I think SF should see through their distaste for "omg they're selling public space" and hold a competition among private entities to solve the problem in much the same way NASA held a competition to combat future space missions (the winner being SpaceX ). This app is just the private sector trying to solve a problem, but they're all acting like individuals and the result is predatory competition. What they need is leadership.
Maybe one short-term option is for MonkeyParking to run the whole thing more like Lyft, where you aren't required to pay a per-use fee but tips are appreciated. A micro-culture would rise around this activity and through social media would establish customs regarding tips. Lots of people would get that app and thus it would fertile ground for advertisers; not only through the app but anything you could put on or around the parking spot itself. Advertisers would love to know where you like to park, when, how long you're there, what kind of cars you drive, etc. There's money to be had in this without directly auctioning off public space.
This is exactly the sort of thing fuzzy-logic models are developed through video games for.