NYC Cabbies Who Resisted Credit Card Machines... Now Making More Money Because Of Them

from the resisting-technology dept

A rather common theme around here is how often various industries resist the use of new technologies, fearing that those technologies will somehow harm or even destroy the industry. And yet, before too long, the opposite turns out to be true. Remember how Jack Valenti declared the VCR to be the "Boston Strangler" to the movie industry? Just a few years later, revenue from VCR rentals and sales represented a massive part of the movie business's yearly income. It happens over and over again. The NY Times has a different kind of example of the same basic thing. Two years ago, Mayor Bloomberg in NY pushed for taxis to be required to take credit cards. The cabbies resisted, complaining that it would cause all sorts of problems. They even went on strike over the issue.

And yet, two years later, having easy to use credit card readers in the back of every cab means that more people are taking cabs, because it's easier, and they tend to tip more as well. Part of that is because the machines have "preset" tip suggestions that many riders use, which often result in higher tips than average. While the article still quotes a few angry cab drivers who insist that higher tips aren't true, the reporter was able to review the receipts from a few cabs and found that the average tip was 18%, with the preset tip suggestions being used more than half the time. While it's still early, it certainly seems like this was yet another overreaction to new technology that has actually ended up helping, rather than hurting.
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Filed Under: cabs, credit cards, nyc, technology

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  1. identicon
    Doctor Strange, 9 Nov 2009 @ 9:40pm

    I know that the Valenti quote is a common whipping-horse here at Techdirt, but if you actually read Valenti's testimony it's very interesting.

    Was Jack a little nutty? Maybe so. But he certainly was unabashed in floating every possible argument in his organization's favor. In some sense, his testimony reminds me of an attorney's closing statement: it's his job to make sure that all the facts and evidence are construed in the best possible light for his client, not to help the other side win or help the jury find a "balanced" verdict.

    Did Valenti underestimate the value of the rental and home video markets? Absolutely. But WHY did he so grossly underestimate this? The implication at Techdirt is, of course, that Valenti was just a short-cited idiot, incapable of perceiving the vast new markets opened up by this technology. And this may be partially true, but I think there's more going on.

    Valenti, in his testimony, makes a number of predictions that, in hindsight, seem pretty reasonable, and it's interesting that they didn't come to pass (or they did, but in a different way). For example, he predicts that VCRs would rapidly advance far beyond the VHS standard:

    In those days, first, there was only about an hour's recording time on a cassette. Nobody could really collect cassettes because you couldn't record long enough. Soon, they got up to 2 hours, 3 hours. Now, they are up to 6 hours. They are going to be up to 24 hours. Pretty soon, they will have a cassette that will record all year long, I suppose.

    Improbably, that never came true. In fact, only now with the advent of DVRs have 24+-hour recording capabilities come to home devices, and even then you only get the one device. You can't just pop in a new "tape" (or hard drive) and get another 24 hours of recording time.

    Valenti also assumes that home recording would be and remain popular. I don't know if my experience is typical, but it turned out that home recording of programs on TV was a novelty that wore off quickly. It was a huge pain in the ass. You had to set the tape, set the timer (always a cryptic experience, even with later VCRs that had onscreen displays), label the tape, etc. I can count on one hand the number of times I actually used the "record" feature on a VCR after about 1985. This was not because recording something on TV isn't something people want to do, but because no incarnation of the VCR ever made it particularly convenient. DVRs, of course, show that when it is convenient, people do it incessantly.

    Valenti further assumed that technology to edit out commercials was surely right around the corner:

    Being advertised today in all the video magazines, and if any of you take video magazines, here is a marvelous little device called the Killer. It eliminates those black and white commercials. You put the Killer onto your Sony and it automatically takes out the commercial. You don't like the Killer, try the editor. The editor will do the same thing. It will wipe out commercials.

    In fact, and again rather improbably, this technology either never worked well enough or never caught on. I remember taking the commercials out of the programs I recorded as a little kid. You had to actually sit there while the program was recording, hit pause as soon as a commercial came on, and then psychically know when the program was about to come back on and hit unpause. Even then, the program would come back from the non-commercial funny as the tape wound up to speed. Again, we have finally (about 25 years after Valenti's testimony) developed DVR technology with a 30-second-skip button and a fast-forward button that rewinds just a little bit when you stop that makes skipping commercials really convenient.

    Valenti's statistics about the rental and home video market do not reflect what eventually happened. He cites a study (which he points out was not MPAA-funded) which stated that only a third of VCR owners had any prerecorded cassettes and less than half had ever rented one. Those figures would certainly change drastically.

    In a portion of the testimony that will certainly make most readers here completely apoplectic, Valenti argues directly against the first-sale doctrine, opining that leaving it alone will force movie distributors to either offer cassettes for rental (under very limiting contracts with video stores) or sale, but not both (since distributors will otherwise have no way of getting a cut of rental income). Valenti, here, was mostly correct, except that what happened was for valuable movies that were expected to rent well, the tapes were offered at egregious prices ($100 or $150) initially for rental shops to buy, followed by a massive price drop later after the rentals had died down. So consumers' choice to rent or buy was indeed constrained, at least temporarily when the movie first came out on video.

    Surprisingly, Valenti never mentions tape copying as a threat. It's unclear why, but if home recording was a pain, then tape copying was certainly worse. You needed not just one, but TWO expensive VCRs, enough knowhow to cable them together, and then the time to have one play back and the other record at the same time. Copying a two-hour movie would take two hours, and the copy's quality wouldn't be quite as good as the original. Even when VCRs became cheap-as-free, nobody I know ever spent much time copying tapes. By that time, Macrovision had also made commercial copying an even bigger pain.

    It seems to me that the massive markets that Valenti failed to predict were actually enabled by limitations of the VCR technology, such that the VCR became less of a videocassette recorder and more of a playback-only device. Surprisingly, this lasted for decades until the introduction of DVD players, which mostly couldn't record either (but nobody cared).

    It took the invention of the DVR to make recording attractive and convenient, but DVRs are suitably limited in other ways: it is fairly inconvenient for most people to expand their DVRs to have virtually infinite capacities, and it is also inconvenient for people to transfer programs they have recorded onto their computers to share with their friends. Yes, I understand that both of these things are possible for hackers and computer enthusiasts with a lot of time and patience, but for most people these activities are still beyond the pale.

    When Valenti stated that the VCR would be the "Boston Strangler," he wasn't referring to the gimpy videocassette player that we all, in hindsight, remember so fondly. He was referring to a technologically advanced device that would make high-quality recording, storage, and transfer of video programs convenient, attractive, and affordable. He thought this would come only a few months or years after the first VCRs, but he was about two decades early. With DVRs, computers, and the Internet, the hypothetical device he feared has now come to exist, and we will see how many markets it creates, and how many it strangles.

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