Barely Legally

Confessions of a Moot Court Bailiff

Business Tragedy of the Commons

A couple months back, I poked fun at the “sharing economy” of apps and web sites built to monetize the everyday parts of our lives. You want to make some quick cash? Sign up on this site and sell access to your spare bedroom, or your home-cooked dinners, or your boat, or your car, or your power tools, etc. Those are all actual things. I’m not making those up. Wired had a great article about this whole strange thing.

But like any old and inefficient industry, the sharing economy is ripe for disruption. Make way for the startups!

Yeah, I said it. Get your antiquated business models out of the way. Renting out your power tools? What is this, the damn Middle Ages? Sure, rent out your power tools and then go down to the village commons and listen to the town crier read the headlines from @BreakingNews. Knock yourself out, grandpa. I’ll be over here with the cool kids, disrupting your whole fiefdom.

Today, the sharing economy is being disrupted in San Francisco; a trio of startups run by visionaries have kicked off the race to let users share stuff that’s not even theirs.

Italian Driver Joke Goes Here

The first is an Italian company which lets you auction off your parking spot. Let’s walk through this. The government creates parking laws and regulations, which themselves create this parking spot. Someone else, having used the parking spot until they didn’t need it any more, left the parking spot open. You arrive on the scene, not through any skill or cultivated ability of your own, just driving around looking for a parking spot. You take it, and then want to sell it to the rest of us.

How completely insane is this? It’s not yours to sell! It’s like you’ve noticed there’s no toll for the elevators in the state courthouse, and so you’re going to show up at 6 a.m. and hold down the “Close Door” button until someone reserves the elevator on Elevatr, the cool new startup which disrupts the traditional elevator economy.

My favorite is the statement this company gave to Ars Technica:

[The company] claimed that it was, in fact, not auctioning off public parking spaces. Rather, the company says it auctions off information about the parking spaces.

“The real issue here is that a local ordinance is being misapplied to wrongfully target our service,” the company said. “This is happening with our company and other companies operating in the social sharing space. This is yet another example of a local ordinance that was drafted in a world pre-shared economy which local authorities are improperly applying to a shared economy service.”

The startup also claims that its users have the First Amendment right to express and sell such information.

I’m not running a web site for pirating movies and TV shows, I’m offering information about where to join Bit Torrent Swarms which allow users to download movies and TV shows. I’m not blackmailing you, I’m offering to sell you these photos I “found” of you having sex with this person who is not your spouse. I’m not selling drugs, I’m offering information about which guy on the nearby street corner will give you $20 worth of weed; my asking price for this information is $20.

The “parking space” versus “information” distinction fails to even pass the straight face test. I hope this company isn’t paying its lawyer a lot.

Bonus Points: a Sidebar

Okay, a little bit on the “analog laws” versus “digital world” problem. Yes, that’s A Real Thing, and it’s a thing I’m actually rather passionate about as it pertains to civil liberties and even intellectual property. For instance, search warrants and cell phones or even silly stuff like Aereo. But the law you’re talking about isn’t really outdated.

The San Francisco Police Code §63(b) says:

It shall be unlawful for any person, firm or corporation to enter into a lease, rental agreement or contract of any kind, written or oral, with or without compensation, for the use of any street or sidewalk.

Let’s play a game. The year is 200X. Dr. Light has reinvented streets and sidewalks to accommodate our hovercars. The holograms which replaced the city’s law department have sent a Cease & Desist letter to the noble titans of industry at GaltParking.com, who find their efforts to achieve the true destiny of Man foiled by antiquated laws.

In this case, yes. That law no longer applies because of all the hovercars and the sidewalks populated by holograms.

The year right now, though, is 2014. Cars don’t hover. Streets are pretty much the same as they were the last time this law was updated in the distant past, the year 2003. (Seriously.) And the last time this law was updated, selling access to parking spots was unlawful. It’s pretty straightforward. If you offer to give someone a parking space for money, that’s a contract.

The Other Guys

The city attorney for San Francisco included a couple other innovators in the press release announcing the Cease & Desist demands.

One was a service that displays parking spots which users of this service have just vacated. If you park in the newly vacated-space, the service charges you $5. If another user of this service takes the spot after you, you get a $4 rebate. Putting aside the value proposition for the users of this service, this service passively gathers information about parking spots and then charges you when you use a parking spot. “If you park here, that’ll be $5” is a contract for the use of the parking spot. Again, pretty straightforward.

Perhaps the best one, and your reward for reading this far, Dear Reader, is the service which has yet to launch; it’s disrupting the disruptors before they even disrupt parking.

From the SF City Attorney’s press release:

ParkyPark, which appears poised to launch later this week […] will employ drivers at a rate of $13.00 per hour to occupy public parking spaces in the Mission District. ParkyPark then plans to sell the on-street parking spots to its paying members through its iPhone app.

That’s not their real name, but that is their real business model. This is amazing. They are literally going take possession of parking spaces and charge people for them. Remember my analogy about hijacking the courthouse elevator and how it was like auctioning your parking spot? Remember how it was a little tortured, because you’re only auctioning it to other users, and you’re probably going to get tired of waiting in your car and just leave?

This one is staggeringly un-tortured. This company sees a public good and immediately seizes it, holds it hostage, and wants you to pay for it. Well, I’m going down to the park with my friends and sitting on all the swing sets until parents pay me to leave. I’m going to the water fountain and drinking all the water until you pay me to leave. I’m going to build a giant movable disc to block out the sun.

The best part is that they pay $13 an hour for people to drive around and occupy parking spaces. New York Magazine had a nice article a couple months back about how profitless startups are destroying markets with unsustainable business models; venture capital investors subsidize business models that have absolutely zero chance of making money.