Thanks for the article! The bit about the monthly vs. lump sum payments is very interesting, as well as the distinction between getting it in the form of a tax credit vs. a separate payment from a different administration.
> "But I think it does raise questions about Lyft’s (and Uber’s) claims that its drivers are independent contractors. Theoretically, when I drive for Lyft I’m acting a self-employed entrepreneur who is directly providing a service to my passengers, with Lyft merely acting as a matchmaker. But that seems hard to square with Lyft keeping more than 70 percent of the revenue on some rides."
I was wondering about this as well––do you know why or when Lyft (or Uber) takes a bigger cut of the fare total? I've seen "median share" reports online but I'm curious if you know how the algorithm/model works such that occasionally the share might be as high as 70%. My partner's father also drives for Uber and the same thing happens, but (as far as I know) he doesn't know why.
I think Uber and Lyft used to have a more transparent formula where they'd take a fixed percentage of the fare and pass the rest on to the driver. Now I think what the customer pays and what the driver gets are fully decoupled. They charge the customer whatever the market will bear. And then they pay the driver mostly based on time and difference—with some relatively small bonuses during periods of peak demand. So what the customer pays is more variable than what the driver gets, and when the customer pays a lot then Uber or Lyft get a bigger share.
How does the math work out with Lyft losing all that money, keeping 70% of the revenue, and basically just running a peer-to-peer matchmaking service? I mean, I get they have servers and software to run and support, but there are lots of other apps that do (admittedly to my ignorant eyes) similar things and don't seem to need that much money to run them. I know you've reported on ride-share economics before, but I feel like I'm missing something here.
I would like it, too... and the costs now should be more like operating costs rather than up-front R&D since once the app is there and established, the Ops should be getting kind of "routine".
I understand there are costs with maintenance and new features, but the app is becoming boring, as evidenced by people just wanting to treat the service more mechanically than as a novelty, as evidenced by most preferring to ignore the driver.
Your Elon Musk buying/getting involved in Twitter article plus reading this made me think an interesting thought experiment would be to map the changes/analysis Elon Musk makes as he goes over Twitter and see how they could apply to Lyft (although you will have much less information available and be required to speculate).
As to the revenue split, are there other markets where independent contractors provide fully-commoditized service(s)? If so, what is the wage negotiation power/revenue split between the marketplace and the contractors? Oh plus the apparent duopoly in play here as well.
Nice! And I like the Sir E.U. track too - my favorite kind of hip-hop, layering absurdities on top of cultural detritus.
Thanks for the article! The bit about the monthly vs. lump sum payments is very interesting, as well as the distinction between getting it in the form of a tax credit vs. a separate payment from a different administration.
> "But I think it does raise questions about Lyft’s (and Uber’s) claims that its drivers are independent contractors. Theoretically, when I drive for Lyft I’m acting a self-employed entrepreneur who is directly providing a service to my passengers, with Lyft merely acting as a matchmaker. But that seems hard to square with Lyft keeping more than 70 percent of the revenue on some rides."
I was wondering about this as well––do you know why or when Lyft (or Uber) takes a bigger cut of the fare total? I've seen "median share" reports online but I'm curious if you know how the algorithm/model works such that occasionally the share might be as high as 70%. My partner's father also drives for Uber and the same thing happens, but (as far as I know) he doesn't know why.
I think Uber and Lyft used to have a more transparent formula where they'd take a fixed percentage of the fare and pass the rest on to the driver. Now I think what the customer pays and what the driver gets are fully decoupled. They charge the customer whatever the market will bear. And then they pay the driver mostly based on time and difference—with some relatively small bonuses during periods of peak demand. So what the customer pays is more variable than what the driver gets, and when the customer pays a lot then Uber or Lyft get a bigger share.
My heart goes out to Michael and his family. I hope he gets a good break soon.
How does the math work out with Lyft losing all that money, keeping 70% of the revenue, and basically just running a peer-to-peer matchmaking service? I mean, I get they have servers and software to run and support, but there are lots of other apps that do (admittedly to my ignorant eyes) similar things and don't seem to need that much money to run them. I know you've reported on ride-share economics before, but I feel like I'm missing something here.
Totally agree! It shouldn't cost hundreds of millions of dollars to run an app like this. This may be something I explore in a future piece.
I look forward to it!
I would like it, too... and the costs now should be more like operating costs rather than up-front R&D since once the app is there and established, the Ops should be getting kind of "routine".
I understand there are costs with maintenance and new features, but the app is becoming boring, as evidenced by people just wanting to treat the service more mechanically than as a novelty, as evidenced by most preferring to ignore the driver.
Your Elon Musk buying/getting involved in Twitter article plus reading this made me think an interesting thought experiment would be to map the changes/analysis Elon Musk makes as he goes over Twitter and see how they could apply to Lyft (although you will have much less information available and be required to speculate).
I would also be interested in that followup.
As to the revenue split, are there other markets where independent contractors provide fully-commoditized service(s)? If so, what is the wage negotiation power/revenue split between the marketplace and the contractors? Oh plus the apparent duopoly in play here as well.