Mobility-Driven Companies Shake Up the Bikesharing Market

Originally posted at TheCityFix DC.

Montreal’s Public Bike System (PBS), also known as “Bixi,” provides a competitive alternative to the bikes-for-advertising business model. Photo by amlibrarian.

It seems that D.C.’s 10,000+ SmartBike members may have to wait some time for the District’s promised ten-fold expansion. ClearChannel Outdoor, the advertising giant that operates SmartBike, has little interest to expand the pilot, according to news last week from the Georgetown Metropolitan.

Gabe Klein, the director of the District Department of Transportation, told TheCityFix that the District is still committed to expanding SmartBike and is still negotiating with ClearChannel.

The District’s deal with ClearChannel, penned last year, gives the advertising giant exclusive rights to abundant ad space throughout the city, in return for ClearChannel’s modest provision of about 100 bikes at ten stations. Now with little more to gain, ClearChannel offers D.C. little more in return.

The popular bikes-for-advertising arrangement deserves credit for the rapid deployment of bike sharing throughout Europe (for example, in Paris and London.) But D.C.’s conundrum highlights a big shortcoming of the model: the operator has no vested interest in mobility. ClearChannel’s business is advertising, so its mission compels it to focus on billboards, not bikes. Moreover, because the city owns all the bike-share revenue, while ClearChannel owns all the cost, better service and more business mean LESS profit for the operator.

This paradox haunts even the most popular systems in Europe, where competitor JCDecaux, winner of exclusive advertising deals worth hundreds of millions of Euros, complains publicly of too much cost, and endures perennial complaints about maintenance and reporting.

While the advertising model offers politically attractive, “free” bike-share systems to D.C. and many European cities, the financial opportunity cost of foregone billboard revenue can be astronomical. It seems cheaper to leverage low-cost public bonds.

To date the giant advertisers have offered the best technology, quickest financing, and only viable large-scale options.

But the market is quickly changing. New mobility-driven companies like B-Cycle, Veloway, and Montreal’s Public Bike System (PBS) are providing competitive alternatives, sometimes offering even better technology, private financing, and near-full cost recovery. Montreal and B-Cycle also are partnering with local non-profits whose missions are dedicated to mobility and public benefits.

Might one of these new-comers offer a great alternative for D.C? Now that D.C. has committed itself to SmartBike with ten built stations, does the District have a choice?

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