Information Superhighway Crash

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The Internet has laid waste to bookstores, roughed up newspapers and drained profits from the entertainment industry. And now the Internet is hurting … taxicabs?

Well, yes, apparently so, if you believe the cabbies who drove around Los Angeles City Hall last Tuesday morning, honking to protest the new Internet-based competitors in their industry.

The source of this digital decimation: smartphone apps that let folks who need a ride hook up privately with car owners who are willing to drive them to their destination, for a “donation.”

Cabbies are upset, obviously, because if word gets out that a traveler can hitch a ride with a polite person who actually observes most traffic laws, well, the threat could be an existential one.

A couple of things are immediately interesting about all this. One is that there seems no end to the industries that find themselves in the crosshairs of the Internet. Retailing, advertising and television, as we knew them, have been forever diminished by the Internet. Of course, the print version of Newsweek magazine is dead, and music CDs are not dead yet but breathing hard. There’s even talk about how there will be less need for physicians soon, thanks to the Internet. And now with the growing popularity of online, personalized radio stations, you have to wonder about the future of all those broadcast FM stations. (For a sign of stress, see last week’s article about the sudden bulge of deeply discounted radio ad time.)

The other thing that’s interesting has less to do with the Internet and more about the specifics of this fight between L.A.’s taxis and the ride-sharing app companies. (See the story on page 6.)

The city apparently is serious about squashing these tech startups. It sent cease-and-desist letters last Monday to Uber, Lyft and Sidecar, the three ride-sharing operators in Los Angeles. Drivers are subject to arrest and their cars may be impounded.

The city’s taxicab administrator, Tom Drischler, said that it’s a hazard to have what amounts to unregistered taxicabs running around. The cars haven’t been inspected and the city doesn’t know if the drivers have insurance. “In our mind, that poses a risk,” he said in an interview with the Business Journal, but apparently he hasn’t ridden in an L.A. cab in a while. The regulated ones seem plenty risky to me.

The drivers often are rude, reckless and entirely unfamiliar with credit cards. I once couldn’t find the seat belt in the back seat of a cab, but it didn’t matter. The seats were so sticky there was no danger of being ejected in a crash.

I imagine a lot of app users suspect that the ride-share drivers may not be fully insured. And those users probably know, if only subliminally, that they are taking a chance on an unregistered driver. But they apparently conclude that, as in most matters in life, there’s a tradeoff; they’d rather accept the unknown risks of a ride-share service than the known risks of a taxicab. That’s a free choice in an open market.

But the cabbies don’t want an open market. They’d rather have it closed and protected. And the city appears eager to oblige the unionized cab drivers (as opposed to, say, nonunionized trash haulers and port truck companies, which have been targeted for extermination by City Hall).

The Internet, in this case as in many others, has done nothing more than provide a new way to get old goods and services to the customers. It is giving consumers more choices. It is heightening competition where it was stunted before.

As for the cabs, well, maybe they should take this as a wake-up call. They could clean up, offer new services and accept credit cards.

After all, the best way to overcome new competition is to improve.

Charles Crumpley is editor of the Business Journal. He can be reached at [email protected].

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