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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."
1. Become influential or join together with a group of influential friends.
2. Buy things very cheap.
3. Sell them at a higher price.
4. Profit
In fact, you could set up a brokerage business where you find people that have cheapest access to things, offer to buy from them at a slightly higher price than they pay, and sell at a higher price to groups that would have to pay even more. Lots of profit opportunities here.
If I can be modded down for being a troll, can I be modded up for being an orc, or a balrog?
This is not a challenge, just a clarification question: how exactly do linux users factor into this discussion? It seems to be about using information gleaned from social networks to adjust prices in order to maximize product adoption. Also, I wouldn't be so certain this wouldn't be popular. If everyone in your social group wants to be like person X and MS can determine this and give something to person X for free that will cost you and the rest of the group $10, I'm not sure so many people would abstain as a protest. Or at least not more than the gain in revenue seen by the scheme. I think of it like this: when the iPhone came out all the geeks bought them, and then convinced everyone else to buy them. Because of the cult of Apple it wasn't too hard to get tons of geeks to get them and show everyone else how cool it is. On the other hand not as many people were buying Zunes and convincing their non-geeky friends to buy them. What if MS was able to determine the people who had the most influence on their social group's technology buying habits and sent them all free Zunes? It seems like if this could be done accurately it would be an incredibly effective marketing ploy (of course, that is a big IF).
Here is the scenario Microsoft is working on. People will buy their software online, retailers will offer it as well but MS will make them charge more than online citing "expense reduction" due to not having to make physical items. Microsoft will have your information, requiring you to put in your information including job info. They will also scan the web using their search engine to find out if you are "influential" and then based on that sell you the product at an increasingly lower cost. They will be able to do this because they will control the price of all their products and only offer online software via their site. Now do you think it will work? Its possible.
We already have this sort of thing on a macro scale. Gadget magazines are sent free gadgets and many of us make buying decisions based on those gadget magazines. This is just a finer grained version of the same old system.
What scares me about this is that it would create the same kind of frenzied I-want-to-get-as-many-facebook-friends-as-possible-no-matter-if-I-know-them-or-not mentality except with profit motive behind it. The more friends you have, the more MS thinks you are an influential person, the cheaper products are for you. I think that this sort of thing would probably be quickly gamed by many people to the point of being worthless to the marketer.
If you receive a more preferable product for a good or service based on your social network status (or on your blog), you have to disclose that, according to the FTC.
You aren't allowed to get a better price based on your influence/following and fail to disclose it.
This type of pricing scheme is dangerous, and might land company executivies in jail, for the attempt to defraud less-influential people with higher pricing.
However, I expect this could backfire... some of the more influential people will certainly say what price they got.
You can't control this type of information. There will be a backlash / disillusionment when other people learn that they are getting a different price.
In fact, the "more influential person" may lose influence, when people discover that.
E.g. Getting the better price can have long-term social costs in how other people in your social network view you.
Good Advise vs. "Sell-out"
yes but how much did you actually spend on said party? $100? $200.
i thought once I was found, but it was only a dream.
simple linux users are the at the bottom of the social ladder. little influence means they have to pay higher.So MSFT has found a way to segregate and separate the general population into a class, pricing structure based who they know. If you can't see how this is bad then you need to open up a history book on class seperation through the ages and the methods used to keep a group of people down.
Also when the iphone came out it wasn't just geeks buying them. the general masses found an easy to use phone and mobile web browser and the rest was history. People who buy the "iphone killers" soon get disappointed as the interfaces aren't as useful and they grow frustrated at them over time.
i thought once I was found, but it was only a dream.
Yeah, I agree it already happens, but I think there can be a qualitative difference if it gets hugely pervasive. In the case of free gadgets being sent out, you can at least plausibly still identify a "normal market", where people buy things based on price signals and preferences. It might be distorted somewhat by the reviews the free-gadget-recipients produce, but that's not really in principle different from any other disinformation that distorts markets; just another variety of misleading advertising.
But if the pricing variance is built into the market itself, it seems quite a bit worse to me. You no longer have a normal market with people trying to distort it, but no real market at all anymore.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
Just look at what they're proposing. Those who INFLUENCE other people in a way that makes a product more valuable.. are desirable customers. So we discount them or give the product to them for free because it increases the value of the product on the whole. Let's look at two examples that are present in all places one might wish to look:
1. Advertising. Duh. Sports athletes, actors, models, and other such famous figures. We see them sporting things GIVEN to them by companies. Why? Because the trend is: "he/she has it, that's so cool, I want one too!" That's exactly what this system is.
2. Referral rewards. This one is particularly damning to this patent. Many companies allow people to refer other customers and as a reward they eventually get a kickback or free stuff. Why? BECAUSE THEY ARE HIGHLY INFLUENTIAL. And there you have it, this EXACT system, down to the letter. If you prove you're influential, we give you a discount or free things because we know you're likely to bring us more customers and as a result we can raise our prices.
This patent will almost certainly be shot down via prior art if those in charge of approving them have paid attention to marketing strategies for the past few decades.
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.
This is just an observation, but when I hear things like "We got 80% off list price for technology X from our vendor" it makes me wonder what the real value of the product is. After reading this maybe the value of the product is really irrelevant and in our world of commerce it depends on how influential you are. If that is the case how can they patent how the world currently works?
-- Thou hast strayed far from the path of the Avatar.
for free stuff i use p2p, best marketing tool ever, apart from the sales graph
Fuck 'em. Don't buy their shit. Hell, make it a general principle and don't buy shit in general. Ask yourself "Do I really need this"? Spend more money on food and wine, ideally without a long distribution chain between you and the producer.
Switch back to Slashdot's D1 system.
I'd have thought it would be shot down with prior "art" simply because tiered pricing has been in existance since bakers gave away their goods to the emperor for free to bear the titel of "emperor's baker".
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
...or bribing the most influential?
Microsoft is widely misunderstood. It is not primarily a software company. It is an abuse company that uses software to deliver abuse.
That's my opinion, and the opinion of millions of others, it seems.
Microsoft CEO Steve Ballmer reportedly has little or no technical knowledge. Could someone with no technical knowledge make a high-tech company profitable without an abusive virtual monopoly?
Steve Ballmer, As Portrayed by 80 Blue Screens of Death
The natural tendency of Money + Usury = monetizing everything.
Check this essay on the nature of current money implementation, how it robs humanity of true value and alternatives:
http://www.realitysandwich.com/money_a_new_beginning
I don't think the clothes I buy at Target are worn by a "star" ... but I could be wrong, mainly because I don't pay attention to such things. I buy clothes there because ... I like the styles, and the prices are cheap. I discovered this simply by walking past them in the store.
Which brings us to your point. I don't think we're all sheep simply because a product we purchase employs a specific marketing tactic. It's sort of a "If a tree fell" scenario - how am I a sheep when I don't know that some cultural icon gets paid to wear / use something that I coincidentally also wear / use?
The thing is a great deal of people, consciously or not, do make purchases because someone they hold in high regard wears / uses something. Even when the only reason they are doing so is because they were paid to, or given the item for free. It makes zero sense to me, but I also don't read People Magazine :)
One bad review posted to a web forum can have a huge effect. When multiplied by 1000, I would expect the consensus view would be that few people would buy a product - if they saw that many bad reviews or negative votes or a given product. These guys had better be very careful about who they decide is not influential, they could just find that there's a difference between how motivated individuals are to spread good news about a product and the lengths others will go to if they feel they've been hard done by.
politicians are like babies' nappies: they should both be changed regularly and for the same reasons
The Difficulty I have with this is that I am AC Anonymous Coward. And therefore have little to no influence. So I get charged the maximum allowable rate, which probably includes their margins for medical/dental/vacation/bribes etc. Now if I was to sign my name to it, I could perhaps be influential, but no I prefer the idea of anonymity so I get seriously gouged for it. But if I have a name, then I might get the regular rate which is supposedly discounted but really isn't, this is similar to Grocery Card thinking. What this sort of price fixing might help spur is identity theft, so I can get the better rate for items if not just get the item for free. You want to be anonymous you end up having to pay for it, but if you can leverage a known name/brand you can live the sweet life. Reminds me of Christopher Rocancourt, he got away with saying he was a Rockefeller for years.
simple linux users are the at the bottom of the social ladder. little influence means they have to pay higher.
I'm not so sure about that. I'm a simple linux user, but as such, I'm constantly having to work on my wife's and parents' windows boxes because I happen to have the most pc know how. As I am their IT, they constantly hear me berate Windows and tell them I'd rather swap them over to Ubuntu or a Mac than just fix the problem again. If MSFT really implements this price gouging schemes, I'd be more insistent of them switching.
The way I see it, I have influence over my family by getting them to switch away from Windows. So shouldn't I then be eligible for a discounted copy?
greed@All_Evils:~#
Don't give them any idea. That's essentially what killed http://sixdegrees.com
SixDegrees used to be a great social networking site until they got the idea that they should reward people having the most connections with free CD players/walkmans and free cheap trinkets (the type that credit cards give you when you sign up with them). As soon as they started doing that, I was really embarrassed that I had invited my former bosses, my college professors, and many of my friends, to it. I used to be really gung ho about that site.
And it's not that a few idiots didn't take the new incentives to heart, some did, and accumulated thousands of worthless connections from people they didn't even know. And eventually, the site just imploded on itself. The social networking diagrams, which used to be somewhat informative, became totally meaningless. The people that actually added value to the community all left. And the only ones that remained were the needy idiots that cross-spammed each other so that they could get the highest number of connections with the other idiots (that they didn't even know of course).
Now I realize that Microsoft isn't trying to replicate what SixDegrees did, but I am quite insulted that they would be so out of touch by the common folks that they would try to patent and freely publish such a manipulative and insulting study/process of an idea. Don't they have a PR Department or something? PR Departments shouldn't just vet the Press Releases and announcements, they should also vet and have veto powers against all potentially damaging patent applications, which can be just quite as public and damaging to the reputation of a company as company announcements can be (not only that, but it adds another fresh set of eyes to the process that's not under the direct line of command from where the patent idea originally came from).
And also, Microsoft should also take look at its own incentive structure for creating patents, just like with social-networking if the incentive system is too out of whack for its own employees, any idiot-researcher within the company will try to produce patent applications -- no matter how damaging those patents can be in PR terms -- to the sponsoring organization itself.
but you have to really understand what's going on. A program like this is to measure "influence"... so they now have leverage to keep people from publicly switching as they will lose their "influence discount" and have to start over at "retail price" if they want to "come back to the fold". This is about Microsoft not losing share to other players by squeezing the share it's already got. At an enterprise level that could be tens of thousands of dollars if they saw you reducing Windows desktop licenses but wanting to keep some Server and development tools for stuff yet-to-be-switched.