Microsoft Invents Price-Gouging the Least Influential

theodp writes "In the world envisioned by Microsoft's just-published patent application for Social Marketing, monopolists will maximize revenue by charging prices inversely related to the perceived influence an individual has on others. Microsoft gives an example of a pricing model that charges different people $0, $5, $10, $20, or $25 for the identical item based on the influence the purchaser wields. A presentation describing the revenue optimization scheme earned one of the three inventors applause (MS-Research video), and the so-called 'influence and exploit' strategies were also featured at WWW 2008 (PDF). The invention jibes nicely with Bill Gates's pending patents for identifying influencers. Welcome to the brave new world of analytics."

Comments

Prior art: Any specialty business / "sponsorship"

[BrianRoach]

I used to run a motorcycle performance shop. You do this all the time. I would often cut deals on accessories / parts to customers I knew would show them off to their friends, talk on the internet, etc, etc. Those people (hopefully) then buy from you at your regular prices.

When you do it for club racers, it's called "sponsorship" ... but it's really the same thing. If you have a fast racer, you help him out based on his "influence" (wins races, is well liked, etc). Regardless if your assistance makes him go faster or not, the perception is: "Fast / winning guy goes to Shop X, I should also go to Shop X". They have influence over their "social network", which is other racers.

Seriously, I don't see how this is new or innovative.

Already an established business practice

[Kjella]

Maybe they've wrapping it in a new packing, but this doesn't seem very different from the way it's always been - you have those who pay full price, those who get rebates, those who get promotional copies for free and those you have to sponsor, that is to say pay just to use your product and it's all a sliding scale. Like a friend of mine, he's often organizing dinners and such and when he's there alone items will "disappear" off the bill. Why? Because he'll be bringing in a bunch of people who'll spend a lot of money. A colleague of mine used to be quite good at his sport, he's not good enough they'd sponsor him anymore but if he asks he'll always get a "special price" because there's a value to having a veteran walking around in that brand. This sort of stuff happens all the time, and it's been done a million different ways of referrer discounts up to and including MLM schemes where it doesn't just get cheaper there's money flowing out at the top. This just seem like a slightly more organized version.

Re:Already an established business practice

[BrianRoach]

Exactly. I also don't see where this is new or innovative, except that it's (presumably) on a large scale.

When I ran a motorcycle shop, we did this all the time. You know the local customers who bring in other business, often times not even consciously ... they do this because they have a "social influence". So ... you give them cheaper prices. The business they bring in more than offsets that discount.

With amateur racing, it's called "sponsorship" even if you're not giving things to racers for free. Give a fast guy parts at dealer cost and a break on labor, and he tells other racers how great your are.

In the "big leagues", companies PAY people to use their products because, well, most people are sheep and buy stuff simply because some "star" wears / uses it.

Nothing new to see here, move along.

Re:Linux users

[Anonymous Coward]

I'm wondering how many Linux users would actually *be* on a social network, seeing as even a simple thing like Flash is so hard for them to get working ?

Please. It's been a few years now since I had any trouble using flash in Linux. Gentoo had an absurd number of hoops to jump through last I used it, but most Linux distros play flash media just fine now after a simple install of libflashplayer.so.

Amazon's 2000 Experiment With Dynamic Pricing

[theodp]

Outrage prompts Amazon to Change Price-testing Policy: "Last week, Computerworld first reported that Amazon was conducting various price tests in its DVD store that could result in one consumer paying as much as $15 more for the same item as another consumer."

Prior Art

[prograde]

I cite as prior art every club that charged me a cover fee, while letting the cool, beautiful people skip the line and get in for free.

Re:Meh. There's prior art...

[jc42]

I don't have mod points right now, either. So I'll just add that the joke about Congress is just one of many example of "prior art" that might be used to disqualify this patent.

Another well-known example of this process is the common practice in the food industry of having higher prices (and lower quality) in inner-city stores than in the same chain's suburban stores. The chain stores know that the poorer people can't afford to do price shopping like the more affluent people do, so they can get away with charging more in the poorer areas.

With a little effort, we can probably come up with a good list of prior art, and maybe we can even get it into the Patent Office's hands.