The city's Taxi and Limousine Commission gave the green light last September to seven firms vying for licenses to provide video, Web surfing and ads to passengers in cabs. The pilot program involved putting various types of video screens in several hundred taxis that carry passengers for an average 13-minute ride, mostly in Manhattan.
But on Wednesday, taxi commissioner Matthew W. Daus put the brakes on the test. The firms have until Sunday to remove the in-taxi video screens, although lawyers for the companies had applied for a temporary restraining order against the decision. A state Supreme Court justice told parties to come back this morning for her ruling.
If the plug is pulled, it will derail what had been billed as a new and promising form of out-of-home media. Daus declined comment Thursday, with his office citing the litigation. In an interview with The New York Times, Daus said taxi passengers were either cool to the screens or couldn't stand them. "We saw no compelling need to keep them around," Daus told The Times.
That's news to the handful of companies who had hoped to build a business out of the service, companies that thought this time of year would be spent fulfilling the taxi commission's requirements for licensing. Corey Gottlieb, president of Targeted Media Partners in New York City, said Thursday that his company had spent $4 million developing a constantly-updated video system in 100 cabs in New York City and another 100 in Chicago.
"I'm perplexed as to why this wasn't good for the city," Gottlieb said. Targeted Media Partners' interactive touch screens featured video news from the NY1 cable news network (updated every five minutes) along with free listings of restaurants, movie and stage venues, museums and events in New York. Gottlieb's firm paid the taxicab owners for the right to deploy the screens.
Advertising was sold throughout most of the systems but, as Gottlieb pointed out, the other content was free. Several advertisers signed up for one or another of the video services, including American Express, North Fork Bank, movie studios and television networks. Gottlieb's video screens ran interactive spots for Paramount's "The Italian Job," which featured a 30-second trailer as well as the ability for a taxi passenger to touch his way to find movie theatres screening the film and showtimes.
"For advertising purposes, not only can you run any type of creative but you can bring depth that television can't even give you," Gottlieb said.
The reaction on Madison Avenue was disappointment that a promising new ad medium has been nipped in the bud, but not surprise.
"It didn't have a chance to develop," said Jack Sullivan, senior VP-media director at Starcom MediaVest Group, adding that even if it had that chance it still would have been a tough sell to the ad community. He noted that more consumers would have seen ads on the top of cabs than the video ones inside them.
He said the demise of New York's pilot program also casts doubt over a similar test currently taking place in Chicago.
"Consumer response to this as a medium is still to be determined," added Joe Strickoff, senior partner/associate director of out-of-home communications at Mediaedge:cia. "The jury's still out."
Even though it wasn't a mass-reach vehicle, Strickoff said in-taxi video ads could have proven to be an effective medium if the price was right.
"For this to have some sort of mass level as a medium, [the industry] would have had to go way, way beyond the 200 cabs here, the 300 cabs there that these companies were putting the systems into," Strickoff said. He added that the poor economy didn't help a startup medium either.
"It's a captive audience, it's an interesting opportunity, but there's always the possibility that some consumers, when they get into the cab, they won't be interested," Strickoff said.
The taxi commission cited passenger complaints as its main reason for red-lighting the project. But Gottlieb said that didn't make sense, since the industry had taken steps to make it as unobtrusive as possible. For the past seven months, Gottlieb's video screens had been equipped with one-touch on/off switches.
"If the passenger doesn't like it, he can shut it off," Gottlieb said. But he acknowledged that some other company's video screens, ones that didn't use touch-screen technology and easily installed software updates, might not have been as popular among taxi passengers.
But he also said that during the recent blackout, the video systems inside the taxis were just about the only TV in New York City and the only source of news unless you were lucky enough to have a battery-powered radio.
The commission had some early feedback on its Web site that had been negative, but Gottlieb said the industry had committed to learning from the feedback and working to alleviate concerns. In July, Gottlieb's company had forwarded to the taxi commission 35,000 surveys of taxi passengers; 95% wanted screens in more cabs.
Six weeks ago, Gottlieb said, the commission told the companies that the pilot program was over and that the screens had to be shut down and removed by the end of August. The companies involved fought that, getting a stay of execution when the commission called to tell them that the program would continue and that permit specifications were being written. A meeting scheduled Wednesday morning was canceled, the ax fell, and that's when the in-video taxi marketers decided to launch a battle in court.
Gottlieb said that feedback from advertisers had been great, even though they wanted to have a bigger rollout among taxi cabs.
"Advertisers are embracing us. The only thing that has been holding us back is our size," Gottlieb said.