napster
54 days ago
 

The travel sharing economy is having its Napster Moment right now

Remember 1999? Sure you do. The dotcom bubble was in full effect: come up with any idea, really any idea, and add “.com” to it, and you could raise millions.

We now know in hindsight that many of these “businesses” amounted to nothing. As a whole, though, the revolution that time begot continues to impact our lives.

NB: This is an opinion by Andrew McConnell, co-founder and CEO of VacationFutures.

Take one example: Napster. At the time this startup completely changed how music was acquired and consumed.

No longer did you need to buy a physical CD. Heck, you didn’t need to buy anything at all, the world’s entire catalogue of music was available for free.

Now Napster is a shell of its former self – existing in name only. But the impact of that startup was huge.

While the company may have been wrong about the exact methods, the fact that the internet was permanently changing how people acquire and consume music was spot-on.

Napster ultimately led to things like Pandora, Spotify, and even the iTunes store.

Travel’s Napster era

Now the sharing economy is experiencing such a moment.

Companies like Airbnb and Uber are taking the place of Napster. Vested interests in staid industries like hotels and transportation are taking the place of the music industry.

The taxi lobby and hotel executives attack these upstarts as illegal and dangerous.

In many cases, just like the music industry executives, they may even be right. But being right is not helpful when the ground is shifting beneath you.

The music industry, through the Recording Industry Association of America (RIAA), managed to tie Napster up in litigation, and even shut it down for a time.

Unfortunately for them, Napster was not the enemy: innovation was.

As with Whac-A-Mole, knocking down Napster did little to stop the myriad of copycat sites, or prevent the creation of new business models.

As a result, according to Cornell between 2000 and 2010 record store sales fell by over 76% and CD sales more than 50%. The music industry won the battle but lost the war.

Just as Napster paved the way, and others followed suit, the same will eventually happen in the sharing economy.

Napster took a flippant devil-may-care attitude to the legal complexities they faced. Companies like Pandora and Spotify tackled the complexities head-on.

They found ways to provide many of Napster’s benefits, using the power of the internet to provide instant access to music anywhere, but did so while staying on the right side of the law.

Growing pains

Airbnb’s approach to date of “we are just a marketplace, we can’t help if people are using our platform to do things that are illegal” may be a little too close to Napster’s early attitude to provide comfort for its investors.

Napster showed you can be right about the changes that are occurring, but still be wrong about the business model.

Pretty soon the sharing economy will have to grow up, and work with governments and industry bodies just as Pandora, Spotify, and iTunes worked with the music industry.

Perhaps the current sharing economy behemoths will make the shift that Napster never managed.

Perhaps hotels, taxis, and other incumbents will learn the lessons of the music industry and adapt in time. Perhaps they won’t.

Regardless, the taxi and hotel lobbies should take little comfort from the fact that Uber and Airbnb may still go the way of Napster, and Uber and Airbnb should take little comfort in their current popularity with consumers.

Just as with music, the way consumers are consuming lodging, transportation, and a myriad of other services is in the process of irrevocably changing.

Time for everyone to adapt or die.

NB: This is an opinion by Andrew McConnell, co-founder and CEO of VacationFutures.

NB2: Napster image via Shutterstock.

 
 
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About the Writer :: Special Nodes

Special Nodes is the byline under which Tnooz publishes articles by guest authors from around the industry.

 

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  1. John Nagel

    The point that Airbnb needs to learn from Napster’s failure to take resonsibility for the “content” it promotes is very accurate. The same point is made in depth here: http://upwordsranking.com/airbnb

     
  2. Martin

    While there are some great parallels to the Napster story, especially about winning the battle and loosing the war and as you pointed out the “enemy” was innovation. There are some inherent flaws with the comparison which are that music could be reduced to a download, which was going to be inevitable. Because if it is going to make it easier for the consumer it will happen somehow. It’s almost a law of nature.
    Hotels can’t be reduced to a download, neither can taxi’s.
    So IMO that Napster moment is going to happen on pricing and distribution which are the only two points that still have quite some slack and which will make things easier for the consumer. AirBnb will drive the hotel rates down, I don’t think it will replace hotels but it certainly will put hotels in perspective. Uber will do the same for Taxi’s.
    Maybe a better parallel would be an anti-trust monopoly where hotels didn’t have outside competition and neither did taxi’s, now they need to level up their quality or cut rates and the latter is the path of least resistance.

     
  3. Patrice

    Amazingly accurate parallel.

     
  4. Chris Connar

    The vacation rental market is a $24B market place with 44% being managed by Professional Management Companies. Now Concur is integrating with Airbnb and Uber. Hilton is supporting Uber which is an indicator the market is adapting to change. Still the AHLA continues efforts to exploit Airbnb for safety restrictions e.g. Hosts not paying electricity bills, prostitution , squatters, meth labs, assaults, raves and fraud. This model is risky business for both the host and guest. STRAC is working to establish hort term rental policies with communities, local residents, property managers to advance short term rental regulation framework for compliance and safeguards for travelers and residents.

     
  5. Timothy O'Neil-Dunne

    I think this is a fair piece. As with Napster flouting basic copyright law – so do Uber and AirBnB flout basic laws. The catch me if you can attitude has been replaced with a more cautious approach. Are they solving the basic problems of the sharing economy – such as liability, taxation, trust, security? Nope!. In the same manner Napster just in the end failed. So too will in my view the basic premise of Uber and AirBnB. They have to change and those gigantic valuations will go a long way to enabling change and responsibility.

    It would be interesting to speculate whether if Napster had not been launched then – but was launched now – would iTunes have happened? Would VCs have invested big time in Napster?
    Interesting questions.

     
  6. Ashwin Kamlani

    Napster took an existing product and created a marketplace where consumers could obtain the product illegally, for free. Uber and AirBnB have created marketplaces which provide access to new products and services that consumers never had access to before, and they are both making a lot of money doing it. They are fundamentally changing the way people travel, earn income, and live their lives. I don’t see either company shutting down or going anywhere.

     
  7. Simone Puorto

    Wow, I wrote a article last week making the exact same comparison between Airbnb model and Napster, so I think this is no stupid article at all (otherwise we’re both stupid for making this connection).
    IMO it’s exactly the same situation and you summarize it perfectly in one quote: “Napster was not the enemy: innovation was”

    Great article

     
  8. Antonio Bortolotti

    I think this is no stupid article at all, it is quite thought provoking instead and in my opinion it forces players of all kinds in the VR industry to ponder where they need to stand, how adaptive should they be to changes.

    I say this from the point of an actual vacation rental owner in an industry that is rapidly changing. We see such changes dramatically affecting the way we do business on a season to season, year to year basis and while many of us struggle to keep afloat a few others keep thriving because they continuously adapt, while the rest have no clue what’s going on and why they can’t survive.

     
  9. Sherbet Stone

    This is a stupid article. Those companies are nothing like Napster. Sharing economy companies are already working on legislation, which Napster never did.

     
 
 

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