Where Car Is King, Smartphones May Cut Traffic

But now licensed cabdrivers in this city where the car remains king are facing their greatest competition in half a century, from new ride-sharing programs that use smartphone apps to connect drivers and passengers.

At the end of a night of drinking recently, rather than hailing a cab, Trisha DiFazio tapped an app called Lyft on her phone to summon a ride. Minutes later, a graduate student moonlighting as a driver pulled up in a Toyota S.U.V. with Lyft’s signature pink mustache affixed to its grille.

“This is so much cheaper than a cab, and so much easier,” said Ms. DiFazio, 31. “I absolutely think my friends drink and drive less because of this.”

Transit experts say these new services, which appeal to younger riders, could play a crucial role in ending the reign of single-occupant cars (and unending traffic) in Los Angeles, and many young residents have embraced them as a cheaper, more reliable and, well, more fun way to get around the city. But some of the city’s licensed cabdrivers have another name for ride-sharing services: illegal bandit taxis.

Last month, city regulators sided with the cab companies and sent cease-and-desist orders to Lyft and two other companies offering ride-sharing services, Uber and Sidecar, ordering them to shut down immediately. “It’s the Wild West with these operators,” said Tom Drischler, the taxicab administrator for the city’s Department of Transportation. “You have folks driving private cars and picking up strangers. Public safety is our assignment, and I don’t think it’s safe for the public.”

All three companies have refused to leave town, asserting that agreements they made with state regulators allow them to operate anywhere in the state.

Smartphone-based ride-hailing services have faced opposition from taxi companies and city regulators almost everywhere they have appeared, from Las Vegas to Cambridge, Mass. But the fight here is complicated by longstanding efforts by city officials to alleviate traffic and reduce drunken driving.

Last week, on his first full day in office as the new mayor of Los Angeles, Eric Garcetti proudly proclaimed that Los Angeles was beginning to leave behind its culture of car ownership. And Juan Matute, director of the Local Climate Change Initiative at the University of California, Los Angeles, said that if more people used ride-sharing services — even just 3 percent of the population, he said — substantial reductions in driving in Los Angeles could result.

“It would be easier to share rides that are incidental to daily life,” he said.

Unlike the new companies, the taxi industry here, which pays about $4 million a year to the city in franchise fees and vehicle permits, is tightly regulated for safety.

In addition to franchise and inspection fees, regulated taxis have to serve far-flung and low-income parts of the city where Lyft drivers need not venture. The city also requires cab companies to offer disabled-accessible vehicles, which William Rouse, the general manager of Los Angeles Yellow Cab, said his company did at a loss. “If they’re going to skirt our entire cost structure,” he said, “then they’re going to be able to get away with charging less and still make a profit.”

Rather than a metered fare, Lyft has a suggested donation, typically about 20 percent cheaper than a cab. Riders can pay as much or as little as they like, although those who frequently shortchange drivers have a tough time getting rides.

Jano Youssefi, an Iranian immigrant who has driven cabs in Los Angeles for 15 years, said his income had dropped at least 20 percent in the six months since Lyft rolled into town. “We are not making money anymore,” Mr. Youssefi said.

Yet, even as the threat of arrest hangs over drivers — some Lyft drivers removed the pink mustaches from their grilles after the cease-and-desist order — interest in the new programs seems to be on the increase. Drivers for Lyft and Sidecar use their own cars, and typically keep about 80 percent of the payments passengers offer, while the company keeps the rest. Uber also offers a service that connects passengers with licensed, professional luxury car drivers, as well as people driving their own cars.

Justin Riley, who began driving for Lyft a month ago, said he enjoyed the flexible hours, which gave him time to work on getting his tech start-up company off the ground. “It’s allowed me to discover L.A.,” he said. “I’ve met so many diverse people, heard so many great stories.”

But Mr. Drischler, the city taxicab administrator, said the collegial environment was part of the problem. Before safety partitions were installed in cabs two decades ago, he said, one cabdriver was killed every 18 months in Los Angeles. “I’m honestly worried for the drivers of those companies,” he said. “I have two daughters in their 20s, and I would never let them drive for those companies.”

The California Public Utilities Commission is writing rules for smartphone ride-hailing services.

Shopping Sites Pay Contributors Who Drive Traffic to Retailers

Ms. Medeiros is not a style pro; her day job is at a talent agency in Manhattan. But in a little-known practice, social media shopping sites are offering payments to shoppers who post product links that drive Web traffic and sales to retailers.

In the case of Ms. Medeiros, it is the sneakers and lipstick she added to Pinterest and the night life collection she posted on the shopping site Beso.

Favorable mentions on blogs have been for sale for years. Product reviews can also be bought. Now social media sites are taking citizen marketing to a new extreme, turning anyone’s Twitter message, Facebook post, Pinterest image or e-mail into a possible paid promotion.

The shopping sites are open about the moneymaking mechanics and argue that readers no longer expect everything online to be commercial-free. But the Federal Trade Commission says the practice blurs the line between a recommendation and a paid endorsement and needs to be flagged to readers.

“It’s turning word of mouth into a revenue opportunity,” said Mary Engle, who directs the commission’s division of advertising practices. “Since they’re getting compensated, in a sense, for their endorsement, then they should disclose that.”

Social media shopping sites let users select items from across the Web and share and comment on other users’ selections. They don’t sell anything themselves but make money by taking a cut from retailers on their sites.

Beso formally introduced a program on Tuesday that Ms. Medeiros has been trying, which pays users to send clicks to hundreds of major retailers, like Target and Gap.

“If they drop a link onto Twitter about a pair of shoes that they’re dying for, or a new handbag they’re coveting, and they refer users to Neiman’s or whoever sells that item,” said David Weinrot, the chief marketing officer for Shopzilla, the parent company of Beso, “they could actually be rewarded.”

Other large social shopping sites and apps, including the Fancy and Pose, recently introduced similar programs, and Referly, a site introduced in May, is entirely based on people referring products to friends and receiving money in return. Referly says 10,000 people have already signed up. The programs are too new to evaluate their financial success, but Web marketers say consumers should expect more similar programs, in part because visitors are no longer offended by the idea.

“The economic maturity of consumers is, businesses need to make money somehow if they’re going to survive — it’s so ubiquitous now that it’s expected,” said Alicia Navarro, co-founder and chief executive of Skimlinks, which automates referral links for publishers.

The sites determine who gets paid through unique links created for each participant. When someone uses a link to visit a retailer’s site, or buys a product, a payment is deposited into the referring user’s account. The practice is known as affiliate marketing. Bloggers already use the system and almost all major online retailers are willing to pay for traffic or purchases, Ms. Navarro said.

Links can be tracked no matter where a post occurs, meaning a Twitter message, a photo on Pinterest or a Facebook entry can all generate revenue. The social media shopping sites act as a middle man, collecting fees from the retailers and depositing payments into the users’ online accounts — after taking a cut. (Sometimes, sites cut out consumers, too. Earlier this year, Pinterest got into hot water when it quietly adjusted some users’ links to become affiliate-marketing links, and seemed to be collecting all the revenue for itself. It says it has ceased using affiliate links and declined to comment on whether it would offer users fees from such links in the future.)

Beso pays users an average of 14 cents for each click they send to participating retailers, while other companies, like Pose, pay only when a purchase is associated with a link. Payments for purchases average about 5 percent of the price, Ms. Navarro said. The sites and the retailers monitor for spamlike behavior, like tons of clicks from a single I.P. address, and do not pay in those cases.

Lynsey Eaton, a Pose user who runs the blog Law of Fashion, said switching to the paid model for Pose images had made her more likely to post Pose links, and had made the service more useful. “Instead of just making it an Instagram for fashion, it’s now shoppable as well,” she said.

The Federal Trade Commission issued guidelines in 2009 saying bloggers must disclose any paid endorsements, and recently updated them. The guidelines apply to these commission-based links, Ms. Engle of the commission’s advertising division said, whether they are in a post or a 140-character Twitter post. “They can use a hashtag and then ‘ad,’ and that’s only three characters,” Ms. Engle said.

But there is some disagreement about whether a Twitter post should be treated like a blogger’s recommendation and about the changing expectations of financial disclosure on the Web.

Linda Goldstein, a lawyer specializing in advertising, said when the F.T.C. issued its blogger guidelines, “consumers were much less sophisticated” than they are today. “Consumers are now being used to generate leads — I don’t know if that raises the same concerns as an endorsement,” said Ms. Goldstein of Manatt, Phelps & Phillips. “You’re not expressing an opinion about the product, you’re sending it to someone you think might be interested.”

Twitter and Facebook policies allow individuals to post referral-based links, but both companies say users should disclose that they are getting paid.

So far, the social media companies and their users seem to be largely unaware of how the guidelines apply to them.

Dustin Rosen, chief executive of Pose, said he was not clear on whether the guidelines would apply. Beso says its users should add hashtags like #spon, for sponsored, or #paid to links, but stops short of requiring it. Ms. Eaton, the Pose user, says she follows disclosure guidelines on her blog but has not yet done so on Pose. “I think this is so new that I haven’t really honestly thought about how users perceive the fact that people are making money,” she said.

Ms. Medeiros, who signed up for the Beso pilot program about a month ago, says she doubts that her friends will mind that she makes money from her links.

“It’s extra cash for something that I like doing,” she said. “It’s sort of rewarding to be able to make a few cents from sharing your personal life.”

This article has been revised to reflect the following correction:

Correction: October 2, 2012

An earlier version of a picture caption with this article misstated the name of a social media shopping site that is offering payments to users who drive Web traffic to some retailers. It is Beso, not Bezos.

Technology: In Traffic? Next Time, Use an App

The average commuter in the United States spent 34 hours fuming in traffic in 2010, according to the 2011 Urban Mobility Report from the Texas Transportation Institute at Texas A&M University. And traffic congestion isn’t just irritating, it’s costly. The report estimates that in 2010 gridlock wasted 1.9 billion gallons of fuel and, coupled with the associated loss in worker productivity, ended up costing $100 billion.

Avoiding traffic tie-ups is a particularly vexing problem because there is no single source of live traffic information. Municipalities may have cameras at major intersections and old loop sensors buried in a handful of roads, but lack information about secondary streets. Accident reports help to identify bottlenecks, but by the time the information is reported it’s too late for hundreds of drivers already stranded by a fender bender.

The ideal solution would be to gather live information on the speed and location of most vehicles on the road, and then to transmit the relevant traffic conditions to drivers so that they can avoid problems ahead. A sampling of three services suggests that this is finally starting to happen with improved accuracy, thanks to the growing popularity of in-car telematics and — perhaps more important — the pervasive use of smartphones.

The basic idea is to gather information from drivers on the road through in-dash or smartphone GPS and cellular connections. It’s a mutually beneficial arrangement. To receive traffic alerts, drivers allow the services to collect anonymous information on their own speed and location.

Inrix, for example, offers a welter of data on its free Traffic smartphone app. In the past, the company has aggregated traffic information from a wide variety of sources — including local transportation departments, emergency first-responders, construction reports and commercial fleet operators — and then analyzed the data in real time to deliver live traffic information.

Inrix’s smartphone app adds more information by tapping app users. On the screen, one will see color-coded roads — green if the traffic is flowing well, red if the going is slow — as well as orange and white cones marking construction sites and exclamation marks for accidents. A premium $24.99 edition of the software for the iPhone adds unlimited routes and icons for traffic cameras. Tap on the camera graphic, and you’ll see a snapshot of vehicles at that location.

The traffic-obsessed traveler can use the app to see whether, if the trip were shifted several hours later, the traffic is predicted to be lighter. A-type personalities can send a message noting the estimated arrival time to a friend or co-worker waiting at the destination.

Inrix is also hoping that a traffic community, of sorts, will develop. So app users are encouraged to help improve the traffic flow by confirming an obstruction or noting that one has been cleared.

Inrix’s software is focused solely on traffic. You can plot a route and it will tell the estimated travel time, but it doesn’t provide turn-by-turn directions or automatically reroute you in the event of a major tie-up ahead. This downside became painfully clear when I failed to notice a traffic alert and ended up stuck on Interstate 95 in Connecticut for an hour and 20 minutes waiting for an accident to be cleared. (Alerts are refreshed on the phone every three minutes.)

While parked in line with scores of fellow motorists, I tried another free app called Waze. Unlike Inrix, Waze relies primarily on the location and speed information culled from users of its app to determine traffic conditions. It also offers turn-by-turn navigation.

Its real strength, though, is that it shows the location of other Waze drivers on the screen as moving manga-style icons. This is more than a novelty. While sitting in the I-95 backup, I could see whether drivers ahead were picking up speed (indicating that the congestion was clearing) or getting off the highway in search of quicker routes.