This morning I saw this tweet about Toronto streetcar advertising. The author has a “big problem” with public transit being fully wrapped in ads and so she decided to tweet her local Councillor to see if these could be somehow limited in size.
My first thought was: I wonder how many people would accept higher fares in exchange for fewer/no advertising. Is this something people care about? Because personally, I’ll take the lower fares in exchange for someone trying to monetize my attention. I mean, every social network I use is already selling my attention off as their product.
But then this got me thinking about what the actual numbers look like. So let’s look at some of those for not only Toronto, but also for Hong Kong, since many people view that as the gold standard as far transit authorities go.
For the year ending December 31, 2016, the Toronto Transit Commission (TTC) posted a total operating revenue of $1.204 billion. This represents about 41% of total revenue – the rest comes from subsidies.
If you drill down into operating revenue, advertising makes up $28 million or about 2.33% of total operating revenue. So a pretty small number. If you tried to shift this number over to “passenger services” revenue (transit fares), it actually wouldn’t increase fares by that much. But presumably fares are already at some profit maximizing number.
Switching to Hong Kong’s MTR Corporation, their numbers have to be unpacked a little differently because the group has a number of diverse business lines, including property development.
For the year ending December 31, 2016, total revenue from Hong Kong Transport Operations was HK$17.655 billion (almost all fare revenue). Advertising falls within the Hong Kong Station Commercial Businesses group and that company posted revenues of HK$5.544 billion for the same time period.
To try and create some sort of comparison, I’m ignoring all of the other segments within MTR.
Within Station Commercial Businesses, advertising revenue alone makes up HK$1.09 billion or about 20% of that group’s total revenue. The rest comes from station retail rent (the biggest chunk), telecom, and some miscellaneous station income.
If you add up Transport Operations and Station Commercial Businesses, total revenue was HK$23,199 billion for the year ending 2016. Advertising comprises about 4.70% of this – so more than double that of Toronto.
It’s also worth noting that MTR’s station retail rental revenue is about 3.4x that of its advertising revenue. In the case of Toronto, the TTC actually makes more money off advertising than it does from “Property Rental.” I’ve always thought this was a missed opportunity. Transit and land use go hand in hand.
In any event, I’m far less fussed about advertising on transit. But what are your thoughts? Let me know in the comment section below.
This morning on my way into the office I ran into a friend who lives in my building (downtown). She works in midtown and so I asked her how she gets into the office. She told me that she either takes the subway or an Uber, but that increasingly she has been taking Uber, particularly on the way home.
We then started talking costs and she told me that what she does is carpool with a friend from work using UberPOOL. They live nearby and so what they do is leave from the same place at night (the office) and then select a midpoint location between their homes for the drop-off. After splitting their portion of the fare, the ride costs her about $3.25.
As she was telling me this, I couldn’t help but think to myself: Wow, this is massively disruptive to transit. That is the same cost as taking the subway. So why take transit? With the subway, there may be a speed argument in certain instances, but that certainly wouldn’t be the case with some of Toronto’s streetcar lines (such as the King line). It’s faster to walk.
However, there are obviously geographic limits to how far you can go in an UberPOOL before your costs greatly exceed taking transit. But as Uber and other similar services continue to bring down the price of a ride (eventually the labor cost component will disappear), how big does that area get?
All of this – including my own mobility patterns – has got me thinking yet again about the role of transit in the city of tomorrow.
One segment that continues to be underserved is the regional scale. Here in the Greater Toronto Area, we are working on that by transforming our commuter rail service into a two-way all-day Regional Express Rail service. Today that strikes me as being hugely valuable. And unless driverless vehicles somehow solve our traffic problem, it will likely remain that way.
I would love to get your thoughts in the comments below.
I increasingly never carry cash on me. I just never think to take out money and, when I do, I hate paying for things and getting change back. That change just ends up in a “change jar” in my apartment and then never comes out ever again. I keep telling myself that I need to buy coin rolls but that never seems to happen.
Lucky for me, it’s pretty clear that many cities and countries are quickly headed towards a cashless society. It’s pretty easy to get by in most cities today without cash. Here in Toronto, I use Uber and my PRESTO card to get around. I can use my phone for many purchases like coffee. And I can use my credit/debit cards for everything else. I never really thought about it until recently, but I have unintentionally gone almost completely cashless.
But of course it’s not just cash that is going to disappear; it’s also our physical wallets. Just this week Fred Wilson wrote a post on his blog about how he forgot his wallet at home and how Apple Pay came to the rescue at Whole Foods. I can’t wait until more banks roll this out in Canada. It’s also encouraging to see that under “coming soon” on the Apple Pay website, the Toronto Transit Commission is listed. I guess that means it will be integrated with PRESTO.
However, this transition is not happening in the same way everywhere. There are many countries that still prefer cash. According to CNN (November 2015), only about 10% of people in Indonesia and the Philippines would prefer to pay with a credit card. And it’s for this reason that Uber now accepts cash in a number of countries. It’s what those customers wanted. I find this interesting though, because not having to carry cash is one of the main reasons I use Uber.
Of course, there’s also the question of what happens to people who are currently not connected in anyway to electronic forms of money. I get asked by people on the street for change at least every day when I walk around Toronto. But there is actually no way for me to transmit the money I have to them. I don’t carry cash and I certainly don’t carry change.
I would be curious how many of you have gone or are close to going cashless. And if you are operating cashless, did you even notice the transition happening?