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posted by janrinok on Friday December 19 2014, @06:19PM   Printer-friendly
from the for-richer-for-poorer dept.

After Uber's success, nearly every pitch made by starry-eyed technologists “in Silicon Valley seemed to morph overnight into an ‘Uber for X’ startup" with various companies described now as “Uber for massages,” “Uber for alcohol,” and “Uber for laundry and dry cleaning,” among many, many other things. The conventional narrative is this: enabled by smartphones, enterprising young businesses are using technology to connect a vast market willing to pay for convenience with small businesses or people seeking flexible work. Now Leo Marini writes that the Uber narrative ignores another vital ingredient, without which this new economy would fall apart: inequality.

"There are only two requirements for an on-demand service economy to work, and neither is an iPhone," says Marini. "First, the market being addressed needs to be big enough to scale—food, laundry, taxi rides. Without that, it’s just a concierge service for the rich rather than a disruptive paradigm shift, as a venture capitalist might say. Second, and perhaps more importantly, there needs to be a large enough labor class willing to work at wages that customers consider affordable and that the middlemen consider worthwhile for their profit margins." There is no denying the seductive nature of convenience—or the cold logic of businesses that create new jobs, whatever quality they may be concludes Marini. "All that modern technology has done is make it easier, through omnipresent smartphones, to amass a fleet of increasingly desperate jobseekers eager to take whatever work they can get."

 
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  • (Score: 2) by urza9814 on Friday December 19 2014, @07:11PM

    by urza9814 (3954) on Friday December 19 2014, @07:11PM (#127550) Journal

    All you're saying is that taxi services can exist without wealth inequality. Which is certainly true, because they've pretty much always existed in one form or another.

    TFA is being far more specific though. There are lots of taxi companies, they're focusing on the specific features that allow Uber to beat out the competition. And apparently one of the keys to their success is having fairly desperate drivers willing to work more and accept lower pay than the competition. People willing to put thousands of dollars of their own personal property on the line for a $20 fare. That doesn't happen without significant wealth inequality.

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  • (Score: 2) by strattitarius on Friday December 19 2014, @07:21PM

    by strattitarius (3191) on Friday December 19 2014, @07:21PM (#127553) Journal
    Excellent point about how much they are putting on the line for a relatively small return.
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    • (Score: 2) by ikanreed on Friday December 19 2014, @08:32PM

      by ikanreed (3164) Subscriber Badge on Friday December 19 2014, @08:32PM (#127577) Journal

      Yeah, and it's pretty clear that the supply side of Uber is going to blow out sooner or later.

      Like when people get tired of scrubbing vomit out of their back seat, they're going to wonder if it's worth it.

      When it stops being yuppies enjoying a new experience, and starts being grouchy assholes taking the driver for granted, taking our their problems on them like any other retail employee. People are going to ask if they are maybe underpaid.

      When serious liabilities start adding up, they're going to wonder if it's worth the risk.

      Uber is fueled mostly by novelty. It won't die, but it'll start accumulating everything that makes people not like taxis.

  • (Score: 2) by TheRaven on Saturday December 20 2014, @09:05AM

    by TheRaven (270) on Saturday December 20 2014, @09:05AM (#127700) Journal
    One of my colleagues recently did a study comparing Uber's prices to a big data dump that someone had got of all taxi rides in Manhattan over a long period and found that Uber was typically slightly more expensive than a taxi. Their benefit is not price, it's convenience, and their business model comes from having a very scalable dispatcher service.

    Most taxi companies still use a human (aided by a computer for larger fleets) to handle dispatching, which means someone has to answer the phone and make decisions. This doesn't scale to a huge number of taxis, so you need multiple dispatchers and you need to pay them even when they're not really doing anything. Uber has a fully automated dispatcher, which can handle an enormous fleet. The cost of running their service is a few programmers and a couple of servers, but per taxi it's trivial.

    They also benefit from payments. Handling cash in large quantities is expensive. Uber doesn't take cash, and they have a sufficiently large volume of credit card transactions that they will get a better rate than smaller taxi companies.

    Finally, they benefit from convenience for the user. If you use Uber, then you've got a single app that lets you book a taxi wherever you are. No more having to hunt the number of a local taxi company when you travel, just step off the plane and you can have a cab waiting.

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