Sunday, August 21, 2011

SFMTA May Seek A Share Of Taxicab Advertising Revenues In The Future. By John Han.

The San Francisco Municipal Transportation Agency (MTA) may explore ways to get a share of taxi advertising revenues in the future. 

Recently, the United Taxi Workers (UTW) filed a public information request, and obtained materials regarding the City's regulation on 5% credit card fees, rear seat Passenger Information Monitors (PIMs), and electronic waybills.  

Included in the material was a copy of an email sent by MTA Deputy Director of Taxi Services Christiane Hayashi dated March 25th, 2011, and addressed to Sonali Bose, the agency's chief financial officer, and other recipients. 

In that email, Hayashi responds to two questions being posed at her by Nathaniel Ford, who was the MTA chief at the time, and backed up by Sonali Bose, regarding the distribution of ad revenues generated by rear seat PIMs. 

Bose’s first question to Hayashi was, “Who negotiated the 90%-10% split and under what authority?”  Her second question was, “Why isn’t the MTA getting a portion of the ad revenue?”

The following is an excerpt from the email in which Hayashi answers Bose’s two questions…


“As to the question of ‘who negotiated the deal,’ I guess my response is that it’s not a deal so much as a regulation – while I did my due diligence and circulated a draft memo to the TAC, it comes from a place of regulatory authority, not negotiation.  The SFMTA has no privity of contract with the equipment providers – Veriphone, Wireless Edge and CMT have contracts with the taxi companies. 

Why 10% to the Driver Fund?  Because, like the medallion sales program, I felt it important to be able to point to some benefit to drivers in order to make the very unpopular change go down more smoothly. 

If he question is why not a share to the SFMTA, I guess my answer is that this is equipment that is owned by third party vendors and being installed at no cost in privately-owned vehicles driven by independent contractors.  We come at it as a regulator, and the permit fees we receive are supposed to cover the cost of administrating our program.  I think that I would have gotten tremendous resistance from both companies and equipment vendors if I tried to demand a slice of advertising revenues for the SFMTA as part of the price for a company to get a waiver from the regulator.  It would be like granting a building permit on the condition that the Planning Department could have a share of the advertising revenues from the building.

Of course, as we have discussed previously, there may be a place for bringing taxi advertising generally into the SFMTA, but if we do it would have to be a cooperative situation with the companies, where we agree to bear the administrative burden and use our greater negotiating power to increase their revenues in exchange for a share.  That is a distinct possibility that we can continue to explore.  I think the companies would embrace it if we can improve their advertising yield and reduce their administrative costs.  I think I mentioned to you that the good time to broach this would be when we propose uniform top lights for all taxis with uniform advertising space that we could manage on behalf of the companies.  That is something we accomplish during the next fiscal year if that is the policy direction. 

I hope I have explained a very messy situation.  Let me know if you have further questions.”

A scanned version of the emails text (sometimes hard to read because it's scanned) is available and can be viewed by CLICKING HERE.  

(Before going any further, it should be noted that this is not a personal attack against any person.  Neither is there an accusation of insidious motives, maliciousness, or conspiracies on the part of an individual or an agency.  This author is not attempting to pass judgment on whether the MTA’s interest in taxi ad revenue is good or not.   

The MTA has clearly demonstrated an interest in gaining taxicab ad revenue for itself, and I thought the taxi industry would benefit to know this.  It is up to readers to decide for themselves whether they think the MTA’s interest in ad revenue is insidious, malicious, a conspiracy… or perhaps innocent and perfectly okay, or even good for everyone.)

One Important Thing To Point Out Though: 

In the above quote, Hayashi mentions to Sonali Bose that the Driver Fund would get 10% of add revenue generated from rear seat PIMs.  She said, “Why 10% to the Driver Fund?  Because, like the medallion sales program, I felt it important to be able to point to some benefit to drivers in order to make the very unpopular change go down more smoothly.”

What Hayashi is talking about here might seem okay if it actually meant what it seems to say.  In other words, if the Drivers Fund skimmed 10% right off the top of all ad revenues generated from rear seat PIMs, then that may add some appeal, and be a persuasive factor for taxi drivers to give PIM ads a second look. 

Additionally, I saw Hayashi tell taxi drivers at a town hall meeting that the Drivers Fund would get 10% of add revenue from rear seat PIMs, but without distinguishing to them whether it would be 10% of gross or net ad revenue.       

But in her October 15, 2010 memo titled, “Processing Non-Cash Payments in Taxis”, she clearly says, 

“Ten percent of ad revenues in excess of those required for equipment installation and maintenance shall be paid into the Drivers Fund.”  (Memo, “Processing Non-Cash Payments in Taxis”, October 15, 2010.  Bold text mine.) 

In other words, she means net revenue. 

There could be quite a significant difference between the dollar amount that could go to the Drivers Fund if 10% were skimmed right off of the top of all ad revenue vs. what the Drivers Fund would get from only 10% of what’s left after installation and ongoing maintenance costs have been paid for.

So which one will it be?  It's important to make the distinction, particularly when taxi drivers who cannot attend all TAC meetings, are instead being educated and given the information at town hall meetings.  

At this point, I feel it necessary to say that this is not a personal attack, a conspiracy theory, or an accusation of malicious intent.

There is clearly a discrepancy in the manner in which the 10% of ad revenue to the Drivers Fund was presented as information, and I am simply making the observation.

For example, in Sonali Bose’s May 6th, 2011 memo to the MTA Board of Directors, she tells the Board that the Drivers Fund would receive 10% of ad revenue from PIMs, also without distinguishing whether the percentage would come from gross or net revenue.  But her words may could easily imply a percentage from gross revenue. 

She wrote…

“Subsequent to the August 18, 2010 TAC meeting, in October 2010, communication was sent to taxi companies detailing the parameters of the Program, including the elements listed above, with one change: the TAC had identified that it was administratively unworkable to allocate advertising revenue to particular drivers because drivers use different vehicles every day and may drive shorter or longer shifts each time, so the Program was amended to require instead a ten percent contribution of advertising revenues generated by the PIMs to the Driver Fund.”  (Sonali Bose, May 6th, 2011 memo:  “Credit Card Charges:  Follow Up on Taxi Issues Raised at the April 5, 2011 Board Meeting”.  Bold text mine.)

That this distinction was not clearly made either in Sonali Bose’s May 6th memo, or by Hayashi at town hall meetings is, in my opinion, questionable and deserves clarifying.

I should not be laughed off, dismissed, or pegged as a conspiracy theorist for seeking clarification, since it is a valid inquiry.

It may also be worthy to note, I am on the TAC and do not recall that we as a council identified that it was, “administratively unworkable to allocate advertising revenue to particular drivers “. 

Without going and checking the actual audio of past TAC meetings, my recollection is that Taxi Services had informed the TAC during a meeting that a 50/50 split with the driver of the vehicle would be unworkable, (as was originally proposed in the draft version), and that a 90%-10% split had been arrived at after MTA had had talks with company managers.       

9 comments:

  1. Hi John,

    It's good to see that you're not making personal attacks.

    I guess i'll start with the last first.

    1. The 10% - I attended both Town Hall meeting and a TAC meeting where the question was discussed.

    A. I seem to recall asking Hayashi why the percentage had been cut from 50% to 10% at a meeting and the answer was that she wasn't able to get 50% only 10% and I believe the conversation was with the vendors - not the companies.

    B. Jim Gillespie at TAC spoke about the virtual impossibility of figuring out how much money should go each driver. I don't think that there was a vote but there certainly was a general agreement of people in the room. Maybe this was a meeting you didn't attend or perhaps you were breathing in Bill Mounsy's air and floated off to La La land.

    C. “Ten percent of ad revenues in excess of those required for equipment installation and maintenance shall be paid into the Drivers Fund.” Was a position stated by Hayashi on several occasions including a few meetings.

    I don't actually see why you are confused. Getting a percent of the "profits" is standard business practice. Getting a percentage of the gross is rather unusual - if it happens at all.

    It would create a potential situation where a company could loose money and still pay a percentage to someone meaning that would be losing more money ...

    I don't think so John. A percentage of the profits is the only thing that makes sense and you may be the only person I've ever met who wouldn't understand that.

    D. Although you claim that this isn't a personal attack - you act like a prosecuting attorney gathering evidence of a crime.

    Your comparing of different sentences written at a different times is a case in point.

    I don't think Sonali Bose, for instance, felt the necessity of specifying that the 10% in question was of the profits because - see C.

    Also the context of Hayashi's answer to Sonali Bose is not clear from your post. Sonali is actually asking the question on behalf of Nat Ford - who did indeed think of the cab industry as an "income stream" for the MTA.

    I think that Hayashi gave her position in the paragraph beginning.

    "If he question is why not a share to the SFMTA, I guess my answer is ..."

    In any case, Nat Ford is no longer there so your mucking around in the past strikes me as totally pointless. We have yet to see what Reiskin's thoughts on the subject are.

    The question is: Should the MTA be getting a percentage of advertising revenue? And I think the answer is "no" for the reasons Hayashi stated in the paragraph above.

    Or if it does get revenue it should be statement that it someone goes back to Taxi Services for our use.

    Ed Healy

    ReplyDelete
  2. If one is so ignorant that he do not know about hundreds of deals are made where a percentage of
    gross revenue is shared. Someone should go and
    look at the deals made by Golden Gate Rec. Park
    which owns the land where couple of restaurnt are
    built at Ocean Beach and they shared a part of
    gross revenue. Secondly as said that this item
    of back seat will not be acceptable to the drivers and efforts are to make it acceptable
    to them "SMOOTHLY". To bad, this item is to benefit financially one of her known friend
    and the majority of the taxi drivers had rejected
    it altogether. It is a huge blow the the efforts
    of SFMTA to move Muni buses at faster pace. Why
    Muni shut down North bound Market street at 10th and 8th street for private vehicles ? Simple, they want to move buses faster. 50 % business
    of taxi pick ups and drops is on Market street.
    These PIMS will delay a bus nearly 3-4-5 minutes
    whereas current credit card machines in front of the drivers takes only 10 seconds. ( --10 Seconds -- ). Is this not loud and clear.
    So she is destroying SFMTA efforts to move buses
    faster. There is lot to say about it but in simple it is gross mistake to put 2ND credit card
    machine.

    ReplyDelete
  3. Here is the answer from Tariq Mehmood.

    A blogger keep talking about that there were
    no cabs on August 2nd. Tariq did not announced
    a strike while he was busy talking to SFMTA higherups. He equally believe in negotiations
    before coming to protest or strike decision.
    If any one else announces a strike, that is not
    Tariq's responsibility. The blogger got no
    respect from cab drivers so he is trying to
    waste everyone time. He wants attention like
    a 6 month old baby crying. Sorry we got no time
    for you.

    That blogger is trying to read tea leaf and maple and bannana leaf. I got no time for nonsense. When I will announce protest or
    strike, everyone once again will see it that it
    is big and strong. Now this blogger may spent
    months writing all about this comment. I got no
    more time to waste time for this person.
    People want change about how SFMTA is handling taxi issues.
    On my first walk into SFMTA meeting with 60 people, the blogger said that's it. Later-on
    that blogger started to realize that he was wrong as protest size kept growing. Let me make it once more clear that when protest will be announced it is going to be strong. Thanks to "Taxitownsf Blogs" for writing fair blogs and commenting very clearly and respectfully.

    ReplyDelete
  4. Ed Heally, your blogs and comments about Tariq is full of hate, nonsense and against drivers
    of San Francisco. Your interest in Christiane
    does not mean that you insult anyone and write
    nothing but lies. What is
    personal attack. Talking about Hayashi going
    to fishing trip with two cab companies is not
    personal attack. It is realty and she should
    not have done it at all. She is not a driver making $ 25,000 a year but she is an attorney
    whoes salary is somewhat in the range of 150,000
    a year. She knows moral code of this society.
    You keep talking nonsense of criminal attacks,
    criminalizing, etc. etc. This all you are actually behaving when you are attacking others
    who are representing the drivers. You have used every wrong word. You said Tariq Disciples.
    How many are they. In City Hall protest the
    cabs were blocking 3-3, 4-4 blocks away. Several hundreds drivers were there. As far
    as the eyes can see, the cabs were there. The other people knows more strong language than you but they are ignoring you. Why you want attention ?
    That is needed by the adults who were not treated well by parents and other while such adults were child. You must stop anti drivers
    camapign. In the long run these drivers will
    not treat you nicely as you are trying to
    damage their fight for fairness. You have used the word criminal. Go and file the case with 850 Bryant. What are you doing here ? You been
    using this word to scare others and all nonsense
    language you could use, u dit it.

    Why don't you give back your medallion who you
    got it only for driving and now you are collecting check from Cab company for giving them
    to use it for renting other drivers. Give this medallion to Green/UTW and tell them
    that you will drive so many shifts and rest of the shifts they should give it to the drivers
    for free. Can you do it ? NOPE

    ReplyDelete
  5. Hi John,

    I see all these guys who used to sent me idiotic hate mail have gravitated to your blog. It appears to be a good place for them.

    Keep up the good work.

    Ed Healy

    ReplyDelete
  6. Do I detect an air of hostility riding the crest of the wave between John and Ed.
    By the way Ed I didn't understand your comment about Bill Mounsey and La La land maybe you would be kind enough to elaborate on that.
    Thank you.

    ReplyDelete
  7. Hi Dick Mc Kenzie,

    You said, "Do I detect an air of hostility riding the crest of the wave between John and Ed."

    My answer is - it's mostly coming from Ed.

    ReplyDelete
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    ReplyDelete

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