📺 "Uber TV" Set To Hit NYC Streets, FHV In-Car Ads Now Legal
City Council bill that allows in-FHV (for-hire vehicle) ad tablets is now officially law. Wall Street Journal says "New Yorkers hate video ads in their taxis. They’re about to get a lot more of them"
NYC Council passed bill in December 2023 to allow for in-vehicle advertising tablets, despite TLC protests and passenger experience with NYC “Taxi TV”
City Council added amendment to bill in February 2024 to add $500 licensing fee for approved advertising tablet vendors
Drivers must receive at least 25% of ad revenue generated by tablets
TLC has not created website that makes it easy for drivers or fleets to understand which vendors and tablets are officially licensed
We also share our opinions about in-car ad benefits for drivers and rental companies, the potential impact on TLC Plate values (and taxi medallions) and the need for Uber/Lyft to also share revenue from in-app advertising
As we covered late last year, City Council passed a bill that would allow NYC TLC-licensed drivers and fleets to be able to display electronic advertising tablets in their for-hire vehicles (FHVs). The bill was sponsored by NYC Council Member Amanda Farías and supported by the City Council’s Committee on Transportation and Infrastructure. It passed a full City Council vote 47-0 in December 2023 and now has officially become law, despite TLC criticism and testimony against allowing in-vehicle ads.
“Some of you maybe asking, why did I introduce this bill? Why does the City Council decide if our drivers get to have in-car advertising or not? The New York City Taxi & Limousine Commission regulates interior and exterior vehicle advertising…over the last five years, drivers have been subject to the slow, bureaucratic process…what makes today so important, is that drivers will no longer be subject to TLC policy changes and their opportunity for advertising will be cemented into law, for years to come.”
- NYC Council Member Amanda Farías
It’s now official, the in-FHV ad bill is law 👏🥳.
“This bill would permit for-hire vehicles to display digital advertising on an approved electronic tablet attached to the interior of the vehicle. The approved tablet would be capable of being turned on and off, muted, or having its volume adjusted by the passenger in the vehicle. No driver would be required to have a tablet in their vehicle or pay for the installation of a tablet in the vehicle they drive. It would also be unlawful for any service regulated by TLC to take negative action against any driver for choosing not to have an approved tablet in their car. Any driver of a for-hire vehicle with an approved tablet in their vehicle would receive 25 percent of the revenue generated by such tablet in their vehicle. TLC would license the persons who provide or supply the approved tablets.”
- NYC Council, Int 1139-2023, Law number: 2024/033
$500 Licensing Fee
Of note, there was actually a February addition to the in-for-hire vehicle ad law that set the fee for an interior advertising company license at $500 (we do not think this is A per tablet fee, but rather a general licensing fee although we could be wrong 🤷).
“This bill would amend Local Law 33 of 2024. It would clarify that any driver of a for-hire vehicle with an approved tablet in their vehicle would receive a minimum of 25 percent of the gross revenue generated by such tablet in their vehicle. It also would set the fee for the interior advertising company license at $500.”
- NYC Council, Int 0172-2024, Law number: 2024/056
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Next Steps For Drivers & Fleets
What’s unclear and unhelpful is the TLC does not seem to be making it easy for drivers and fleets to take advantage of this new LAW. The regulator has had three months since the bill was passed to setup an easy to navigate website and has also not distributed an industrywide press release. This is noteworthy because the regulator sent an industrywide email in October 2023 warning drivers against installing T-Mobile-owned Octopus Interactive ad tablets 🤔.
Our advice to NYC drivers and fleets is to be careful before installing in-vehicle advertising tablets. Although it is allowed, the tablet you install in your vehicle must be approved by the TLC and be licensed. We urge the TLC to immediately make it clear to drivers and fleets on how to be in compliance with new rules around in-vehicle ad tablets. ⚠️ Remaining silent or ambiguous can have unintended consequences (i.e., driver installs tablet that shows inappropriate ads to minors) ⚠️.
Wall Street Journal Article
The Wall Street Journal (WSJ) actually published an article yesterday (‘The Next Ad Battleground Will Be the Back Seat of Your New York City Uber’ by Patrick Coffee, April 23, 2024 9:01 pm ET) about NYC allowing in-vehicle advertising in City for-hire vehicles.
While NYC in-vehicle ads could be big revenue opportunity for Uber, Lyft, T-Mobile, Curb, Dart Technologies and other advertisers, the WSJ author relevantly cites that passengers could be annoyed by the development, similar to their experience with the infamous NYC “Taxi TV”.
“When TLC asked 22,000 residents to name their least favorite part of the taxi experience in 2011, 31% chose “Taxi TV is annoying.”
- Wall Street Journal. ‘The Next Ad Battleground Will Be the Back Seat of Your New York City Uber’ by Patrick Coffee, April 23, 2024 9:01 pm ET
Concluding Thoughts
There are other, perhaps not immediately obvious, thoughts we think our readers should consider related to the impact of NYC in-FHV ads being allowed.
🚕🚕 TLC RENTAL COMPANIES: TLC leasing or rental companies might uniquely benefit (i.e., they control vehicle and/or FHV License) from installing the ad tablets. These companies must ensure the drivers who rent or lease their vehicles are compensated and also not forced to install these tablets.
A win-win should not turn into zero-sum business or previously mischaracterized “predatory” leasing company political talking points will return. In the WSJ article, Buggy and Fast Track Leasing-owner Voyager Global Mobility is said to have partnered up with Zappy to “carve out a space in the market for the latter company’s video tablets, which double as kiosks for portable phone chargers that riders can rent or purchase”. Our message to leasing companies is to be reasonable, our message to TLC drivers who rent from these companies, is the same.
📈 VALUE OF TLC PLATES (FHV LICENSES): We’ve covered this topic previously, but we want to (again) make clear that only FHV Licenses attached to a business entity can be effectively transferred (these entities are known as FHV Corporations). The vast majority of TLC Plates are owner-operated / owner-claimed and cannot effectively be sold in any form or fashion.
However, we do predict the financialization of the “rights” these TLC Plates give someone who has access to them, regardless of the ultimate owner. This is a topic for another article(s), but the TLC has to understand that people, companies and financial institutions will come up with clever and 100% legal workarounds to accrue value from (correctly) supply constrained FHV Licenses, even if the TLC Plate is attached to an individual name. For example, AutoMarketplace could offer $10,000 to purchase the exclusive right to use (for 3 years) a TLC Plate belonging to an individual driver who might want to switch careers, but not lose their TLC Plates. As it relates to this article, the cash flow associated with in-vehicle ads will increase the value of the “rights” attached to TLC Plates.
Undoubtedly, the relative value of a yellow taxi medallion vs. a TLC Plate will also be impacted. Remember, both asset valuations can go up (taxi medallion and TLC Plate valuations can both increase), but the valuation delta (difference) might decrease🤔.
💰 TLC DRIVERS SHOULD GET A CUT OF IN-APP ADS: Uber is now making money off displaying in-app ads to its customers (i.e., while you wait for your Uber ride or track your UberEats order an ad pops up). Similar to NYC in-vehicle ad tablet regulation, the same revenue sharing principle should apply to in-app ads. TLC drivers should be getting a cut of this revenue.