The Impact of the Rise of Platform Economies: Uber, Airbnb, Etc.
With the rise in technological developments over the past two decades, platform economies have been leading the charge in revolutionizing various sectors by empowering individuals and businesses to embrace an interconnected, digital market space. Now you may be asking, “What is a platform economy in the first place?” A platform economy is an economic system, acting typically as an intermediary, in which a digital medium allows users with specific needs to connect with businesses offering products and services to satisfy those needs.
There are many different platform economies that we use in our day-to-day lives. A few prominent examples include Uber, Airbnb, and even Amazon. All of these companies have created platforms that act as intermediaries to connect buyers and sellers, all while profiting off this connection. All of these platforms primarily aim to disrupt traditional businesses and provide alternatives to consumers; the most prominent example of this is Uber. Uber, along with other ride-hailing services, revolutionized the taxi industry by offering both cheaper and more convenient options while also allowing millions of people to convert their vehicles into a means of business. Airbnb offers over 150 million users and providers a similar-value proposition, with consumers finding a cheap place to stay and owners being able to rent out properties to earn passive income (Kiera et al., 2024).
I do not think any of us look past the convenience that platform economies have created in our lives. More than 80 million people order food from Uber Eats and are soon happily greeted with their orders, but what about every step that goes behind our ordering the food and simply receiving it (Sukhanova, 2023)? What about the restaurant, the drivers, or even the company itself? Have you ever thought about the economic impact these companies have created in the world?
IBISWorld reported that the revenue for taxi industries declined by 0.8% from the years 2016 to 2021. In contrast, Uber saw a near 100% increase from its third-quarter 2021 earnings to its third-quarter 2020 earnings and serviced 6 billion rides in 2020 (“Uber Technologies Revenue,” n.d.).
Another key statistic in terms of revenue generation by platform economies is that of Airbnb. Airbnb provides many individuals with a cheaper alternative to hotels, and many have taken advantage of this opportunity. In New York City, hotel nights sold declined by 1.5 million from 2015 to 2016 while Airbnb usage in the city rose significantly (“Airbnb Revenue,” 2023). Furthermore, Airbnb saw a spike in revenue from $2.6 billion in 2017 to $3.4 billion in 2020 (“United States: Ride,” 2023).
This creation of platform economies has not only impacted traditional businesses like hotels or cabs but also had a shocking impact on employment rates in the economies they operate. The National Bureau of Economic Research found that, despite the increase in autonomy and self-employment these platform economies create, ride-sharing platforms like Uber led to a 10% decrease in the median income of taxi drivers in the United States from 2015 to 2017 (Angrist et al., 2017). As of 2024, Uber and Lyft collectively employ 2.15 million drivers in the United States alone (Uber statistics 2024, 2024; A deep dive into driver earnings & expenses, 2023). Despite an increase in overall rates of employment, median wages for the overall industry fell, benefiting consumers but negatively impacting providers and employees in the industry due to lower wages and profit margins.
Looking past the economic or labor market impact, we also see a key shift in consumer behavior since the development of platform economies. A survey conducted by Pew Research Center found that in the United States, 36% of adults had used a ride-hailing service like Uber or Lyft as of 2018, up from just 15% in 2015 (Jiang, 2019). Consumers, now more than ever, have started to shift their spending patterns towards platform economies simply out of sheer convenience compared to traditional markets.
The rise of platform economies exemplified by companies like Uber and Airbnb has ushered in unparalleled convenience for consumers, revolutionizing traditional industries while creating new opportunities for self-employment. Yet, this transformative shift comes with complex economic and social implications. While consumers embrace the convenience of these platforms, traditional industries face disruptions, and workers experience income instability. Moving forward, it is crucial to strike a balance between innovation and sustainability, ensuring equitable benefits for all stakeholders through dialogue, supportive policies, and responsible business practices.
Edited by Nicolas Nemati
References
Airbnb Revenue and Booking Statistics (2023). (August 21, 2023). Backlinko. Retrieved April 25, 2024, from https://backlinko.com/airbnb-stats
Angrist, Joshua D., Sydnee Caldwell, and Jonathan V. Hall. (October 9, 2017). Uber vs. Taxi: A Driver’s Eye View. NBER. Retrieved April 25, 2024, from http://www.nber.org/papers/w23891
Jiang, Jingjing. (January 4, 2019). More Americans Are Using Ride-Hailing Apps. Pew Research Center. Retrieved April 25, 2024, from http://www.pewresearch.org/short-reads/2019/01/04/more-americans-are-using-ride-hailing-apps/
Kiera et al. (2024, March 1). Airbnb statistics[2024]: User & market growth data. SearchLogistics. Retrieved from https://www.searchlogistics.com/learn/statistics/airbnb-statistics/#:~:text=Airbnb%20has%20more%20than%20150,of%204.3%20nights%20per%20booking
Lyft. (2023). A deep dive into driver earnings & expenses. Retrieved from https://www.lyft.com/driver/earnings/expenses
Sukhanova, K. (2023, August 25). Uber Eats statistics, facts & trends for 2023. TechReport. Retrieved from https://techreport.com/statistics/uber-eats-statistics/
The Rideshare Guy. (2024). Uber statistics 2024: Drivers, riders, revenue & more. Retrieved from https://therideshareguy.com/uber-statistics/
Uber Technologies Revenue 2017-2023: Uber. Macrotrends. Retrieved April 25, 2024, from http://www.macrotrends.net/stocks/charts/UBER/uber-technologies/revenue
United States: Ride-Hailing and Taxi Revenue Growth. (November 6, 2023). Statista Research Department. Retrieved April 25, 2024, from http://www.statista.com/statistics /1421835/ride-hailing-and-taxi-revenue-growth-united-states/
