Days after my friend Joan died in the Spring St. apartment she’d lived in since the mid-70s, before her family had time to move out all of her effects, her ex-husband, out of the picture for decades, broke through the police tape and locked the door behind him to try and establish his right to the rent-controlled walkup.
It’s a strange city, where people will get married, fight in divorce court or even break into an apartment they don’t own to try and claim it.
Which brings us to Airbnb, the killer app, so to speak, that’s leveraged the internet to build a real-world sharing economy that’s helped thousands of New Yorkers bring in much-needed extra cash renting their apartments — even as it threatens the ever-shaky structure of compromises and subsidies that have kept New York from becoming entirely unaffordable.
In effect, it’s one of the businesses creating new marketplaces that unlock the value of goods people already own, and disrupts existing social arrangements and government rules and laws in the process.
Napster, which devastated the music business while opening up worlds for listeners, offers some lessons. What people can share, they will. Trying to punish individual users, like the music industry did, is counterproductive. And when a system for sharing becomes large enough, instead of fighting it, new rules need to be shaped around it (which is how we went from years of ubiquitous piracy to streaming services that at least pay musicians a pittance).
Now, that same dynamic is playing out here in the real world.
Airbnb, like other web companies aiming to crack complicated, heavily regulated markets, took the wild west approach: get big first, then negotiate with the government about the rules. As David Streitfeld put it in a sharp New York Times piece, Silicon Valley’s credo has become “better to ask forgiveness than permission.”
For Airbnb, that’s been key to building a projected market valuation of nearly $ 10 billion since its launch in 2008 — more than Hyatt, for instance. Other sharing companies like Uber and Lyft for car rides, are also coining smaller fortunes. Others still are perhaps goofier — helping connect dogs with sitters, eaters with cookers and attractive travelers with one another.
Even the oldest profession has been reshaped by Craigslist and then Backpage .
In New York, where nearly half the housing is regulated, lowering the barriers that stop people from renting their places for whatever the market will bear is a real threat to the mechanisms meant to keep the city even somewhat affordable and economically diverse at a time when the cost of living here has never been higher.
It also creates huge questions about residential neighborhoods’ ability to define themselves. Landlords have apparently used Airbnb to create de facto hotels from vacant units and buildings, unregulated and untaxed. Whoever’s offering the room. there’s always demand for short stays from thieves, dealers, sex workers and others operating outside the law. Now, they may be sharing your elevator, or staying down the hall.
Much if not most of Airbnb’s business here appears to conflict with New York’s prohibition, passed in 2010, against renting an apartment for less than 30 days without the tenant present. That’s no anachronism, like blue laws or pinball bans, but intended to draw a clear line between residential buildings and hotels.
All this led to a showdown in court Monday with Attorney General Eric Schneiderman, as Airbnb fights his broad subpoena attempting to identify individual users. The company has responded by darkly suggesting the AG may use those names for some sort of nefarious witch hunt of ordinary New Yorkers renting their places for a bit of extra money, and announcing it’s already bouncing “bad actors” who try and rent more than two properties.
Of course, fighting to get big first, and face the law later, is nothing new. The billion-dollar e-cig businesses — another favorite of libertarians — is just now facing FDA regulation, after a few years of explosive, mostly unregulated growth. The big players hope to fend off more rules with promises to self-regulate — which would double nicely as a way to pull the ladder up on their smaller competitors.
Unlike e-cigs, the sharing economy can be a wonderful thing, but (a lesson we should have learned from free email), the companies profiting from it aren’t in business to provide a social good.
The mingled desires for space and profit here are ferocious (see: the home invading ex-husband), and not easily deterred. When the dust clears from Schneiderman’s push and whatever other fights emerge, we’ll see if Airbnb has delivered the virtuous circle they’ve advertised, or just disruption.
hsiegel@nydailynews.com
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