community-centric initiative that creates value from the collective ownership of an asset. Compare that to Uber, which needs to offer value to investors, drivers and passengers – often in different and conflicting ways. We only have one priority: choose masterpieces that will benefit the investor community by rising substantially in value, and in doing so make the world of art investment a more equitable place. That is sharing in the truest sense of the word.
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