“The Phenomenon Is Crossing Over From Soft Goods In Virtual Space To Physical Goods In The Brick-And-Mortar World”

Hell is other people, but if they own a pied–à–terre in Manhattan, you might upgrade them to purgatory.

The virtual advantages of the online world are being leveraged more and more offline, and not just in high-tech ways like with 3-D printers. Case in point: Airbnb, which has increased the inventory of lodgings without building a thing. It’s a knowledge share that becomes a physical one. It allows the non-professional to quantify the landscape and take advantage of otherwise hidden opportunities, though there may be some drawbacks. From Jeremy Rifkin’s Los Angeles Times op-ed about the company and the broader sharing economy:

“It’s not difficult to see why the service has soared in value. For a traditional hotel chain to add another room to its inventory, the room must be built or acquired, at a significant cost. Airbnb can add another room to its inventory at almost no cost, since its website is already up and running.

Private enterprises have every incentive to reduce their marginal costs. Doing so means they can increase profits, offer goods and services at a lower price, or both. But now the Internet and other innovations have reduced marginal costs to near zero for some commodities and services, which has left many traditional companies reeling.

The zero marginal cost phenomenon has sowed a path of destruction across the recording and information industries over the last decade, as millions of consumers began to produce and share music, video, news and knowledge with one another on the Internet at near zero marginal cost. This phenomenon has weakened revenues in the music industry, newspaper and publishing fields, and the book publishing industry.

Now, as we are seeing with Airbnb, the phenomenon is crossing over from soft goods in virtual space to physical goods in the brick-and-mortar world.”

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