Monday, June 23, 2014

More on taxis

I will fully cop to the fact that my previous bitching about taxis concerned a classic San Francisco yuppie firstworldproblem but here are some more stories about how taxis in many cities serve people of all stripes exceptionally poorly.

Relatedly, I took an UberX with a friend the other night and the experience was awesome.

I might have liked the option of tipping the the driver (via the app, after you get out of the car), but UberX doesn't allow that. On the other hand, maybe tipping would establish a social norm for companies like Uber to underpay their drivers with the expectation of tips? I really like traveling abroad in countries that don't have a tipping culture; it seems more rational and arguably in the long run leaves labor in a better position since their compensation is assured by contractual terms rather than manners. So maybe it's great that Uber doesn't have tipping, only reviews.

Wednesday, June 18, 2014

What happens when you let people pay to remove ads

Disclaimer: Obviously I worked at Google for 6.5 years so take this with the appropriate grain of salt.[0]

"I wish Google would just let me pay them money to remove ads from this service. WTF GOOGLE IS SO DUMB AND EVIL WHY WON'T THEY DO THIS."

How many times, in various corners of the Internet, have you read some variation of the preceding sentiment?

Now, it turns out, Google is trying to do this with a subset of music videos on YouTube. But when you do this, you need a contract with the rights holder. This is complicated. The rights holder might not agree to your contract terms. For example, they might want more money. So you end up in negotiations. While those negotiations are ongoing, or if they break down, you can't include that music in your paid service.

The Internet's collective reaction has been: "WTF GOOGLE IS SO DUMB AND EVIL WHY ARE THEY DOING THIS?"

Now, YouTube will still host music videos that are not opted into its monetization program, i.e., if you are a band and want to put music videos on the Internet for free, YouTube will host those videos for you. Let's be clear what this means: if you want to distribute a video to a hundred million strangers on the Internet, YouTube will pay for the software and servers and a petabyte of network bandwidth and a small army of SREs holding pagers who will wake up at 3am if too many people in Kuala Lumpur click on your video and get an HTTP 50x error, and it will do so without you paying YouTube a dime. None of that's changing. But if you opt into YouTube's monetization program, you will have to opt into its full, updated monetization program: ads for non-subscribers, and no ads for subscribers.

Note that there is no sensible way to let users pay to remove ads from music videos while also still showing ads to those same users for some music videos. If YouTube did this, you can bet the Internet would collectively scream, once again, "WTF GOOGLE IS SO DUMB AND EVIL WHY DON'T THEY REMOVE ADS ON MUSIC VIDEOS WHEN I PAID TO HAVE ADS REMOVED? I'm unsubscribing from this bullshit service!" The subscription service would fail and YouTube would have to revert to its old model of monetizing via ads only.

In short, "blocking" — i.e., excluding unlicensed music from the monetization program — is an inevitable consequence of having a paid subscription service.

The press has done an abysmal job covering this. It seems that every year my contempt for (most) journalists finds reasons to grow greater and greater. I'm pretty disappointed that the Financial Times, reputedly pretty reliable, appears to be Ground Zero for this particular blast of misinformation.

p.s. As for claims that YouTube has anything approaching a monopoly on online video sharing, I'm honestly puzzled by the claim. Just to take one example competitor, Vimeo is pretty reliable and seems to have rough feature parity, including embedding in external sites. Vimeo's content is included in Google's video search corpus (example) and therefore shows up as a thumbnail image in Google web search, just like YouTube videos. If you need to make money, Vimeo has a few built-in monetization options; if those are insufficient, there's a lot of innovation occurring in the world of funding, and in my opinion the Patreon/Subbable model seems much more promising for creators with a small-to-medium-sized audience than Spotify-style monetization, which currently amounts to "we'll give you 0.0001 pennies per stream play so that both the company and the artists can lose money hand over fist!" Is it really true that Adele fans will face substantial (or even non-substantial) barriers to watching her music videos if they're on Vimeo? And that's just one competitor. The upshot is that indie labels are probably wrangling with YouTube over licensing terms not because it has anything like a monopoly, but because they think wrangling with YouTube will make them more money than all the other alternatives. Which is perfectly fine — more power to them, negotiating the best deal is essential in business, etc. — but we should not misread the situation.

[0] On the other hand, one benefit of no longer working there is that I can write stuff like this post, just like I used to before I worked there. Arguably, working at Google made me less predisposed to harshly criticizing misinformed critics of Google.

Uber and taxis in San Francisco

Uber is a national story now, but this post from a former colleague reminded me of a little fact about Uber's origins that many observers outside of San Francisco probably don't know.

Before Uber existed, San Francisco taxicabs were extremely unreliable. On busy nights, you would commonly call a cab dispatching company on your cell phone, talk to a dispatcher who promised that a cab would arrive, wait half an hour or more, and still have no cab show up. This only has to happen a couple of times, on a chilly San Francisco Saturday night while your date stands on the street shivering in her dress and heels, before you start saying to yourself, "Fuck all taxicab companies, forever."

Conversely, I speculate that it was not uncommon for cab drivers to receive a call, only to have the passengers disappear, since they'd grabbed another cab that happened by sooner. In fact, once I concluded that taxi drivers were as likely to flake out on me as not, I started doing this myself. What else could you do?

In other words, game-theoretically, taxicabs and passengers were stuck in a low-trust equilibrium. Passengers could not rely on cabs, so they would grab any cab they could, even if they'd called one. Cabs could not rely on passengers, so they would pick up any fare that looked promising, even if they had been dispatched. A taxi company could have disrupted this equilibrium by offering reliable service and building a brand name as such. None of them did. Much like your local cable company, they were collectively content to sit on their government-protected oligopoly and treat customers like garbage.

(Notice that passengers can't disrupt this equilibrium: there's no equivalent "union of passengers" to which a reputation for reliability could be attached.)

The most important thing about Uber, at least initially, was not that you called it with a handy smartphone app, or that Uber cars were fancy black limos, nor even that they always accepted credit cards.[0] It was simpler than that: Uber cars came when you called. Uber achieves this result through a variety of means, but the most obvious is simply holding individual drivers accountable for every ride.

Therefore, at least in San Francisco, the whining of taxi companies exposed to competition from Uber and Lyft is the whining of any industry that serves its customers badly, and then is exposed to superior competition that serves its customers well.

Uber's initial success in San Francisco was a key stepping stone in their rise to national prominence. One wonders whether Uber would exist today if even a single SF cab company had served customers reliably.

[0] p.s. The credit card thing. Every SF taxi rider has had this happen: the driver has the credit card reader in the car, staring you in the face, but the driver says: "Sorry, it's not working." Now, if this happened once in a while, you might believe it. But it happens every single time. Is it really the case that every single credit card reader in the SF taxicab fleet is out of order 100% of the time despite a good-faith effort to keep them operational? Or is it much more likely that the driver is trying to cheat on his taxes, which is made easier if he forces all his customers to tip him in cash? Or else the taxi company is cheating on its obligations to its drivers by keeping tips paid on credit cards for itself? And now this confederacy of cheats wants the government to protect them from competition? Do you feel sympathy for this band of cynical hypocrites?