What's the Difference Between a Shady Hotelier and an Airbnb Host?

Last week, an administrative law judge in New York City fined the unlucky host of an Airbnb rental $2,400 for violating a 2010 city law meant to crack down on illegal hotels. The penalty – a hefty cost for subletting your bedroom for a few nights to some Russian ladies – brings the sharing economy more generally, and the specific idea behind Airbnb, to an inevitable crossroads: All of this small-scale swapping and selling of stuff and services (a ride in your car, a room in your home) is dubiously legal just about everywhere. But now that these services are growing ubiquitous – and bringing with them some benefits that cities should love – dubiously legal won't do.

City regulation, more often crafted with hotels or taxi companies in mind, typically has no clue what to make of people like Nigel Warren, our Airbnb host in New York. The city law in question in this case was created to target shady property owners converting affordable housing into fly-by-night hotels (without having to comply with the zoning, safety and tax requirements an actual hotel must face). Warren was clearly not doing that. But the law says that people can't rent out all or part of their property for less than 30 days. And under that legal standard, just about any Airbnb host in New York is at risk.