Uber’s Driver Subscription Evolution

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In my book, Africa’s Sankofa Innovation, I identified four core frameworks for running digital businesses. By looking at the frameworks, I can see that companies like Uber and Lyft within the next five years will begin subscription services where drivers pay monthly fees and use their apps ecosystems to link up with riders. Neither Uber nor Lyft will take a cut; the drivers keep all, but the tax/processing fees.

ICT (information and  communication technology) provided productivity gains across different industrial sectors in Africa as governments and firms adopted technology to modernize their processes few decades ago. That adoption provided the platforms for new basis of competition as ICT cushioned efficiency in customer service and superior product offering, giving the early adopters opportunities to win market shares.  In banking, for example, new banking institutions used technology to compete against the older dominant ones, and in the process redesigned Africa’s banking landscape.

Technology category maturity releases many new business models around my core framework elements. In the Uber case, the fact that drivers are limited, and distribution is infinite through mobile internet, there is a limit to anyone’s pricing power. That constraint and the competitive rivalry will push pricing power away from Uber/Lfyt despite any network effect.

Where they fail to take action, car companies like Ford (hello Chariots) will emerge, looping drivers to make more money. Or better, the drivers will come together to take the destinies in their hands by building an app, locally, for what Uber does. Understanding how the web works and what happens on category maturity determines how future pricing powers can be. I note these frameworks in the book’s chapter 12.

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