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The sharing economy is an economic system based on sharing assets or services, for free or for a fee, directly from and between individuals. Named in 2011 by TIME Magazine as one of the 10 ideas that would change the world, the economic model is now transforming the landscape of the world economy. There are five key concepts of the sharing economy. Here you can read about them, along with appropriate case stories casting light on what the sharing economy is and how it works.

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Two young men in San Francisco were so poor they could not pay their rent, so they thought to rent out three air mattresses on their floor to people and serve them breakfast. They made a simple website to promote their little bed and breakfast, and three people showed up, each paying $80. After the guests left, they thought this could be a big idea. Now their website offers 250,000 rooms in 30,000 cities in 192 countries. What they started was a whole new business model providing a platform for the sharing economy. The advance of technology brought sharing into economy. Thanks to the Internet and digital technology, now there is much more data about people and things, which makes sharing cheaper and easier than ever. You were able to rent a private room before the Internet, but it was usually more trouble than it was worth. For example, without the Internet, how can you know that somebody has a spare room to your taste in a simple family house? Now, finding a room and booking it is simply a click away. All you need to do is to download an app. The website deals with all the rest, locating the right space and dealing with safety issues, reservations, and payment.

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Access Is As Good As Ownership. Hyeonwoo needed to install a new lighting fixture on his ceiling, but a power drill was too expensive to buy only for the occasion. In Hyeonwoo's neighborhood, however, there lived someone that had a power drill but hadn't needed to use it for a long while. A sharing website that matches owners and borrowers in the same area connected the two of them. Hyeonwoo could borrow a power drill from his neighbor, paying a reasonable fee for using it. Without the service, Hyeonwoo would have had no choice but to buy the expensive tool. Now you can access what you need, even when you don't own it, all thanks to the sharing economy. Why pay a lot of money for something when you can rent it more cheaply from other people online? Why own something when you can have access to it without owning it? That is the principle behind a sharing economy that enables people to share cars, accommodations, and other items because now they can get whatever they need whenever they want. The business model of a sharing economy instantly connects owners of underused assets with others willing to pay to use them. Easy access, made possible by Internet technology, is now as good as ownership.

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Produce Less, and You Will Waste Less. Seonwha is a computer programmer who works mostly at home but sometimes goes to the office to have meetings. She doesn't own a car, but rents one through a sharing platform whenever she needs a ride to work. But for the sharing service, one more car would be made only to stay still in her garage most of the time. In order to use her car more often, she would drive to places where she usually goes on foot now. She thinks the sharing economy contributes to saving the environment since less car use means reduced CO₂ emissions. Though not primarily driven by environmental goals, the sharing economy brings considerable benefits to the environment. Resources are used more efficiently, which helps save on materials and energy. For example, car sharing services are proven to yield environmentally friendly results. Studies have found that car sharing helped reduce CO₂ emissions significantly. What the sharing economy aspires to is a more sustainable way of utilizing limited resources.

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Experience Matters, Not Possession. Jimmy had newly decorated his room and wanted a piece of artwork that fit into the space. Through a website sharing works of art, he picked an artwork to his taste from a wide variety of artists and rented it monthly. When he paints his room a different color, he can return the current piece and rent another. He is not interested in permanent ownership of particular artworks. He simply wants to enjoy art in his daily life. Studies show that experience increases satisfaction far more than acquisitions do, and the new generation that embraces the sharing economy understands it better. For instance, art lovers used to find satisfaction in collecting artworks. Now they have begun to place value on the experience of enjoying them. There are many who appreciate artworks, but have no interest in owning them for good. This benefits the artists as well because they get a monthly income for their artworks that otherwise might be in storage or waiting for their next exhibition. The sharing economy is the experience economy. It is a powerful cultural trend in which people value experiences more than possessions.