The cheaper rates in NYC which are extremely high compared with the rest of the USA were because there was no $125 / 12 hour lease fee because there were no medallions.
Medallion owners would get mortgages (like houses) for the $1.2 million medallions and the high lease fee paid for the medallion mortgage. In fact the other special interests besides Yellow Cab medallion owners were credit unions who financed these mortgages.
A $125 / 12 hour lease fee comes to over $90,000 per year.
By not having to pay these excessive expensive leases, drivers could be paid less money and still make a profit. Drivers who leased the Yellow Cabs still have to pay for gas. Lower costs for taxi service means more time with customers in cabs. Everyone wins except medallion owners and credit unions with the mortgages and politicians bought off by these special interests.
This comes out as 8640 hours per year, which is 360 days.
So we're talking about the income a taxi owner can get from a medallion.
What an individual taxi driver had to pay to work is a much lower number. Typically a full time job is around 2000h/year.
As explained elsewhere in the thread, Uber does not and has not ever competed with medallion taxis for their main product (Uber X/Uber Black) in New York City. Uber's direct counterpart would be the for-hire cabs which are also regulated by the TLC, and are not required to have medallions.
Uber is already subject to the exact same requirements of the TLC that their predecessors were - Uber drivers in NYC have to have a valid TLC license. So there is literally no difference in supply-side regulatory cost there.
Whether or not they fill the same requirements, they made it so easy to get a car that it was easier than standing on a street corner and hailing a yellow cab.
And aside from that, they added accountability. Yellow cab drivers were rude, the cars were moderately clean at best, and generally took opportunities to rip people off. I remember leaving my phone in a cab around 2008, I immediately called it and the dude picked up, said he was around the corner and to meet him outside. He was more than willing to give me my phone back- for $60 and had a shit eating grin on his face. I had the same thing happen in an Uber about 5 years later- the guy dropped the phone off at my house free of charge with a smile.
There is a reason that NYC taxi medallions have pretty much halved in cost since Uber started here- because they are directly competing with yellow cabs!
I very clearly do.
Rather than respond to the anecdotes, I'll point out that I was rebutting the original claim: that Uber was cheaper because it (unlike medallion cabs) does not have to pay for licensing fees. Uber does pay for licensing fees, just under a different classification. More importantly, that's exactly who Uber's competition is on the drivers' side, which is exactly what OP was talking about. Uber drivers are generally people who have driven livery cabs for years and either split their time between Uber and other livery cab services, or have switched over to Uber for livery cab driving.
When talking about the price, it's more accurate to compare Uber to other livery cabs, and to say that Uber has caused the share of livery cabs in the overall cab market in NYC to increase, rather than to look narrowly at the medallion market, and ignore the regulatory field that they are in, ignore the costs of that regulation, and ignore all of the direct competition on the supplier side.
It is not about licensing fees, it is about that because of the medallions, taxi drivers had to pay $125 / 12 hours for the lease. Before Uber/Lyft those medallions which were restricted to 13,000 for a city of 8.5 million (as well as many visiting tourists, business people, and in a city where many don't own cars), the price of a medallion was $1.2 million. After Uber/Lyft the price decreased to $700,000 and many Yellow Cabs are idle. Prices are lower, service is far better.
But if your point is 'Uber was primarily successful because they found a way to get around the medallion system', then I don't think so.
The reason being, livery cars were around long before Uber, are much more comparable, and they also did not have to deal with medallions. So, why didn't livery cars put the taxis out of business a long time ago?
I think the real reasons for Uber's success are:
1. Livery cars were a hassle to arrange. Uber solved this by using smartphones with GPS.
2. Livery cars were slower to pick you up. Probably because there weren't enough drivers on the road. Which is probably because there weren't enough riders. Uber solved that catch-22 by subsidizing the rides to jumpstart a positive network effect.
Accountability and a feedback loop- if the guy did try to rip you off somehow, prior to Uber, you really had very little recourse. There is a process to lodge a complaint in NYC, but it involved paperwork, showing up to a hearing (which you will have to take time off of work for), and then maybe something might be done.
You kind of touched on it, but also just some kind of visibility into when exactly your car will arrive. When Uber was new in NYC, wait times were much longer, generally 10-15 minutes, which I didn't mind much because that's probably about how long it would have taken me to find a cab, and I could finish my drink inside the bar/restaurant and finish as the driver pulled up. This has actually gone downhill a bit over time- So many times I pull up the app to see a half dozen cars within 4 blocks of me, and then when I actually try to reserve, its a 7-8 minute wait. Or they accept the trip but then I guess got a better offer on Lyft or something and is just heading in the wrong direction- meaning you have to cancel and then fight with Uber over being charged a cancellation fee, which usually isn't too hard to do, but its just a hassle and a way drivers can currently beat the system.
1. http://toddwschneider.com/posts/analyzing-1-1-billion-nyc-ta...
I feel like a decade from now people are going to still be repeating this same old line.
It also seems awesome. Why wouldn't I want VCs to give away a bunch of money to its customers?
No, it is not going to run taxis permanently out of business. All you need is a car to do that. If this is really true, as soon as prices rise, another taxi company can start back up again and take market share.
Uber is still losing money hand over fist. It has to come to an end at some point, either when they finally raise prices or they just go bankrupt.
> It also seems awesome. Why wouldn't I want VCs to give away a bunch of money to its customers?
A couple reasons:
1. VCs don't "give away money". They invest, with the expectation that their investment will be returned many times over. Given that it is explicitly Uber's goal to have a monopoly on transportation, you can extrapolate what that means for their intended pricing strategy if they ever manage to take over.
2. While taxis may or may not be an example of this, it's important to realize that VC-backed dumpi^H^H^H^H^Hpromotional pricing can destroy existing businesses even if those businesses were competitive and sustainable. For example: wash.io, which I commented about here: https://news.ycombinator.com/item?id=13608376#13608798. They shuttered a whole bunch of laundromats in SF, which was all for nothing since they went out of business anyway. That's not a healthy dynamic.
> not forcing drivers to pay excessing leasing fees for vehicles.
Err, the cheaper rates were due to uber subsidising rides with VC money, which was unsustainable. Uber also did start a leasing program for drivers.