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These images above are some of the most recognizable icons in the South Korean entertainment industry.  The Korean Wave, or hallyu, is still going strong, continuing to shape East Asian culture and trickling to parts of Europe as well. As an outsider, it is easy to ask, “What makes Korean entertainment so great?” What has made this tiny peninsula–divided in half–an Asian entertainment powerhouse?

The success of South Korea’s entertainment industry can be traced back to the Kim Dae Sung Administration in the late 1990s. During this time, the government’s investment in cultural products increased dramatically. One motivation was to strengthen its domestic market against the Japanese cultural products lingering from the colonial days. Another reason was to recover from the crippling Asian Financial Crisis of 1997, when the country’s GDP dropped 7%. In order to reinvigorate the economy and to raise South Korea’s global profile, President Kim put his faith into the entertainment industry, planting the seed of the hallyu phenomenon. In 1998, the Culture Ministry executed its first five-year campaign, including an increase of culture and fine arts departments in colleges. In 2002, the ministry opened the Korea Culture an Content Agency to encourage exports, sparking the beginnings of the Korean Wave, and injected funding into the Korean Film Council. The results were astronomical. The size of South Korea’s entertainment industry, jumped from $8.5 billion in 1999 to $43.5 billion in 2003. Cultural product exports were so insignificant before 1998 that the government could not even provide figures. Five years later, the number would grow to $650 million.

According to a Oxford Economics report titled, “The economic contribution of the film and television industries in South Korea,” the film and television sector have directly contributed 7,749 billion Won to the South Korean GDP in 2011. It has also supported 67,600 jobs and 3,752 billion Won in tax revenues. Average growth of this industry from 2005-2011 has been 10.7%. From this figures, it is clear this industry provides direct support to the country’s economy.

Cultural exports have promoted tourism and business into Korea, particularly from South East Asia. Past work by the Korean International Trade Association (KITA) suggested that Hallyu related tourism amounted to $825 million in 2004. I definitely experienced the impact of hallyu when I visited Seoul for a cultural immersion program. The hot tourist spots were cafes that were themed with a certain popular drama (for instance, the “Coffee Prince Cafe”). There was a statue of the famous lovers from the classic soap opera, Winter Sonata, one of the most successful Korean dramas to date. Many tourists sign up for hallyu-themed tours that take visitors to production sites of famous dramas and films.

What South Korea ultimately gained from their investment in entertainment was soft power. There have been instances where the government leveraged its cultural exports as means of diplomacy. For instance, the official Korean Overseas Information Service gave airing rights to “Winter Sonata” to Egyptian television. They even paid for Arabic subtitles in hopes of generating positive feelings toward South Korean soldiers stationed in northern Iraq.

Another crucial factor of the Hallyu wave has been the web. There is greater access to content than ever before. Anyone can consume foreign content with the swipe of their phone. Online fan communities were formed to share and distribute Korean content. Youtube channels or content websites like mysoju.tv effectively crowd-source translators, graphics personnel, and coders to recreate original Korean content with subtitles and high quality streams. In 2010, an website turned app called “Viki” was launched by a group of Harvard and Stanford students who aggregated the fan-created content to one platform. According to their website, “Viki, a play on the words video and wiki, is a global TV site powered by a volunteer community of avid fans.”

It seems South Korea’s  investment in entertainment exports was money well spent. I am scheduling a 20-hour binge session of “Alien from Another Planet” after finals as we speak.

 

In November 2013, Business Insider CEO Henry Bodget made a compelling presentation analyzing the state of media in the tech space. The findings were from Business Insider’s new research arm, BI Intelligence. The report created waves in the tech industry. In a matter of two days after the reports’ release, it had over 900,000 views.

There were many insightful slides that demonstrated the current digital realm.  However, one slide especially caught the eye of media leaders.

“Digital is now bigger than TV.”

Although a very contested claim, recent years have indicated that digital is causing a major disruption in the media business. In his slideshow, Bodget echoed the industry’s standard rule: money follows eyeballs. Until recent years, “eyeballs” were monetized through a rating system called GRP, invented by Nielsen. However, this method only worked wonders when our eyeballs had one screen: television. Today, we have tablets, smartphones, and desktops. We are constantly consuming and content is becoming available across all of these exhibition windows. The chart above indicate that “eyeballs” are moving to digital, and people want to know how to measure this revolution, and so far, GRPs aren’t cutting it. The rise of digital is shaking up the longstanding media metrics system, and everyone is keeping an eye on the digital ratings race.

Metrics as Currency

In his book, Audience Economics: Media Institutions and the Audience Marketplace, Phillip Napoli refers to audience measurement organizations as one of the four principal actor–along with media organizations, advertisers, and consumers–in the market for audience product. All services are interrelated and depend on eachother to survive.

Audience measurement organizations seek to provide quantitative data on audience viewership. In other words, they are in charge of monetizing attention. The value of a media product, whether it is a sitcom or an article, depends on the audience exposure, or ratings. How many people are watching? How many people are paying attention? Napoli says audience data functions as the “coin of exchange” in the audience marketplace, and it is the currency that media organizations use to sell, and the advertisers use to buy.

The rise of digital advertising has created a ripple effect in the media industry. The industry understands digital ad spending will eventually overtake television; it’s only a matter of time. However, there is also one giant obstacle in the way of this digital takeover–Nielsen.

Nielsen 

Nielsen is the undisputed king in the media metrics business. Founded in 1923, the 91-year-old company had revenues of $5.5 billion in 2011. During the TV era, Nielsen dominated the audience measurement industry. Nielsen’s monopoly has been a double edged sword. On one hand, having one audience measurement system eliminates complication and uncertainty. If there were multiple ways to measure, more resources would have to be put in media companies and agencies. If CBS used one method of audience measurement but Viacom used another, and a big client like Proctor and Gamble wanted to advertise on both, media agencies would have to juggle the different numbers and invest in new systems, making it immensely difficult and confusing.

However, on the other hand, because Nielsen is a monopoly, it gets to name its price without competition. Last summer, I had the amazing opportunity to be an IRTS (International Radio and Television Society) fellow, a media scholarship program that funds a select group of students to pursue a media internship in New York City. I got to attend a week-long “media bootcamp,” where we visited major media companies that included broadcasting, cable, digital, etc. In multiple panels, industry leaders complained about Nielsen’s monopoly over the metrics industry. Nielsen has been criticized to be slow in responding to rapid industry changes. Les Moonves, the CEO of CBS, is one of many industry executives who advocated for a better rating system. He pushed Nielsen and the media industry to accept the C7 metric rather than the C3, as the introduction of DVRs (digital video recorders) has allowed audiences to watch their favorite shows later in the week. While speaking to investors at a Deutsche Bank media confab in March 2013, Moonves expressed his frustrations when he said, “All we want is a fair measurement—we want Nielsen to measure everybody, and ultimately, we want an eyeball to count as an eyeball no matter where you watch your television shows.” CEO of Viacom, Phillip Dauman, also echoed Moonves’s frustration in an Economist interview when he said measurement is the “number one issue for television right now.”

How Ratings Work

There are a dizzying amount of terms to know in the media industry. CPMs, GRPs, LPMS, PPC, PPM, and the list goes painfully long. Ad Buyers stare at these numbers every day to allocate their clients’ media budgets; the ultimate goal is to reach as many people as possible for the lowest price. Just to give you a snippet of how the current rating system works, here is a ratings report for this Monday (5/5/2014).

I know, there are a lot of numbers on here. When I was interning at a major broadcast network in the ad sales division, a huge stack of these reports were delivered to our desks each week. The numbers on the columns determined the value of our product. Without going into too much detail, ratings on a sheet like this indicates the Nielsen ratings point system. One ratings point = 1% of the Nielsen estimate for the category being measured. On the chart above, the categories, or the target demographics, are 18-49 year-old viewers. LIVE+SD indicates the number of viewers that watched a program either while it was broadcast or watched via DVR on the same day.

Of course, there are so many questions that are unanswered by these numbers alone. What about Hulu? What about all the binge-watching of 30 Rock I did on Netflix last weekend? What about how much I actually like the show or paid attention to it? Nielsen has yet to come up with a satisfying answer, causing buyers to turn to new players.

The Digital Wave and its New Players

Now that the digital revolution is disrupting the media space, allowing more viewers to consume online, the media community is applying greater pressure on Nielsen to keep up with the trends. Although Nielsen traditionally monopolized almost every aspect of the media industry, it seems that the increased demand for digital measurement systems have introduced new challengers. Today, the digital audience measurement sector is the most vibrant and competitive sector in the metrics market.

As Nielsen is already the established leader is measuring “eyeballs,” majority of these agencies have focused on the question of audience engagement–how audiences feel, respond, and interact with content. For instance, a client may seek to reach the coveted 18-49 audience, but the viewing experience of Mad Men on cable versus Huffpost Live on digital stream is vastly different. Social media has been the answer for many stakeholders who seek to gain this information (partly because Nielsen does not provide it). In his 2012 TWC research report, Napoli talks about the new players in market and their varying methods. Digital measurement companies like Bluefin, now owned by Twitter, engage in a new metric model depending on information gathered  from “web scraping.”

“Web scraping” is a common method used by social media analytics services, and it involves aggregating comments posted on social media platforms and using sophisticated algorithms to measure the popularity or sentiment of a show. These measurements derived from online conversations go beyond television consumption to include the consumer’s buying behavior and affinities. Another advantage of this method is that unlike Nielsen, which has a set measurement sample, information can be extracted from anyone who participates in the web.

However, Napoli points out that these digital measurements do not try to stray too far from traditional methods. For instance, Trendrr.tv offers a “share of voice” metric, representing the share of all television-focused social mid activity attributed to a network or a show in a specific time period. Bluefin Labs showcases a “response share” metric that measures a program’s share of the online television conversation at the time the program aired. Other applications like Getglue or Viggle depend on the “check-in” method, measuring digital activity on second screens like computer or mobile phones.

So far, there is no “one-size-fits-all” rating system for social media activity. Some analytics firms focus on a programs’ market share in a weekly or monthly basis while others focus on individual days. One major challenge of these new technologies is that their measuring process is not transparent. One reason for its secrecy is to protect its patents from competitors, but this creates a black box effect that drives ad buyers crazy. Again, the cost of having multiple players in the metrics marketplace is confusion and inconsistency.

Nielsen Strikes Back

Nielsen is trying to meet these new threats by introducing weapons of its own. Check out this cover of their latest yearly report.

Notice anything?

No television in sight.

Nielsen is no fool. The company understands industry trends and it is trying hard to keep up. Last year, it released a new product called “Digital Program Ratings,” recruiting big name partners like NBC, Fox, ABC, AOL, CBS, Univision, Discovery and A+E to participate in the test run. The product will mainly track the network’s desktop websites with plans to integrate mobile in the future. This release follows the company’s introduction of the Twitter TV Ratings system, a measurement of pure social activity. Nielsen also acquired Arbitron for $1.3 billion in December 2012, swallowing its rival with expertise in measuring mobile content.

Despite its shortcomings, Nielsen is still the undeniable leader in its industry. Despite initial reluctance, Google began a partnership with Nielsen in testing ad campaigns on Youtube using OCR (online campaign ratings) deals with select clients. It is a win for Nielsen and a smart move by Google. The search engine giant understand the major ad spenders have a longstanding relationship with Nielsen, and if it wants to gain their trust, they have to use a credentialed third party entity.

What About the Ad Buyers? 

Dubbed as “promiscuous consumption,” Millennials are consuming content through search, social, online video, mobile, and television. Ad Buyers are adjusting their buying habits in response to these new trends as well. Since 2010, ad spending on the internet saw the greatest change with a 7.5% increase.

Laura Desmond, chief executive of one of the world’s biggest ad-buying firms, Starcom Mediavest Group, shared her strategy of partnering with new measurement firms to help her company transition to digital. In a WSJ interview, Desmond said, “[p]art of the market is lagging, mostly because they’re holding on to the measurement that they know.”

She agreed part of this lag was due to Nielsen’s monopoly over the measurement business, and hinted that ad buying will eventually depart from the traditional Nielsen rating methods. With the increased media fragmentation and the promiscuous consumption of media by audiences, what Ad Buyers are ultimately looking for is a unified digital measurement system. Until digital measurement reaches this level of sophistication, agencies will continue to fall back to the biggest and most reliable measurement system. Love ‘em or hate ‘em, Nielsen is still the undeniable rating king.

Growing up, my mother, who worked at a Quincenera shop in the historic fashion district, always took me and my brother with her to work. I remember the streets of Pico and Maple lined with taco trucks, or loncheras, during lunch hours. People used to call them “roach coaches.”

Now, you often see food trucks lined up in front of corporate buildings during lunch hour to serve white collar workers. Now they’re referred to as “gourmet food trucks,” serving up trendy fusion cuisine for a fraction of the price.

How did this crazy make-over happen?

The recession following the 2008 financial crisis created an increased demand for quick quality food on a budget. Trailblazers like Chef Roy Choi revolutionized the industry when he introduced the iconic Korean-Mexican tacos. Kogi was founded in 2008, right at the beginning of the recession and right after Choi was fired from his cushy job at Rocksugar. The business struggled at first, but by 2009, Kogi had 36,000 Twitter followers and generated 2 million dollars mostly off of $2 tacos. People were waiting in 2 hour lines to get a taste.

Aside from the food being delicious, the key secret to the rise of Kogi was social media. The only way people could track down Kogi was through Twitter, and with Choi’s zero marketing budget, social media became a powerful weapon to spread the word. Today, there are thousands of “gourmet” food trucks that run Los Angeles. These new emerging food trucks are serving the demand of the new privileged poor consumer.

However, some people believe the food truck craze is getting out of hand, turning into a mini-bubble in its own right. Hiller says the scene has become too saturated with inexperienced band-wagoners without culinary backgrounds. In addition, the increased regulations and higher prices are creating new barriers to entry. High demand for food trucks has driven the leasing prices way up since “everyone is doing it.”

Food truck culture is spreading across the US to cities like New York and Washington D.C. It will be interesting to see whether food trucks are just a fad or the real deal. Want to learn more? Here is a cool infographic that sums it all up.

In an ideal free market system, the law of supply and demand decide prices and foster competitiveness. However, artificial forces like agricultural subsidies can upset that balance. The US farm bill is a unique ombnibus, multi-year bill which aims to outline the Fed’s overall stance and policies in the agricultural sector. It is also renewed roughly every five years in order to tailor the bill to the political climate of its time. In theory, agricultural subsidies serve to provide a safety net for farmers whose livelihoods depend on unpredictable weather and fluctuating commodity prices. Although this logic seems sound, especially to Keynesian supporters, these subsidies have been accused of overly compensating already well-off farmers and industries.

The farms in the US are no longer the humble small-town family owned establishments, but huge-scale billion dollar corporations, earning its name: agribusiness. Ever wondered why a Big Mac costs more than a salad? Agricultural policies have immense influence over the overall health of American citizens, as they dictate which types of food are cheaply and widely available. Currently, five crops control the subsidy market: corn, cotton, rice, soybeans, and wheat. Unfortunately, these commodities only makes fast-food and processed options more affordable than healthier alternatives like fruits and vegetables. For instance, corn is the most highly subsidized crop in the US, which explains the prevalence of high fructose corn syrup—which is cheaper than sugar—in the ingredients of an average American’s groceries. In addition, these main commodities are produced almost entirely from big agribusinesses. As a result, much of the subsidies are disproportionately fed to the large commercialized farms.

Origins of these powerful players in the agricultural sector goes back to the Nixon Administration. Earl Butz, the Secretary of Agriculture at the time, adapted a “get big or get out” mentality for farmers, focusing his policies on large-scale industrial farming. Butz’s aggressive policies not only fostered the growth of megafarms, but these farms now needed its seed, fertilizer, and pesticide providers to operate on the same large-scale level. As a result, biotech firms also grew to huge corporation to what is Mosanto today, a multi-billion dollar global corporation.

Critics of the bill include small to mid-size farms, health organizations, the World Trade Organization, and the former President George W. Bush, who served in office at the time of the bill’s passage. Bush publicly opposed the legislation, and vetoed it more than once. He believed the bill was too generous for already well-off farmers, and he was right. From 1995-2010, the top 10% of qualifying farmers collected 74% of all subsidy payments. The subsidies are also paid per acre, meaning the largest farms receive the largest checks. In addition, the only cap the bill really imposes is to farmers who make more than $750,000, or $1.5 million for married couples, which means a couple in the upper-echelon of society can still receive federal assistance.

The key actors who run the oligarchy of agribusinesses are Monsanto, ConAgra, and Cargill, and they dominate the farming industry, producing approximately 98% of America’s food supply. Major food manufacturing corporations are also a major special interest group. It is in these corporation’s best interest to keep their commodity crop’s prices low to gain a high profit return. Popular brands like Kraft, Mars, and Coca Cola were also amongst the top spenders in lobbying dollars. Coca-Cola uses high fructose corn syrup as a main ingredient in its sodas, Mars need large doses of sugar to mass produce its famous candy bars, and Kraft needs dairy farms to keep milk prices low.
The agricultural subsidies result in overproduced commodities that are “dumped” to developing countries, and although this may seem like a form of aid, it drives local farmers who can’t compete with the highly subsidized American growers out of business. If the current commodity crops continue to be subsidized and agribusinesses control the market, there will be a continuing trend of higher sales of processed food, proliferation of toxic pesticides, erosion of land, monopolization of market, and etc.

Bill Ayres, Co-Founder and Executive Director of WhyHunger, writes in his Huffpost piece that the 2014 Farm Bill did eliminate billions in farm subsidies, reducing them by 30 percent. Perhaps this is a step in the right direction, but we will have to wait and see if Washington can withstand the army of lobbyists hired by the agricultural elites.

But for now, my college budget has my diet looking like this:

It is Saturday night. You and your friends are planning to go downtown for a few drinks. Instead of calling a cab, someone takes out her iPhone and books a ride with Patrick. He has a friendly smile, a five-star rating, and a white Toyota—with a pink mustache.

Named as one of TIME’s 10 ideas that will change the world in 2011, the concept of collaborative consumption has proved it is a force to be reckoned with. Service start-ups such as Lyft, Uber, and Airbnb are challenging the traditional models of consumption, giving regular guys like Patrick an opportunity to participate in the supply chain. Before, hopping into a stranger’s car may have been seen as reckless and irresponsible, but Rachel Botsman, co-author of “What’s Mine Is Yours: The Rise of Collaborative Consumption,” writes about how technology is enabling trust between strangers. She says collaborative consumption is a “powerful cultural and economic force reinventing not just what we consume, but how we consume.”

Technology has often times disrupted the economic landscape. Take Lyft as an example. It is a ride-sharing app that markets itself as “a friend with a car.” The economic transaction is more than just an exchange of service; it’s an experience. Lyft is redefining what a ride service is, while normalizing casual interaction during commodity exchange.

Here is how it works. At any point in time, you can open up the app and hail a friendly Lyft driver around the area.

You enter the car, give the driver a fist-pump, and he or she entertains you with a friendly conversation as you are dropped off at your location. The transaction is processed by Lyft so you avoid the awkward paying and tipping process. Using Lyft is vastly different from using a taxi service. Lyft has become popular especially with the tech-savvy and thrifty Millennial generation. The company raised $60 million in its third round funding last May with venture firm Andreessen Horowitz and the company has grown to be available in 22 cities.

According to TechCrunch, Lyft is currently growing at a faster pace than its main competitor, Uber, with a 6% growth rate disclosed by its co-founder, John Zimmer (TechCrunch). Some point out the numbers can be misleading since Lyft currently has a smaller revenue base than Uber. However, when Uber raised $307 million in Series C funding last June, Lyft caught up to having one-third of the weekly ride volume Uber had across all its products. If we dive further into the success of Lyft, we can find there are multiple economic forces at play.

“There’s an app for that” is a now common response to everyday problems. Technology of apps and proliferation of mobile phones have allowed companies like Lyft to reduce transaction costs. People are able to conduct business with private individuals rather than a chain. This process of disruption has reorganized the protocol of commodity exchange. In Lyft’s case, the app redefined the economic structure by asking for “donations” rather than charging “fares” for payment. Since Lyft does not employ a specialized workforce, it came up with a new form of transaction in order to enter the market. The legality of this is as fuzzy as Lyft’s iconic pink mustache, evidenced by the app’s ban in certain cities like Seattle. Major cities like Los Angeles requires Lyft to charge a set fee to continue its service, but the majority of Lyft locations still operate on “donations.”

Perhaps ironically, through innovation, our generation is reverting back to a peer-to-peer localized model. “Collaborative consumption” is often interchanged with “shared economy.” The act of sharing is deeply ingrained in the Millennial culture. Millennials love to share articles, tweets, pictures, location, etc. It seems natural that this behavior trickled down to more tangible things like clothes, cars, and even homes. Economic sluggishness over the last few years has also contributed to this phenomenon, as more people are trying to find ways to make money off of their unused or under-utilized assets.

Think about it. You have a car and a driver’s license. You consider yourself to be a responsible driver, and you give rides to your friends all the time—why not start getting paid for it? Patrick bought into the idea, joining Lyft to make some money on the side.

“I needed a second job to help pay some bills and also to help save up for grad school. I do see myself doing this long term because I can make some extra cash and not have it interfere with my regular work schedule,” he says.

Lyft takes a 20% cut from every transaction. There are also “Prime Time Tips” that escalate rates during high-demand periods (i.e. 11pm on a Saturday night). These tips can go as high as 70%, but the entirety of the increase goes to the drivers. Due to the reduced transaction cost of using a casual workforce and conducting financial transactions online, Lyft fees are also generally cheaper than regular taxi services. Katherine, a college student from California, says she uses Lyft because it is more convenient and affordable.

“I use Lyft because it feels more personal and I feel like I can trust the drivers. Plus it’s convenient to find a car from an app on my phone – I never know which number to call for a taxi or what service is better than another. Plus it’s cheaper. A ride to downtown via taxi can be $14, while using Lyft, I can get a rate as cheap as $8.”

It seems like everyone wins—well, except for the taxi and limo service industry. Formally trained drivers who are screened in a testing and licensing system are now competing with normal civilians. In essence, the barriers to entry to the transportation industry has been compromised. However, this does not mean Lyft does not take safety seriously. In some aspects, Lyft’s screening process is harsher than some taxi companies, with higher age requirements, and stricter standards on criminal records. For instance, Lyft requires no reckless driving or DUI within the last seven years, when the City of Los Angeles only requires three years. In addition, Lyft links your Facebook for verification and provides insurance of up to $1m for the drivers. The car also has to be clean and presentable.

There have also been tensions between governments and the new model. In 2012, the California Public Utilities Commission issued “cease and desist” letters to Lyft along with other similar services. Although the knee-jerk reaction may be the issue of safety, there are many factors contributing to the debate of this new business model. Taxi and limousine companies who once enjoyed monopolies are heavily lobbying against legalizing these services. In addition, many cities rely on the regulation fees these companies pay to operate, fees private ride sharing programs are not obliged to pay.

“To me it’s a really dumb debate,” Patrick says.

“The real concern for the state of California and other states that Lyft operates in is that they see private ride-sharing programs as entities that are taking money from them. They hide under the issue of safety, but their arguments are based off of taxi companies having to pay fees regulated by the state while private ride sharing programs do not. How does that equate to being concerned about passenger safety? It’s really ridiculous.”

The issue of safety is always brought up in these debates. However, it seems like Millennials have more faith in strangers. Katherine says, “the idea of communicating even with a stranger online isn’t quite as daunting anymore.”

“There’s a growing inherent trust between young people in this generation (twenty-somethings), so doing things like calling a cab or organizing a ride share through an app or online service doesn’t seem so out of ordinary, and most don’t think anyone is trying to scam them.”

Patrick says the age of his passengers range from 21-45, which is consistent with the wide belief ride-sharing is embraced mostly by the Millennial generation. Botsman asserts that we now live in a global village, and there is a new importance placed on reputation. In Lyft’s case, transactions are followed by a rating system, from these reviews drivers and users leave a trail. If you average less than 4.5 stars, you are in danger of being dropped. Our ability to collaborate is quantified into a form of “reputation capital,” and it is put in public display, ultimately determining our access to collaborative consumption.

Last September, the State of California became the first state to regulate ride-sharing, or what is now newly dubbed as “transportation network companies.” Depending on how these new rules perform, other cities may follow the California framework in the future.

It is Saturday night. You and your friends are planning to go downtown for a few drinks. Instead of calling a cab, someone takes out her Iphone and books a ride with Patrick. He has a friendly smile, a five-star rating, and a white Toyota—with a pink mustache.

Lyft is a ride-sharing app that markets itself as “a friend with a car.” The economic transaction is more than just an exchange of service; it’s an experience. The app is free and syncs to your smart-phone. At any point in time, you can open up the app and hail a friendly Lyft driver around the area.

You enter the car, give the driver a fist-pump, and he or she entertains you with a friendly conversation as you are dropped off at your location. The transaction is processed by Lyft so you avoid the awkward paying and tipping process. Lyft raised $60 million in its third round funding last May with venture firm Andreessen Horowitz and company has grown to be available in 22 cities.

According to TechCrunch, Lyft is currently growing at a faster pace than its main competitor, Uber, with a 6% growth rate disclosed my its co-founder, John Zimmer (TechCrunch). Lyft has especially been popular especially with the tech-savvy and thrifty Millennial generation. Katherine, a college student from California, says it has to do with convenience and saving money.

“I use Lyft because it feels more personal and I feel like I can trust the drivers more. Plus it’s convenient to find a car from an app on my phone – I never know which number to call for a taxi or what service is better than another. Plus it’s cheaper. A ride to downtown via taxi can be $14, while using Lyft, I can get a rate as cheap as $8.”

If we dive further into the success of Lyft, we can find there are multiple economic forces at play. The first is the economic recession. In tough times, people are gathering part-time jobs to make ends meet. For instance, Patrick started Lyft to make more money on the side.

“I needed a second job to help pay some bills and also to help save up for grad school. I do see myself doing this long term because I can make some extra cash and not have it interfere with my regular work schedule.”

In every transaction, Lyft gets 20% of the cut. There are also “Prime Time Tips,” that escalates rates during high-demand periods (i.e. 11pm on a Saturday night). These tips can go as high as 70%, but the entirety of the increase goes to the drivers. Lyft gets to bypass the system by asking for “donations” rather than charging “fares.” The legality of this is as fuzzy as Lyft’s iconic pink mustache, evidenced by the app’s ban in certain cities like Seattle. However, this does not mean Lyft does not take safety seriously. In some aspects, Lyft’s screening process is harsher than some taxi companies, with higher standards on criminal records, and linking your Facebook for safety and providing insurance of up to $1m for the drivers. The car also has to be clean and presentable.

Another economic factor is proliferation of mobile technology. “There’s an app for that” is a common slogan in response to every day problems. Technology of apps and mobile phones have allowed companies like Lyft to reduce transaction costs. People are able to conduct business with private individuals rather than a chain. Perhaps ironically, through innovation, our generation is reverting back to a peer to peer localized model. People have referred to this phenomenon as the sharing economy, or collaborative consumption.

Rachel Botsman, the co-author of What’s Mine Is Yours: The Rise of Collaborative Consumption, talks about how technology is enabling trust between strangers, and this concept of collaborative consumption is a “powerful cultural and economic force reinventing not just what we consume, but how we consume.” Botsman writes collaborative consumption is a class of economic arrangements in which participants share access to products or services, rather than having individual ownership.

Named as one of TIME’s 10 ideas that will change the world in 2011, the concept of collaborative consumption has proved it is a force to be reckoned with. Botsman co-wrote the book in 2010, and since then, the concept has taken the app world by storm, with giants like Airbnb, Uber and Lyft rounding billions from venture capitalists. However, this new concept is disrupting the economic system. In Lyft’s case, the service is a huge threat to the taxi and limo service industry. Formally trained drivers who are screened in a testing and licensing system are now competing with normal civilians. In essence, the barriers to entry to the transportation industry has been compromised.

There has also been tensions between governments and the new model. In 2012, the California Public Utilities Commission issued “cease and desist” letters to Lyft along with other similar services. Although the knee-jerk reaction may be the issue of safety, there are many factors contributing to the debate of this new business model. Taxi and limousine companies who once enjoyed monopolies are heavily lobbying against legalizing these services. In addition, many cities rely on the regulation fees these companies pay to operate, fees private ride sharing programs are not obliged to pay.

“To me it’s a really dumb debate,” Patrick says.

“The real concern for the state of California and other states that Lyft operates in is that they see private ride sharing programs as entities that are taking money from them. They hide under the issue of safety, but their arguments are based off of taxi companies having to pay fees regulated by the state while private ride sharing programs do not. How does that equate to being concerned about passenger safety? It’s really ridiculous.”

The issue of safety is always brought up in these debates. However, it seems like Millennials have more faith in strangers. Katherine says “the idea of communicating even with a stranger online isn’t quite as daunting anymore.”

“There’s a growing inherent trust between young people in this generation (twenty-somethings), so doing things like calling a cab or organizing a ride share through an app or online service doesn’t seem so out of ordinary, and most don’t think anyone is trying to scam them.”

Patrick says the age of his passengers range from 21-45, which is consistent with the wide belief ride-sharing is embraced mostly by the Millennial generation. Botsman asserts that we now live in a global village, and there is a new importance of reputation. In Lyft’s case, transactions are followed by a rating system, from these reviews these drivers and users leave a trail. If you average less than 4.5 stars, you are in danger of being dropped. Our ability to collaborate is quantified into a form of “reputation capital,” and it is put in public display, and ultimately determining our access to collaborative consumption.

Last September, the State of California became the first state to regulate ride-sharing, or what is now newly dubbed as “transportation network companies.” Depending on how these new rules perform, other cities may follow the California framework in the future.

I was a sophomore in high school when the 2008 financial crisis happened. As naïve teenagers, my friends and I were more concerned with the upcoming Homecoming Dance rather than the stock market crash.

My mother, Judy Kim, owns a small dress store in LA’s historic Java Market (so I guess you can say every girl in school was jealous of me). Fall is traditionally a hot season because of high school dances (i.e. Homecoming, Winter Formal), but profits suddenly declined after the crisis.

“After 2008, people just weren’t spending,” Judy says. Since beautiful dresses are a luxury, Judy’s small business has been effected largely by cyclical shifts in the economy.

“Most of our customers were blue collar folks. Even so, we had parents who came in every week for months to pay off a 500 dollar dress for their daughter’s Quinceañera. As the recession got worse, more and more customers would beg for a refund. Some people just stopped showing up and did not pick up their phones.”

Judy had to make changes in sales tactics in order to make up for the loss during the recession. First and most obvious, she cut prices. Instead of the normal 50% return, the store now had a mark-up of 30%. The store is now constantly having a sale, but customers are always haggling the price more than ever. Judy came up with the idea of selling all-inclusive packages to entice customers. For example, a Quinceañera set can include: customization of a dress, a headpiece, and a pair of gloves with the girl’s initials embroidered on it.

The store also reduced the amount of employees. One summer, Judy taught herself how to use a sewing machine, and started doing alternations on the dresses herself. She taught me how to use Excel so I could record sales and calculate the commission of each employee. During the past tough years, everyone in my family was expected to contribute.

One glaring factor that contributed to Judy’s decline in sales was that her specific target consumer demographic experienced the hardest hit during the recession: the Hispanic population. “In the Fashion District, Jewish people own many of the buildings, and Koreans work in wholesale. Many stores employ Hispanics, and majority of the shoppers in the area are also Hispanic.”As a first-generation Korean American, Judy is not completely fluent in English—in fact, she is more fluent in Spanish. Located in Downtown Los Angeles, Judy’s store caters to a high Hispanic consumer base, which explains why there are three main types of dresses at her store: wedding, prom, and Quinceañera.

The Hispanic population in Los Angeles is almost 5 million according to a 2012 report by the US Census Bureau. According to a 2010 congressional report released by the Congress’ Joint Economic Committee, Hispanics have been named as the group that has experienced the hardest hit during the recession. The report showed that the Hispanic unemployment rate was only slightly above the overall national unemployment rate in 2006, when my mother’s dress shop was enjoying considerable profits.

However, by 2009, the rate soared to 13.1%, around 3 percentage points higher than the national rate. The disproportionate impact on the Hispanic community is partly due to the housing bubble’s impact on the construction sector. Information from the report also suggest unauthorized immigrants may have experienced the most impact in employment.

The decrease of disposable income has caused customers to be incredibly price conscious. Judy’s biggest competition has been online retailers. Start-ups like “Rent the Runway” allow users to rent a dress for a much cheaper price. Since dresses are not exactly necessities, people who are looking to save money find renting a wedding or Quinceañera dress is an economically smarter alternative than buying one and never wearing it again. Many of the dress stores have closed down, but Judy does not plan on giving up anytime soon.

“In this business, it is all about standing out. We are constantly trying to find a way to offer our customers something they cannot find anywhere else, including the internet.”

One huge advantage Judy has had over the years was that her sister is a fashion designer. Another secret weapon of hers is that her brother also has a dress shop, not too far from her own. Having the support of her family has been her greatest asset. The Kim siblings actually had plans of starting a retail website. However, my mother still has one huge reservation.

“Social media scares me. One bad review can kill your whole business, and kids are mean these days!”