The New Digital Divide: Which Side Are You On?

Danielle Beurteaux

Here are some numbers that might make many a digital startup a bit uncomfortable.

According to a new Pew Research Foundation study, most Americans aren’t very involved in the digital economy.

For its Shared, Collaborative, and On Demand: The New Digital Economy report, Pew researchers asked almost 5,000 American adults, in what Pew says is “its first-ever comprehensive study of the scope and impact of the shared, collaborative, and on-demand economy,” about how many and which digital economy services they’ve used, including home sharing, crowdfunding, and transportation.

And not only do many Americans have but a glancing familiarity with the on-demand and sharing models of business, but in some cases they’ve never heard of them. For example, you might think the term crowdfunding is ubiquitous, but 61 percent haven’t heard of the term.

There is good news: Almost 72 percent have used at least one service that could be called on-demand or shared.

But 28 percent haven’t used any of these services at all, and only a small percentage have used, for example, an on-demand car service (15 percent) or a home-share service (11 percent).

If you use a ride-hailing service, you’re likely a college-educated urban dweller aged 18 to 29 with a household income over $75,000 (interestingly, in terms of gender and race there are no large differences of users).

Will these services replace car ownership? Hard to say right now; availability is concentrated in areas with multiple transportation options. In fact, car sharing users are more likely to own a car, but it’s one of several ways they get around—they’re also walking, biking, and taking public transport.

Fifty-three percent of Americans haven’t heard of home-sharing services, 34 percent have heard of them but not used one, and 11 percent have used a site like AirBnB to find a place to stay.

Even home-sharing users aren’t knowledgeable or keeping track of the arguments about the legality and regulation of these services.

If you’re part of the 11 percent that has used home-sharing services, you’re likely a white, college-educated urban dweller aged 30 to 49 with a household income of $75,000 or over.

And while these types of on-demand companies are thought of as technology companies that provide a platform for users and ad providers to connect, users of these services also expect these companies to be responsible for the quality and safety of the service.

When it comes to crowdfunding, the 22 percent of Americans who have contributed to a campaign tend to be urban, college-educated, white, with incomes of $75,000-plus, and female. Crowdfunders tend to donate to more than one project, and the sweet spot of giving is around $50 per project. Most of this money—68 percent—isn’t going to the latest innovation, but rather to charitable requests. And most of that is going to people within the donor’s established social network—family members, friends of friends, etc. Donors are much less likely to give to strangers’ funding campaigns.

Women and men differ slightly with their giving. Men tend to give to more projects, commit more money, and fund new projects or innovations. Women dominate when it comes to charitable giving.

Back to that 72 percent. That number represents a broad spectrum of everything that could be considered part of the digital economy. A full 50 percent of that number comprises those who buy or sell goods online on sites like craigslist, basically the old-school version of the digital economy.

So why does any of this matter? As already noted, the on-demand and sharing part of the digital economy is very skewed towards wealthy, young urbanites. If the digital economy is truly to become a driving force in the overall economy, then the customer pool needs to grow exponentially. There are only so many ride-hailing services that even a large urban center can support.

Second, the creation of an economic digital divide means that regulations and laws that respond to some of the questions being raised by on-demand companies, like whether ride-hailing drivers should be classified as contractors or employees, could be decided without the participation of most Americans. Laws that could have effects that reach much further than whether it’s legal to rent out a spare bedroom to a tourist.

For more on how the sharing economy is changing business models for traditional services, see Embracing New Pricing Models In The Age Of Disruption.

 

 


Danielle Beurteaux

About Danielle Beurteaux

Danielle Beurteaux is a New York–based writer who covers business, technology, and philanthropy. Her work has appeared in The New York Times and on Popular Mechanics, CNN, and Institutional Investor's Alpha, among other outlets.