Will Uber Pop The Medallion Bubble?


In a lengthy report, Emily Badger explores what the rise of Uber and Lyft means for taxi medallions, whose value has risen astronomically in recent years:

In New York, taxi medallions have topped $1 million. In Boston, $700,000. In Philadelphia, $400,000. In Miami, $300,000. Where medallions exist, they have outperformed even the Standard & Poor’s 500-stock index. In Chicago, their value has doubled since 2009.

Now, however, a market built on restricted supply is showing cracks with the arrival of start-ups that turn anyone with a car into a driver for hire. In Chicago, those cracks have triggered fears that medallion values are tottering. They have given rise to a high-stakes lawsuit, tentative new regulation and a glimpse of how this same clash between old power and new technology could play out in other cities. Throw open the market — to amateurs, part-timers and the underemployed (and whatever they drive) — and medallions lose their exclusivity. Without which, they lose their value, too. …

That, Uber says, is precisely the point. The five-year-old San Francisco tech company — and the envy of Silicon Valley — has rapidly and strategically infiltrated taxi strongholds by enabling consumers to hail rides electronically from their smartphones. Uber and companies like it argue that regulations intended for taxis don’t apply to a service no one could have envisioned when the laws were written. And consumers don’t seem to care what those laws say. They are piling in and leaving cities to chase after a fast-expanding business.

Meanwhile, Eric Goldwyn considers the conflict between traditionally trained drivers and disruptive tech:

Startups like Uber argue that technology can transform the casual driver into a professional. With G.P.S., anyone can navigate efficiently. Real-time passenger feedback means that drivers who consistently receive low ratings can be dropped from the service. “Tech tools have changed the whole environment,” Josh Mohrer, the general manager of Uber’s New York office, told me. The upstarts can provide a range of ride options at different price points, improve driver efficiency by matching drivers with rides more quickly, and weed out bad drivers. …

There is now talk within the taxi community of developing mobile applications to compete with the T.N.C.s. [transportation network companies like Uber]. [Taxi union leader Bhairavi] Desai sees this as a viable strategy, one that could stitch together the obvious benefits of technology and professionalism. “In cities where ride-share has grown, it’s because professional taxi drivers have switched to the other side,” Desai explained. “The Uber model isn’t sustainable without professional drivers.”

Previous Dish on Uber here and here.