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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."
Isn't this a business method patent?
Hey, works for me... Microsoft gave me a free copy of Windows 7 Ultimate 64 bit for hosting a Windows 7 party... I am influencial, I get free software!
I'd swear that's what the merchandise bags they give out at movie premieres are. The celebrities get stuff free, wield their influence over those susceptible to influencing who rush out and buy it. $0->$x.
"There are no facts, only interpretations." --Friedrich Nietzsche.
I can't believe, that some pricing strategy is patentable. Is this a joke (I'm a layman in such matters)?
Approaches like this are pretty direct attacks on why free markets work. Almost all classical and neoclassical economic theory assume things like the existence of a supply/demand price curve, availability of pricing information, etc. If you have some nutty system where price curves aren't really defined beyond an individual level, prices aren't widely available, etc., all the usual pricing signals, resource allocation by the "invisible hand", etc., get a lot more muddled, and probably begin to break down.
Of course, that's certainly a reason I can see Microsoft wanting it: finding ways to profit other than "make a good product and compete fairly on the open market" is their modus operandi.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
You sir are a tool, and apparently happy to be one.
Let's all friend each other on Facebook...the entire /. community. We will all be considered exceptionally influential and will therefore be given free stuff.
So if this is the future...where's my jet pack?
[0004]The described implementations relate to social marketing. One technique identifies potential buyers of a product where the potential buyers belong to a social network. The technique determines a price to offer the product to individual potential buyers that considers both influence of the individual potential buyer within the social network and overall revenue from sales of the product to the potential buyers.
[0005]Another implementation identifies potential buyers of a product in a social network. The implementation arbitrarily selects a set of the potential buyers to offer the product at a relatively low price to influence the remaining potential buyers. The implementation also updates membership in the set by adding and removing individual potential buyers from the set until revenue from product sales to the social network is not increased by adding or removing an individual potential buyer from the set. The above listed examples are intended to provide a quick reference to aid the reader and are not intended to define the scope of the concepts described herein.
The rock stars get their guitars for free (Paul McCartney once commented:"When you're poor you cant' afford them and when you're rich they give them to you.) is the same thing.
Or how about paying celebrities to use your product.
Now the randomly selecting people part. What's wrong with that? So they're trying to accelerate the product to the tipping point.
This will hurt no one and this was just an "article" to have an excuse to bash Microsoft about something. *yawn*
It's NOT me! It's the meds! I'm on 1000mg of Fukitol.
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).
Influence mapping scares me deeply. It completely devalues the entire concept of friendship, turning every relationship into a marketing channel, every person into a spambot zombie hoping for a discount from sellers or a better performance appraisal at work.
I would love to see the practice outlawed, but data mining is becoming so pervasive I don't know how you prove its even happening without catching differential pricing caught in the act.
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"
Now nobody else can do it. Can I have my $150 Photoshop now?
People will find ways to game this system, just like people gamed search engines with Google bombs.
If you think blog spam is bad right now, just you wait.
And someone just said yesterday that the privacy policy of Bing is better than the one for Google.
Looks like they have the next few revisions already in mind, with substantial changes.
Assorted stuff I do sometimes: Lemuria.org
So now MS is patenting Game theory.
What netx, algebra ?
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.
I would assume that the open source movement has a mole within Microsoft, because this looks like a big win for open source software.
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.
Live today, because you never know what tomorrow brings
This is the most evil plan related to software that I think I've ever heard. Their plan is basically to prey on the weak. Are they going to patent stealing candy from children next?
I, for one, welcome the new opportunity to game the system. I mean pricing scheme.
Paleotechnologist and connoisseur of pretty shiny things.
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.
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.
Only 5000 more rep and I'll be exalted with the Microsoft faction! Discounts abound!
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.
FTFP: "The technique determines a price to offer the product to individual potential buyers that considers both influence of the individual potential buyer..."
Microsoft wants to pay its customers to astroturf for it. Where I come from that's called a kickback, bribe, or politics as usual.
for free stuff i use p2p, best marketing tool ever, apart from the sales graph
...or bribing the most influential?
Let's be blunt here, if one side ceases to play fair, I see no reason in not following.
So what's the requirement to be seen as "influential"? Having a shitload of friends on facebook? Great. Let's start a group dedicated to the sole purpose of having friends. People you don't know or don't care about, as long as you have a lot of friends you get crap cheaper? Works for me.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
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
A pretty close one: having the option to disable slashdot ads based on user karma.
Consider the following: You've been tasked with junk-kicking the man business of a certain number of individuals. The parameters of your task are only concerned with the number of people junk-kicked; you decide which people's man business gets junk-kicked to meet your assigned quota. Are you going to junk-kick Vladamir Putin or Osama Bin Laden? How about Kim Jong-il? Tom Cruise? I would think not. That some of the aforementioned people might deserve a junk-kick in their man business matters not. They all have massive influence and could easily make you: disappear, die, rot in prison, or a level 5 Thetan.
The obvious targets for a junk-kick in the man business would be individuals with very little influence: Luxembourgians, educated American voters, Gary Coleman, The Jackson family sans Michael, and etc. These targets would have little recourse other than to accept a good junk-kick in the man business. In fact, some groups are repeatedly being junk-kicked in the man business (read: educated American Voters).
I think it's safe to say that a lack of influence == junk-kick in your man business.
this is exactly what the US Congress has been doing for years (Price-Gouging the Least Influential).
"National Security is the chief cause of national insecurity." - Celine's First Law
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
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:~#
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."
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.
With Windows 7 release.
'Influential' people (loud online and offline how Vista sucked) and enthusiasts (basically same as first group) were given discounted versions of Windows 7 (win 7 parties, pre-release discounts, school discounts, etc.)
And they all took the bait, told the world how Win 7 is great... and guess what? You can't buy discounted version, you have to shell out $120 for cheapest upgrade. The student version offer is about to end as well, and family upgrade option 3-for-150 has been discontinued.
Sadly, it works, now everybody wants or considers Windows 7.
I sure hope that most linux users are not in there only b/c of the price in $. IMHO, linux is not just a price tag, it's a philosophy, a way of being!
I'd buy large quantities of their products at a low price and resell them for a small markup.
With the Internet, everyone has a voice. Everyone is not equal, but everyone has a voice. There are so many places, forums on sites like this being the best example, where people can express themselves that even if you are completely non-influential online in general terms, your voice can be heard by millions. Also someone who isn't influential can suddenly become influential. My website is not influential, it isn't intended to be, few people come to it unless they are after something in particular on there. However, if I put something on it, and Slashdot links to it, suddenly it is influential for that item. My voice went from meaning little to meaning lots.
So the problem you get is that if there is differential pricing going on, people will quickly find out. If it is something like you've been sending out discount codes to preferred customers that reduce the price, those codes will quickly be posted all over the Internet. If it is something like you give people a great deal via their account and tell them to tell their friends, well then quickly it becomes apparent that not everyone gets a great deal as they talk about it, and this will get posted on the net.
It is just the sort of thing I don't see working. There is so much content submitted by random people (like our comments), so many forums for expressing yourself, and the potential for a single post to become of major international note. You can't control that sort of thing.
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.