Uber vs the taxi industry: a case study on the broader social impacts of new media innovation
Recently a friend introduced me to Uber, an app which connects drivers to passengers, providing a fast, reliable and cashless alternative to taking a taxi. He loves the service because so far it has been on time, door-to-door, cheaper than a cab and he doesn’t have to worry about having cash in his wallet at the end of a big night out.
New media has proven wonderful at connecting people who can provide a service or product with those who require said service or product. The moment I heard about MeeMeep I jumped on board. I’ve been toying with becoming an Airbnb host. Too often I hear people lament that the internet/mobile phones/social media are destroying interpersonal relationships, killing community or negatively impacting our interactions with our world. I believe the opposite is the case – and smart start ups like these prove it.
But these types of innovations aren’t without their problems. After somewhat assuaging my initial concerns about safety (information about safety here, and like Airbnb, it is likely that problematic drivers will eventually be weeded out through the user review system), my next thought turned towards the taxi industry – in particular Melbourne’s taxi drivers, who have fought many a battle for their rights over the last few years.
Already taxi drivers in Europe are voicing concern over Uber’s potential to snatch away market share. With no expensive license fees, Uber’s drivers have much lower overheads and Uber pays them really well, as part of a clear strategy to become a major global player.
In my hometown the relationship between taxi driver and passenger has been an uneasy one. In 2008 Melbourne cabbies peacefully protested against lack of driver safety, after the stabbing of a young driver. His death wasn’t isolated: our taxi drivers are frequently victims of violent attacks and robberies.
Until recently Victorian taxi drivers had to pay over AU$500,000 for their taxi license plate, as well as hundreds in monthly fees, leading to an under supply of drivers and producing a toxic service culture. Such high fees and few drivers meant greater fares and lower service. Passengers frequently complain about the standard of cars, level of communication skills and most of all lack of knowledge of Melbourne’s streets. Taxi drivers’ reputations certainly aren’t enhanced by reports of assault and fraudulent behaviour. I have a friend who takes cabs frequently and could write a book about the ridiculous things she has experienced.
All this for what many says are excessive fares. And yet despite the cost to passengers, our cabbies are incredibly underpaid, earning around AU$29,000 a year. When cab fares go up, this doesn’t often mean a pay rise for drivers.
Fortunately Victoria is now undergoing major taxi reform and the first change to be announced a few days ago was a drastic reduction of licensing fees to AU$22,000, as well as a change in licensing structure. In addition, the state government plans to introduce a knowledge test. But will this be too little too late for a public already embracing a the hip new media based alternative?
With the birth of Uber, consumers now realise they don’t have to pay a small fortune for bad service any more. What they can’t possibly know is what their taxi dollars actually pay for and how little of that trickles down to their driver. Uber has the potential to erode the perceived value of the service taxis are designed to provide and once passengers are used to paying less for more, there will be no turning back.
Perhaps Uber will force the archaic taxi industry to review its business model, in the same way as film distribution practices are being redefined by instant online downloading. Reform is definitely what is needed and clearly here in Australia this is finally starting to happen.
Consider this: a significant number of the taxi drivers were born overseas and an equally large portion are international students, casuals and people working two jobs. If Uber really takes off, it may mean a cheaper ride for you using the latest in new media innovation, but it will be the thousands of immigrants who will suffer the consequences of shrinking market share. This ethical consideration doesn’t necessarily make Uber wrong; but it should give pause for thought.
If you’re still reading, an anecdote:
I remember one driver in particular who picked me up after a Toastmasters course I attended in Parkville. Since I had been at a hotel the young Sri Lankan assumed I must be a tourist. When I told him I was studying public speaking, he asked me whether I was going to be a politician. I laughed. He suggested that one day I might even be PM! We spoke about his ambitions and it turned out he had a degree in Pharmacology from his home country and was currently doing a Marketing and Business double degree in Melbourne. I asked him, with all this education, why was he driving a cab? “It is hard to get other work here”, was his simple response. I asked him when he finds time for study when he drives his cab all night. He said he just makes time. He needed the money and – predictably – much of it he sent back home to his family. “One day when you are PM, I will be your driver”, he announced cheerfully. I responded “one day, when I am PM, you will be my chief pharma legislative adviser!”
I would love to hear other’s stories and opinions – both about taxis and the Uber service. Feel free to share them in the comments.