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Why Didn't Sidecar's Flex Pricing Work?
I live in Seattle, and nobody I know here has significantly changed the way they think about getting around in the city, as a result of Uber or Lyft. Of course it's more convenient to open an app on your phone and press a button to summon a driver, than to call a taxi company and wait on hold until an operator picks up. And it's reassuring to see a little dot moving across a map on your phone screen showing you how far away your Uber driver is, instead of staring out the window and wondering when your cab is going to arrive. But on price, UberX and Lyft are about the same price as a taxi or less (UberX being the cheaper version of Uber), and sometimes more during "surge pricing" periods. It sounds hip to drop a reference to "taking an Uber" instead of taking a cab, but when cost-conscious people need to get somewhere, they still drive themselves or take a bus, just like they always have.
So I was noodling about writing an article suggesting that a ride-sharing company should try to grab all the market share by implementing a "set-your-own-price" model, which would allow drivers to name their own price for how much they would charge to take a rider from A to B. I even had a specific company in mind: Sidecar, sensitively referred to as the "forgotten stepsister" of Uber and Lyft, should up-end the came and challenge the titans by undercutting them on price. My reasoning was simply that if I want to travel from my house to a location 30 minutes away, a cab might cost $30. But if anybody close by (with a reasonably modern car and safe driving record) can compete on price to take me on that trip, I could probably find someone willing to do it for $10. And with Sidebar not being able to compete with Uber and Lyft on funding or marketing, what have they got to lose by trying a game-changer?
So, beginning of an article sketched out in my head, only to find... that Sidecar has been doing this since February. And nobody noticed. Well, apart from some guy named "Richard Branson", but he hasn't been getting the word out. (All right, be honest: If I hadn't told you that this was an idea backed by Richard Branson, and went with the original article saying it was just my suggestion, would you already be composing comments in your head about what another half-baked Bennett Haselton idea this was?)
So why didn't it change everything? Why do none of my friends talk about "grabbing a Sidecar" to downtown or to the airport?
Well, trivially because there are fewer Sidecar drivers than Uber or Lyft drivers, but that just begs the question: Once a preferable (cheaper) option existed in the form of Sidecar, why didn't more users start trying it out, which in turn draws in more drivers to serve those greater numbers of users? This is the standard textbook economic prediction of what should happen. And while the real world doesn't always follow textbook economic predictions, it's a little surprising to see the reality this far off in this case. A competitor offered a service 50% cheaper than the leading brands, and nobody noticed.
Driver-set pricing has another advantage, which is to blunt criticism of "price-gouging" during periods of high demand. Economists have long puzzled over why Apple and Microsoft don't charge more for their new gadgets, since as long as people are lining up to buy out the stock, sellers could raise the price and still be assured of selling out completely. Various theories abound, including that the act of raising prices would create too much resentment that would cost the company more in the long run. This seems to be the case with Uber, which has long been the target of sarcastic jibes about its "surge pricing", and which was charging four times its standard rate to transport people out of Sydney during a hostage crisis, before the company reversed course after an outcry and offered free rides to passengers trying to leave the city.
Now, most economists would say that raising prices during periods of high demand is what suppliers should do, for various reasons. First, you're going to be providing the good/service to somebody, so by providing it to the people willing to pay the most, you are at least making an effort to provide the service to the person who needs the most. Second, the widely publicized high prices will draw more suppliers into the marketplace to meet the demand, which helps bring prices back down (the standard "surge pricing" notification in the Uber app tries to make this point: "Rates have increased to get more Ubers on the road"). That means even if you're an altruist who planned on burning all the money that you got from driving during "surge pricing", you're still doing more good for the world by charging the highest rate the market will bear. (If you're still feeling guilty about all that extra money, you can donate it to charity rather than "donating" it to your customers by offering them below-market fares.) But I've never heard of a company successfully fighting off charges of price-gouging, by making the economic argument that they were doing the right thing. Usually they just don't engage in a discussion at all, or they cave like Uber did.
But with driver-set pricing, companies could say that they have nothing to do with the sudden price hikes. That's your driver gouging you! And then the driver could justify it to the rider by explaining -- truthfully, in at least some cases -- that they were in the middle of doing something else, when they suddenly got the alert that they could make extra money by providing rides, and it was only because of the high price point that they could justify interrupting their work to come out and drive. By putting it in these personal terms, the drivers would essentially be imparting to their riders the aforementioned economic lesson, the one that no company has ever tried to explain to its customers when it's the company itself jacking up the price. (Although, I expect this would create a new running joke about ride-share drivers: during surge pricing, everybody claims that they stopped whatever else they were doing and came out to "help meet demand", even though some of those drivers must be liars who were already out on the road when the surge hit.)
But in most cases, driver-set pricing would be cheaper than the standard fare set by Uber or Lyft. So why didn't the cheaper option take off? Maybe Sidecar underestimated the disadvantage of only being rolled out in 10 cities -- because Uber and Lyft are deployed in far more markets, they also get name-dropped in vastly more news stories and pop culture references, so even Seattleites won't know what Sidecar is if they only hear about ride-sharing services on TV. Maybe people taking Uber and Lyft rides are consciously or subconsciously trying to be trendy, and there's no point in using the less popular alternative. (Hipsters, on the other hand, now there's a marketing opportunity -- "I'm using this really obscure ride-sharing app, you've probably never heard of it...")
But I think the simpler answer is that the free market is just not the meritocracy that people think it is, or that it's portrayed to be in textbook economic exercises (which would predict that Sidecar should have captured 100% of the market by now). People use what they've heard of, and if a critical mass of influencers happen to talk up a particular product or service at the same time, that gets the snowball rolling, so that still other users will be attracted to the product or service because of the large numbers already using it. Whether the product is objectively "the best" has little to do with the outcome. In a plausible parallel world, Sidecar could have captured more of the initial buzz purely by accident, and led the pack with its flex-pricing model, and now we'd all be talking about Richard Branson's brilliant move that "shook up the industry."
Why is an opinion column being presented as "news"? There's nothing here to suggest that any research or study has been done, it's all Mr. Haselton's opinion of what he thinks is happening. Either stop branding yourself as "News for Nerds", or stop running opinion columns under the guise of "News".
Literally every comment, including this one, is complaining about ol' Benny's worthless post. It's about time to take a hint, slashdot: nobody gives a shit about Bennet's puerile drivel.
What an idiot. He spells out the whole thing but can't see the big picture. Sidecar is hampered by a lack of drivers. Drivers are making more money on Lyft and UberX, so that's where they go. And those companies also have better marketing departments so they get more business. It's really not that complicated.
My life is more important than saving a few bucks by allowing a stoned 16-year-old to drive me around town in a rainy night.
You mean some selfish posters are ruining certain articles for others, who don't particularly mind if Bennett Haselton posts or not...?
If you don't like him posting, SKIP OVER HIS FUCKING POSTS. No one is requiring you to click on that link to read his post, SO DONT FUCKING DO IT.
Coming in here and posting drivel because you dislike him and his is nothing more than you thinking you own this fucking place and your opinions matter more than everyone elses - its as bad as the bullshit "bring back classic" posts which did the same - yeah, ruin it for everyone because you don't personally like it.
How about you go fuck yourself?
its not about disliking him or not, its about the clear abuse of slashdot by this one person trying to use the site as their personal blog.
If people want to read his stuff, there is a section in the site under the user name that allows him to write his crap, and his friends to see his crap.
He could actually post useful info, but the abuse is what is turning me off and i would wager many others
have you seen my sig? there are many others like it but none that are the same
First, most of us think Bennett is an idiot and simply don't want to read his drivel. Slashdot doesn't provide an easy way to ignore his stuff (although other users have written greasemonkey scripts to get rid of him). If he posted comments like that, I personally think that he would be moderated away. If stories were subject to moderation, I think the same would happen. If this were reddit, his posts would never see the light of day.
Second, and more importantly IMHO, is the issue of why is Bennett special? Slashdot links to articles. With the exception of things like ask-slashdot and posts about slashdot itself, everything is cited to an external source. RTFA is a thing, because usually there was an actual article with content. Why does this Bennett guy get to use slashdot as his personal editorial platform? He should have to post this on his own person blog, just like everyone else. And like everyone else, I believe it used to be frowned on to self-promote to slashdot. If you want your articles to show up on slashdot...write good articles and hope other people post them. I 100% believe that if he was posting this stuff on his own blog, it would either not get submitted at all, or the editors would reject it. It simply doesn't meet the quality standards of slashdot (at least the quality standards that there *used* to be). If the articles aren't good enough to stand on their own, why does this post-Dice slashdot feel the need to give this guy a soapbox to stand on?
Slashdot will probably never be what it used to be...but Bennett's crap is one of the most noticeable things that numerous long-time users absolutely hate. The articles often hook you in with an interesting prompt...but the writing is terrible and you soon realize you are reading a moron's rantings. This isn't an ad-hominem attack--I don't reject his articles because they are written by him. I usually don't notice it is a Bennett piece until I am halfway through reading it and say "Oh man, this is terrible" only to look and realize that it is another one of his poorly thought-out editorials which has been given free web-hosting and promotion by slashdot. Every single one of them is bad. If he were to write a decent piece (and preferably post it elsewhere with just a summary and a link on slashdot), I wouldn't complain. But they are all *awful*.
Bottles.
You must be new here, complaining about TFA is the reason most of us come to Slashdot...
Seriously though, the lack of a filter option and the fact that any worthwhile content is invariable lost in wall of textual diarrhoea are quite annoying. If Bennett could learn to condense his ideas down by about 95% and get his own editor tag so he can be filtered out easily people wouldn't mind for the most part.
This is supposed to be "news for nerds", not Bennett's personal blog. Unless you are going to argue that posts about ponies and restaurant reviews would be fine too because, hay, you can just skip over them and let others comment, then complaints about content are valid. This isn't Reddit, the content is supposed to be filtered and on-topic, otherwise why not just go to Reddit or any number of other sites that cater for low quality editorials?
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
Right, assuming that rider demand never switches over to a lower-priced option, it's obvious why drivers would prefer working for Lyft or Uber. The curiosity is why the marketplace is so inefficient that rider demand doesn't switch over to the lower-priced option.
We have a widget marketplace where widgets cost $1 to make, and Lyft and Uber are charging $10 each for widgets. Sidecar is trying to undercut them by selling widgets for somewhere between $1 and $9. In an efficient marketplace, a price war should result, driving prices down to somewhere between $1. Instead nobody's even heard of the new entrant, suggesting the marketplace is really inefficient, to the detriment of consumers and price-competitive suppliers.