A World Where You Own Nothing: Welcome to the Usership Economy

Imagine a world where you own nothing. No, this is not an aging baby boomer flashback of a John Lennon tune, it is the evolving economic and social reality of 'usership' that is set to transform markets, consumer behavior -- even retirement planning.

Since caves were our castles, consumption has meant going out and gathering 'stuff.' To have something meant to own something. Even if shared, ownership was granted to a community of users. To own something brought not just the functional benefits of the item, e.g., a car to provide transportation, but provided a social statement of prestige too. Some brands and styles are simply cooler than others.

A trend is emerging. You can have it all and own none of it. Rather than ownership, more and more consumers are seeking 'usership.' While 'sharing' is often linked to usership they are not the same. Usership economics is characterized by transactions between the user (consumer) and provider. While the provider, typically a private company, may describe a 'community' of users, there is little if any real community, shared consideration, or relationship between the users. Considering the following:

Want entertainment? Instead of reaching for your CDs or even your hard drive -- you rent the musical experience from the cloud from any number of providers: Spotify, Pandora and others with varying business models, but all you require for any of them is a credit card and password.

But let's talk about the big stuff. The two largest household expenditures are housing and transportation. The economic downturn has helped drive a growing market for rental housing. Younger people may not have the money to buy so they rent. Aging baby boomers want to buy quality retirement living but may not want to invest whatever equity they preserved from the sale of their family home. The result -- a home rental market that goes well beyond college towns to include retirement communities, desirable urban livable communities and even downsized but premium suburban apartment living. AvalonBay, Archstone and other firms are successfully leveraging these trends providing access to consumers in high-cost communities such as Boston, Seattle, and Washington, D.C.

Automobiles, once symbols of our freedom, independence and even success, are slowly being transformed from rolling platforms of prestige into simple utilities. While car sharing is not new, the success of companies such as Hertz on Demand and Avis's recent purchase of lead innovator Zipcar suggests that there is something more going on than a few college kids borrowing a car for the day.

Even the clothes on your back do not necessarily have to be owned. Rent the Runway offers women going to events from the prom to weddings branded fashion to be rented, worn, and returned without the burden of finding additional closet space in their rented apartments.

Steady advances in technology, the economic downturn and demographic change are shaping the usership economy where we increasingly own nothing but still get what we want. Internet technology and software-as-service business models have transformed how consumers perceive and use products. Products, such as smartphones, do not provide lasting intrinsic value. Instead many products are simply the cost of membership to an ecosystem of services and apps -- only to be rapidly replaced by something newer, better and cheaper.

The economic downturn has impacted the capacity of many people to buy to own. Still wanting the experience, however, many consumers will spend just enough to use a product for a short time. Younger buyers in particular may be hard-pressed to invest in owning, but may be able to pay as they go for quality transportation, housing, entertainment and communications.

Changing demographics are driving usership. Smaller households are on the rise. Life alone or just two people without children are among the fastest growing living arrangements. Less demand for things as well as living in a household that may be less permanent than traditional larger households with children makes affordability and flexibility a premium value for many consumers.

Even the evolving values of older consumers are shaping the new future of usership. As people age, particularly for many consumers over 50, 'stuff' becomes less valued than shared experience and meaning. While nice things are always... well, nice... older adults may believe money is better spent on time with friends and family, creative interests or checking experiences off the bucket list. Consequently, the aging baby boomers, the fastest growing demographic cohort with the greatest disposable income, may be a prime driver of wanting usership rather than investing precious retirement income in ownership.

Having it all while owning little, or none of it, appears to be here for the foreseeable future. Business-to-business services instead of product ownership have been the norm for sometime. Jet engine manufacture Rolls Royce, for example, sells hours of flight time to airlines rather than selling the engines. Canon sells printouts and document services rather than copy machines to businesses. The long-term implications of usership on consumer-facing markets are unclear. Usership will certainly affect consumer perceptions of what is 'product' innovation and value. How we buy (whether through bricks or clicks) and how retailers present their products and manage supply chains will be altered. Even retirement planning which has relied on owning major assets, e.g., home, car, thereby reducing expenses in older age may have to increase estimates of what is adequate income to pay for life in retirement. Recalling John Lennon -- "imagine no possessions, I wonder if you can" -- sounds like some innovators have already started. Now, can the rest of us imagine what it means for the future?