
Uber Tests 30% Fee, Its Highest Yet - claywm
http://on.wsj.com/1EU9lu5
======
shalmanese
The real meat of the story is tucked towards the end of the article. Both Uber
and Lyft would like to lock drivers exclusively to one service and not have
them constantly price compare. Right now, basically every driver has both apps
open which makes the market almost perfectly competitive with no opportunity
to extract monopoly rents.

However, Uber and Lyft are also deathly afraid of any move to classify workers
as employees rather than contractors and one of the key tests is whether the
worker is free to set their schedules and working relationships.

The 30% rate is largely illusory, they're not expecting a large chunk of their
workforce to pay it. Rather, it's to get them committed to Uber over Lyft
while trying to avoid more onerous regulation.

~~~
rtpg
Only 2 major sellers does not make a market perfectly competitive by any
stretch of the imagination, but I digress.

The classification point is interesting though. If there's forced lock-in to
only Uber or Lyft, then I can't see there not being mass lawsuits about
misclassification of workers. The status quo is already almost 50/50 in terms
of the IRS classification checklist.

~~~
netcan
Perfect only exists in models.

Also, you might think of it as thousands of sellers but only two buyers. In
any case, competitiveness has to do with more than the number of actors.
Switching costs are pretty low and information is very available. That counts
for a good amount. Two buyers/sellers can be still create a competitive market
in the right circumstances, with collusion being the biggest danger.

Also, drivers still have the option of getting business in other ways.

Generally though I agree that the market needs more players, for the employee
vs sole trader debate and for competitiveness reasons.

~~~
eevilspock
> Also, you might think of it as thousands of sellers but only two buyers.

The relevant terms are Oligopsony and Monopsony.

[https://en.wikipedia.org/wiki/Oligopsony](https://en.wikipedia.org/wiki/Oligopsony)

------
braythwayt
Uber is mercilessly commoditizing drivers and squeezing every last drop of
blood from their veins. As the average income falls towards, and then through
the poverty line, the number of people who say that taking an Uber is a more
pleasant experience than taking a taxi will dry up.

Clean, well-maintained cars and polite drivers that speak English well will
become rarer and rarer. This would result in a collapse of Uber, except, of
course, that the company is really betting on replacing its drivers with
robots.

The trick is to destroy the taxi industry before that happens. Because if
self-driving taxis appeared on the market tomorrow, the existing taxi
companies could make a comeback.

~~~
minot
> polite drivers that speak English

As a very infrequent taxi rider, as long as the driver can understand where I
want to go and take me there safely, why do I care what language they speak?
Am I missing something here?

~~~
eevilspock
You're not missing a thing. Inequity in opportunity and segregation live on
through ignorance and a cultural lack of empathy. Pleasant white and native
English-speaking staff in the front of the house, brown and struggling to get
a foothold types washing dishes in the back, because that's what makes
customers feel better. The privileged get more privilege, and the poor get
poorer.

~~~
mc32
I don't think this is an American only thing. You see the same in Europe with
respect to Eastern european immigrants who don't speak the local language
well.

You also presume people would be uncomfortable with either native English
speakers of either Hispanic of African ancestry --which for the great majority
of people would not be an issue. Also, not only white English speakers take
uber.

Personally I think those commenters prefer not having to repeat or ask the the
driver to repeat what they are trying to get across.

Imagine moving to China, you a polish speaker with little Chinese fluency, and
try to make a living as a taxi driver. See how well you compete with people
who speak Chinese natively.

~~~
eevilspock
I appreciate your reasonable and thoughtful counterpoint, unlike bill's
malarky.

My presumption is not true for all people, but it is true for a great great
many. I think you vastly underestimate the amount of prejudice that exists,
from the overt "I don't like people of other colors, gender or sexual
orientation" to the subtle but insidious "I am not prejudice, but I just feel
more comfortable sitting next to a person of the same color on the bus." A
Yale Law Journal study found that "Black taxi drivers' tips averaged 33
percent lower than those received by White drivers."[1]

In this day and age of GPS navigation (It's built into the driver's Uber
app!), you don't need to be even close to a native speaker to exchange
destination information. And if Uber the company cared enough, they could make
it even easier by allowing riders to enter their destination into the app on
their phone. Uber wouldn't have to reveal it to the driver until the driver
accepts the trip.

A agree it's not just an American thing. In rare cases it works in reverse. I
lived in Taiwan for about 5 years. There and in China, an American taxi driver
would be such a novelty or even celebrity they would be in great demand.

All I'm saying is that for the world to get better, we need to _actively_ work
against the Matthew effect[2].

[1] _Blindspot: Hidden Biases of Good People_ , by Mahzarin R. Banaji, Anthony
G. Greenwald. (2013)

[2]
[http://en.wikipedia.org/wiki/Matthew_effect](http://en.wikipedia.org/wiki/Matthew_effect).
The Matthew effect is pervasive, even among scientists:
[http://www.garfield.library.upenn.edu/merton/matthew1.pdf](http://www.garfield.library.upenn.edu/merton/matthew1.pdf)

~~~
mc32
Not to detract from your points but being an object of curiosity, a kind of
clown for a show, is not what I'd call a desirable state. That's almost like a
fetish. I mean, if us uber "fares" started to see the drivers as objects of
curiosity, I think people would feel upset at that, probably rightly so.

------
bhouston
Uber is only greatly cheaper during this initial period of VC-funded expansion
in order to gain market share. There should be no expectation that it will
remain this way after it has beaten soundly its competition and established
itself.

~~~
feybay
Yep, this is an interesting pattern in a libertarian (essentially, they are
ignoring laws for now) society. They will provide good service and rates until
they have a monopoly and can maintain it. Then, they'll abuse the customer
until a viable alternative pops up.

~~~
dylanjermiah
You assume they can get to 'monopoly'(how do you define monopoly? 80% 90%
100%?). In an actual free market that will rarely, if ever happens. When has
that actually occurred? (government backed cartels don't count)

~~~
feybay
That's a very good point.

------
DanielBMarkham
Libertarian here. I love Uber and have had nothing but good experiences with
it. I also am a fan of their business model -- once a few remaining bugs are
worked out.

Having said that? Crap, what a freaking mess Uber is making of things. I have
talked to more than one person who had an Uber driver tell them that the
company continues to push very hard to control them. I guess Uber could make
the case that this was in the best interest of the users.

Now that they're jacking their cut? With their actions they are creating the
argument that folks will make for completely destroying the open market: major
players squeezing poor drivers dry, quasi-legal and highly questionable
policies that try to prevent drivers from going anywhere they'd like, using
the commercial momentum of a large company to dictate to all other players in
the space about how things should be. And that's not even getting into the
problems with personnel. Look, I'm a fan. But this trajectory is not good.

Come on, guys. You can do better than this. If you continue kn this fashion,
you're going to lose a lot of public support and goodwill.

------
zhte415
It is interesting how Uber/Lyft et al are interested in the taxi market, or
seem interested in it.

China also has Uber/Lyft equivalents, but they just sell a smartphone service
to taxi drivers (inexpensive) and unlicenced taxis (also available, but only
after unlicensed taxis in the local area have not responded for a considerable
amount of time).

What China's Uber/Lyft/etc are after is micro-payments. A micro wallet to pay
for services such as taxis, and them other things too. Why reclaim receipts
when it is through and authorized payment channel?

Is this not on the Uber et. al. game plan, or are the markets too different?

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cowsandmilk
Many businesses try to espouse "a rising tide lifts all boats" with their
employees. A growing business helps not just the investors, but all employees
see upside and are motivated.

Uber seems to have taken the opposite tact, where a rising tide just allows
them to scrape more off the top.

------
nlake44
Services like Airbnb and Uber will be become commodities. There will be some
service like Kayak or Expedia to find you the lowest fare in the future. These
companies will have to offer an API or be undercut by competitive services.
Uber and these other services better grab as much money as they can right now.

~~~
prostoalex
The value is in the longevity and diversity of the ratings. You might have
top-notch properties at bargain-bin prices for rent, but if it's all "0
reviews, 0 bookings", it's an uphill battle to earn customer trust.

Good example is Yelp - one can probably buy a ready-to-go software package off
a random "scripts for sale" site, but quality reviewer acquisition and user
acquisition through trust might get expensive.

~~~
jacobolus
[http://thenewinquiry.com/essays/in-praise-of-fake-
reviews/](http://thenewinquiry.com/essays/in-praise-of-fake-reviews/)

[http://tomslee.net/2013/09/some-obvious-things-about-
interne...](http://tomslee.net/2013/09/some-obvious-things-about-internet-
reputation-systems.html)

------
lasermike026
I just downloaded lyft. What does that tell you?

~~~
iamdave
About Uber? Absolutely nothing. About you? That you choose to use a different
product.

Are you looking for some kind of congratulations on your grandstanding?

~~~
lasermike026
You can choose be be obtuse or you can see that people might use an
alternative if they believe service is going to decline.

