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Google Patents Profit-Maximizing Dynamic Pricing
theodp writes "A newly-granted Google patent on Dynamic Pricing of Electronic Content describes how information gleaned from your search history and social networking activity can be used against you by providing tell-tale clues for your propensity to pay jacked-up prices to 'reconsume' electronic content, such as 'watching a video recording, reading an electronic book, playing a game, or listening to an audio recording.' The patent is illustrated with drawings showing how some individuals can be convinced to pay 4x what others will be charged for the same item. From the patent: 'According to one innovative aspect of the subject matter described by this specification, a system may use this information to tailor the price that is offered to the particular user to repurchase the particular item of electronic content. By not applying discounts for users that may, in relation to a typical user, be more inclined to repurchase a particular product, profits may increase.' Hey, wasn't this kind of dynamic pricing once considered evil?"
Please, how is this patent any different from real world bargaining? It's true it happens less and less now, but especially in third world countries bargaining is every day happening.. from tuk tuk rides to shopping.
Essentially Google just added digital into the mix. What a great discovery so worthy of patent! Google, you've changed.
This guy has bought every Madden game ever: No discount on Madden 13 for him.
This guy has never bought a Madden game: Give him a $10 discount to incentivize him.
Sounds great in theory. Sounds ever better in a Google ad pitching the idea. But the reality is that you're about to screw over your biggest fans and supporters. And if they get wind of it, you consequently risk LOSING some of your biggest fans and supporters. Penalizing your fans for being your fans could result in an epic backlash.
Now there are some fan groups (not mentioning any names here), whose members would probably respond to this kind of abuse with a smile an a "Thank you sir, may I have another?!?" But I imagine most people would be none-to-happy to learn that their loyalty to a product line has been rewarded with a backhanded insult.
Not to mention the fact that you can bet that some of the more unscrupulous and technically-minded people out there will quickly learn how to game the system.
BTW, I've never bought a Madden game. Can I get a coupon, EA?
What political party do you join when you don't like Bible-thumpers *or* hippies?
Description reads more like a sociology paper to me.
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You can patent something truly horrific, then not use your patent or let anyone else use it. Hopefully that's what they're going for here.
Not defending anyone that uses this pricing scheme, but what makes people think they have a right to something at any price? A strong sense of entitlement. Anyone familiar with sales knows that the more someone wants something the higher they'll pay. All the complainers are going to have used their own knowledge of someone's desires to benefit themselves sometime in their life, and they'll still remain self-righteous and indignant.
This is not negotiation, as happens during bartering. It is the worst sort of "grab whatever this particular sucker will pay" profiteering. When I see a price posted on an online shopping site, I have a reasonable expectation that everyone else viewing the same page will see the same price. Apparently, this is not true at present. How can we stop these characters from gouging us?
This is merely a new way to implement a ubiquitous and venerable concept: price discrimination. There is hardly a thing in the world that some man can not make a little worse and sell a little cheaper.
The one titled "keeping custom^H^H^H^H^H^Hsuckers from realizing they've been fleeced and getting mad at you"?
Knowledge is how to play a game, intelligence is how to win, wisdom is knowing what game to play.
Seriously. Enough troll headlines about X company patenting Y. Let us know when Google or any other company aggressively uses patent trolling to stymie a competitor. Or when any of these evil privacy invading money grabbing kitten torturing patents actually end up being implemented. Companies patent anything and everything now, it doesn't mean your most FUD imagination of its worst scariest implementation will come true tomorrow. When it does, let us know. Until then, give it a rest.
Something is worth what someone is willing to pay for it.
If a vendor knows who is willing to pay what, they can improve profits while maximizing sales.
Hell, if I had a store and could identify people willing to pay more for my goods, I'd charge them more too.
Personally, I consider that evil. It is why I quit my job working for a payday loan company. They prey on poor, stupid people.
However, technically, it can also lead to lower prices for some people. If the real price is slightly too high for you, they'll lower it for you without losing money on every single sale and the lowered price will probably make you inclined to come back... at which point the price will probably go back up and like everything else just fluctuate like a pendulum.
And legally... I think it falls in line with what is accepted practice. Businesses have always fluctuated their prices based on consumer demand. This just lets them get more personal.
It still is considered evil, at least by customers. The people interested in doing this just hope the customers won't figure out what's up. Fat chance of that in this interconnected world. It won't take long for people to compare notes and find out about variations in pricing with no explicable reason for them (no coupon or discount codes used or anything like that). And once people notice, word will spread like wildfire. As will customer dissatisfaction, and people will shift to vendors who simply offer a straight-up price without trying to play games.
I cannot say what is motivating this patent however just because you apply for a patent doesn't mean you intent to implement it. This should be obvious from all the trolls out there. If someone desires to prevent an "evil" invention from being unleashed on the world having a patent on it would be a means of preventing others from doing so.
Dreaming up and patenting evil inventions to prevent others from creating them may well have saved us from a good number of woes we are now dealing with such as DRM, robo-callers, etc..
Two of my imaginary friends reproduced once
Maybe the Giants will come down to Google HQ with baseball bats and break some windows. They've been using dynamic pricing at AT&T Park for a while now.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
No wonder the US economy is tanking when all companies do are applying for and being granted stupid patents like thiis, and most the world don't care about these kind of patents anyway.
Take Nobody's Word For It.
But I have a tendency to put stuff in a cart and not buy it right away.
I wonder if that works in my favor?
I'm their worst nightmare, I only buy when I can afford to, not when I feel like getting a credit card and buying stuff I can't afford.
A feeling of having made the same mistake before: Deja Foobar
This kind of price discrimination only works becasue the product is digital. Being able to buy from the guy getting the lower price is how this is avoided with physical goods. The solution is not prevent price descrimination. The solution is to allow resale of digital goods.
when they find out I don't belong to any social networks. I'd rather be unknown with no social life than some $$$$$$$$$$$$$ generating product number for some corporation.
So your prices will start at the high end of the spectrum...
A feeling of having made the same mistake before: Deja Foobar
Don't be mumble mumble.
-- Two men say they're Jesus. One of them must be wrong. - Dire Straits
'watching a video recording, reading an electronic book, playing a game, or listening to an audio recording.'
People pay to do these things? Who knew?
This dynamic pricing idea is an extension of something that have been practiced by merchants for a very long time. Dynamic pricing is just price discrimination among different types of customers.
One method to discriminate is in favor of the most loyal customers. Airlines and hotels are examples of businesses that provide loyalty reward points that can be redeemed for discounts and fringe benefits.
Another method is to discriminate in favor of least loyal or new customers. Cable companies like Comcast do this. Here is how. They offer ridiculously low discounts for their cable packages for first time customers for the first x amount of months. The customers that threaten to leave, which would be the least loyal customers, are offered discounts on their current plans and packages if they stay. The people who don't get any discount are the most loyal. In fact, they can expect their cable bill to increase each month for channels/services that they don't really need or want.
Google Bot #1: "The cpu6502 dude went to amazon. Let's show him book & TV ads and jackup the prices."
Bot #2: "Yeah but he didn't buy anything. He opened a second tab and searched isohunt for free downloads."
#1: "Dangit...... no wait he likes music! Look at all the songs he listens to...."
#2: "Yeah on Free radio and youtube. He never buys anything.... last week he downloaded the Hot 100 of 2011."
#1: "Bummer..... oh look! He just surfed over to cheapassgamer and bought a game..... (sigh). Never mind. It was only $1."
#2: "I told you following this guy was a waste. He rarely buys anything and when he does it's for a mere dollar. Let's go track someone else."
#1: "Yeah fine. Whatev."
My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
Amazon tried this a few years ago and when customers found out they threw a shitfit.
And whatever happened to Do No Evil? I hope Amazon gives 'em hell over it, even they didn't bother to patent this and they patented the one-click purchase.
"When information is power, privacy is freedom" - Jah-Wren Ryel
They've just taken market segmentation and added a process to focus it to not just a demographic or geographic area but to the individual. Don't any of you remember looking through Christmas catalogs and seeing "Executive chess sets" or pens or whatever? It was a bloody chess set with the price jacked up and the word "Executive" added to the name. In other words, they figured out how to sell X number of chess sets at Y price to Z number of users. So how is that illegal? Not that I'm a fan of it but I just don't see how it violates any anti-trust. However, it would be nice to see that news spread far and wide so people are aware of it.
That's an ancient practice!
Twinstiq, game news
It is commonly used by drug dealers. They sell stuff at higher prices to addicts and at lower prices for new or less addicted buyers.
1. There is no such thing as "content" anymore. That is just a weasel word they need, to make themselves still think in the nonsensical/criminal old business models. It is "information". Plain and simple. /. nowadays) not understanding the physics of this *at all*, and believing in the bullshit, because if you repeat something often enough, people will believe it, doesn’t make this right at all. Quite the opposite.
2. Information is not a tangible good. It doesn't adhere to the same rules as physical matter/energy. When giving information to someone else, there is no such action as "moving", or "taking it back". Once it's out, it's out forever. So there is no such thing as giving them "another item" of a "product". You can only give them the *same* information again. But they will already have it. And since there aren't (at least yet) and TCPA/DRM chips in our head and on our computers, you can also never control if others got it to. If you yourself gave it to multiple others, it even is guaranteed, that you can't track back who passed it on.
3. Giving somebody something, which he already paid for, and demanding money again, is at least usury, and usually considered fraud. Because you took money, and gave no value in return. You did no work at all to make that copy. And artificially creating an environment in which one has to constantly pay, to keep the information he already got, ups those criminal charges by over 9000!
4. No, nearly everyone (Joe Random, but even most here on
It makes it way way worse. Into a charge of a massive conscious and deliberate conspiracy of fraud, usury, bribery of officials [treason] and racketeering.
In other words: Pound-me-in-the-ass prison. Big time. For everyone involved.
At least in the real world...
As a drug dealer, I became very familiar with this concept.
I used to buy pot by the pound, and then sell it by the oz or quarter oz. My price was always changing, based on supplier, quantity etc.
At first, I tried to "pass the savings on to my customers". I would tell people "Well i paid less for this, so, its less" or "I paid more, so this one I have to charge more for". However, the price I paid was divorced from the real quality. Sometimes you pay more for better, sometimes its not as good.
One thing that became apparent was that people factored price into their considerations in ways that I never expected. I got some exceptional stuff for a great price. It was normally $400/oz stuff, but I got it so cheap, I could sell for $350 and be fine, so I set a price in the middle.... but for one of my better customers, I wanted to be nice, plus I was cuffing to him, and so I wanted to try and get him to make a bit more and maybe transition to paying upfront.
So I say to him... "this is primo stuff, but I got a discount myself so I can sell you it at $350.". He looked at it, smelled it, then asked if there was anything else, and turned it down! I was shocked! I was certain that he would LOVE this stuff!
The very next week, when he came back, I showed him the same bag and told him it was $400. He sniffed it...his eyes went wide, and he immediately picked up an oz, even came back a few days later to tell me how great it was, and asking if I had more! (I never tried to give him a discount again).
I had stuff that was cheaper, and I was offering up for $330, then dropped to $300.... nobody would touch it...while pounds of product came in and went out at $400 an oz
as for anyone thinking this sounds like a profitable business.... it might be if you have enough customers, but its amazing how a habbit can grow (especially when you smoke up your customers). In the end, I think in 5 years I went from around 3k investment to around 12k...with the rest of the profits smoked up.... totally wasn't worth it for the money.... but... I learned a lot about business, and have a lot more sympathy for people trying to figure out what the hell to charge people and how much profit they really need to make for it to be worthwhile.
Recently I have been thinking about causes of piracy and I believe a big factor that contributes to piracy is the fixed retail prices of goods. In many countries today, haggling is common and it allows the buyer and seller to come to an agreement on price based on the interest of a single buyer acquiring the item and a single seller collecting money for the item. However, in many western countries, goods are available at a single price and you can take it or leave it. For those who do not believe that a digital item is worth what stores are charging, they are more likely to resort to piracy despite the fact that they may have been willing to pay for the item had the price been closer to what the buyer thinks it is worth. A system like this could allow retailers more flexibility in pricing so that they could sell items to people based on their interest. Such a flexible pricing system is easy to do in person, but much more difficult to do online.
It will be interesting to see how Google's system pans out if they decide to actually use it, especially considering how similar systems have failed. And while I support their attempt at such a system, I feel it is worth stating that I detest the fact that they are patenting the software algorithm that accomplishes the task.
Because I'm a cheap ass bastard and if they figure out I won't pay more than $0.01 for content they'll charge me that. Win/Win.
Personally, and I suspect I am not a majority, I research my purchases so being taken advantage of is somewhat reduced. Additionally, I have a tendency to deal with people ( after they started adding taxes on online purchases everywhere, I have lost most of my reason to scour the net for cheapest crap.. with one exception, newegg, but I think it is mostly because of the reviews) and I do not purchase as many things online as I used to.
Still, I understand that people do not always research and buy on impulse. Do I think they should be protected? Not really, they need to learn somehow. Besides, if a consumer really really absolutely wants something.. price is just a temporary distraction.
Do I think they should have the information? Yeah, but that part should be up to them to locate. Do I think google is evil for turning from helping customers finding cheapest shit to gorging them depending on their habits? Absofuckingtively...
For what is worth, I try to educate people I come in contact with that giving everyone all your information is not very smart. Unfortunately, the most common response I have gotten thus far something akin to "Pfffft, we aint afraid of big brotha", which completely misses the point, but I digress..
Back to the acid mines..
This post is provided without warranty as to reliability, accuracy or otherwise or fitness for any particular purpose.
The "As Seen on TV" channel...
Seriously, hasn't this been done by every pan salesmen at a farm faire? Every merchant at a bazar?
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I am patenting "Expressive Expoundings of Thoughts". I now own EETs. All of your posts violate my EET patent. Please pay me $0.02 per post. Thank you.
Have gnu, will travel.
Its was drilled into us at Tandy Corps retail locations always always LISTEN to your customer ASK open ended questions PROPOSE a solution (ask for the order) OVERCOME objections (ask for the order) SELL the addons CLOSE the sale.
if this guy was Tandy Trained he would have sat that guy down called the manager for backup sold 20 trucks (with the Service Plan) and a truck load of Floor Mats /Cargo|Tool Boxes and then taken the next three days Off.
Any person using FTFY or editing my postings agrees to a US$50.00 charge
If it is something you can do without, then these types of pricing models are acceptable, as the buyer can always say: "No I'm not going to pay that for the product". Examples of products which could be dynamically priced: music, movies, sporting events, airline tickets, cable tv, communications (i.e. mobile phones, ISP's), concerts, hotel stays, restaurants, and theme park admissions.
If it is something which is income dependent, or the cost to provide the service varies with risk and complexity, then a regulated form of dynamic pricing applies. Examples: Taxes, Insurance, Home improvements, Loans.
If it is an essential item such as food, clothing, housing, healthcare, prescription drugs, or energy, then dynamic pricing should be prohibited, and everyone should pay the same price.
There are plenty of things that I might have bought just to try but couldn't justify the high price. You could also look at this system as offering a discount to disinterested customers such as myself. Hey, he's not really interested but if we offer a discount he might bite.
I've been doing this for a long time with a shop I own. I jack up the prices for anyone who's not white.
People don't seem to like it very much.
A unique way to learn a language: http://languageloom.com
I have an intuitive feel that there is something wrong about price discrimination, but cannot justify it intellectually. I think it comes down to a sense that I should fight for a better price if it is achievable.
Given that the owner of a product should have the choice to sell or not in any particular circumstance there is nothing wrong with price descrimination. Wrongfull motives on the part of the seller (we don't serve your kind here) are an exception.
But I also see nothing wrong in taking advantage of that descrimination to get the lower price, even if it defeats the seller's intent. Deleting cookies, dressing down to buy a car, going to a store in a different neighborhood all are perfectly ok with me. I am not so sure about outright lies (my son is only 5) but YMMV.
Surely, RIAA / MPAA's wettest dream.
I hope against hope Google patents this and then makes it so it's impossible or impractical to license, while vigorously suing into oblivion anyone who dares try it without license. Otherwise, Google just became as evil as any other ordinary Evil Enterprise.
This whole "streaming" and "cloud" thing is just setting us up for robbery. Worse than we are now, I mean. I can see content one's already bought held hostage for further payment. That's what these assholes want, you know. They want it so every single time you read a book that you already bought you have to pay for it. Wait -- didn't someone already try this some time ago? DIVX. Failed, didn't it... it'll be easier to make it stick once all the content's in "the cloud."
Can you imagine? A Blu-Ray one already purchased requiring further payment every time one wishes to view it? That's why they want to do away with physical media, you know. They want this. It's that kind of thinking that makes me think physical media must remain the primary method of distribution. Files in a cloud are too easy to arbitrarily delete, too easy to control, too easy to hold for ransom. With physical, if you want my copy of Brave back, you're going to have to bust into my house, survive whatever punishment greets you when you do, and then make off with the movie.
Every time I read crap like this, I become more disillusioned with this modern world. I don't yearn for days gone by, what I want is for people to wake the fuck right up and say "enough with the gouging and pocket-picking, nickle-and-diming and outright robbery already!"
Heh. Fat chance. I know.
The "Civilized World" jumped the shark ca. 1973.
Anyone else see the irony in Google patenting something Apple has been doing for decades?
Airline tickets.
What Google is doing will drive the creation of dozens of startup businesses, all aimed at gaming the Google system.
Have gnu, will travel.
I thought that was done.
The diversity and expression of human opinion is essential to human survival.
See Subject.
Some individuals can be convinced to pay 4x what others will be charged for the same item. Pretty sure one can use George Lucas as prior art.
They have redefined "no evil..." to "We not evil" - do i smell Balmish standars here?
In order to form an immaculate member of a flock of sheep one must, above all, be a sheep.
Er, you cannot prevent anyone from using your patent. You can only sue them for compensation.
Since when do injunctions not exist?
If Tandy Training were so effective, then why does RadioShack continue to decline?
I looked into this years ago thinking about schemes to use public data such as home values to set different prices. What I learned was this is illegal.
http://en.wikipedia.org/wiki/Robinson-Patman_Act
I don't know if discounting can be used to effectivly circumvent either the federal or any similar state laws.. my guess anyone actually doing this is leaving themselves open for actions for discriminatory practice in at least some jurisdictions.
It is amazing anyone could be granted a patent on such an obvious endeavour with prior art stemming from the dawn of industry. Whats next patenting "dynamic pricing" within a tourist trap while a cruise ship is in port?
If such a system were deployed wouldn't people just create accounts where they act as if they are piss poor to get the lowest possible price? Machine algorithms are exceptionally poor at reasoning and dealing with false information.
I claim prior art exists. Magazines have been doing this sort of thing for decades. They give greatly discounted subscription offers to some people who they target as unlikely to resubscribe and to new subscribers. To old subscribers who they think will keep subscribing they do highly inflated subscription rates for the first pull. Then if you don't bite they start decreasing the subscription rate.
Our family's solution is we just get the magazine in a different family member's name each year. This gives us the best rates. We see all the 'super deal rates' they offer as an existing subscriber but there is almost always a better deal for new subscribers.
Frankly, this model of sales pisses off a lot of people and they're losing business doing it. Often we'll let a subscription lapse for a while... or forever. They should treat their existing customers as gold and pamper them with the best rates.
Go into a high end luxury car dealership dressed in a janitor uniform (blue pants, shirt with a name patch on the front) and park some beater up front in the spots all the sales people can see. Walk in and see how seriously any of them take my desire to buy, say, a brand-new Mercedes E63.
Having known a luxury car salesman personally and seen the shallow, ego-driven mindset involved, I'd assume I'd get jacked around and basically be told that nothing was available, would I like to look at a 10 year old C class?
I'd politely say no, go out to the junker and pull a Zero Haliburton suitcase out and walk in and ask to speak the sales manager. Pop open case, display a bunch of cash and explain I was really interested in buying car, but frankly, I'd rather burn the money.
Then walk back outside the dealership, dump the money and light it on fire and watch it burn.
Generally, allowing the resale will also allow replication. That means that while Fred may be scrupulously honest and would never, ever retain a copy of something he was selling, Susan isn't so uptight and sees an opportunity when it arrives.
A couple of weeks after this policy goes into effect there would be no more sales. Fred? He sits on the sidelines and wonders why and who wrecked things for everyone. Susan on the other hand is gloating that she was instrumental in bringing down not just some nasty little boy but an entire corporation.
Personal profit isn't the only motivation at work, although if you can grab some cash, why not? But the fame and glory associated with destroying what many perceive as the downfall of civilization - a business - is not something to sneer at. And then there is the whole idea of destroying the revenue model for everything and suddenly everything will be free - somehow.
Retail stores have been operating with the known fact that 10% of the people that walk in are shoplifters and will steal something if given half a chance. This is why the guy is checking receipts at the door - they don't catch all of the 10% but they can knock it down to 2-3%. About time the rest of the world caught up with this knowledge. A lot of shoplifters aren't doing it out of need, they are doing it for the fun. Same thing happens in the online world as well.
Some one needs to make a movie where the villian has a crazy side kick named "Don't."
Fugue for Aaron Swartz
What are you, some kind of gay socialist pirate terrorist?
Fugue for Aaron Swartz
The guy normally watching Jungonator Warrior is only searching for Romantic Barf Shizzle because he, against all odds, has a girl in his apartment.
I bet he's even willing to pay $20 so they can watch her favourite movie together.
Privacy is terrorism.
every company that sells products to Australians online has been doing this forever
A patent itself is fairly neutral. It all depends on how it's used. The end game for this one, used offensively, is another layer of middle men.
Now we just need the xmas shopping ap. If you can see what prices your kid brother is getting and they are a lot higher than the prices you are getting for the same goods, that would make a fine gift.
With aggressive hyper-litigious patent trolls, like Microsoft, Oracle, and Apple suing everybody every day; how can you blame Google for trying to protect itself.
Google hates software patents, and has lobbied against them. But until the system changes, Google is forced to defend itself.
Did Google just pull an Apple?
If it ever makes into reality (I doubt it will), you will be given a simple choice: pay whatever some algorithm believes you are prepared to cough up even if it's more than everybody else, has overestimated your income, net worth, etc, etc; or go to a high street store where you pay the price on the sticker, no questions asked. This scheme could be just the saviour that the high street has been waiting for. And to those who say it's only a form of bargaining and the workings of supply/demand market forces, imagine your employer giving you a pay cut because they heard you just inherited some money from a recently deceased relative (after all, you don't need as much money now, right?) There's already a place where supply/demand forces work in the way they were intended - it's called eBay.
They better not post reviews from people who got different prices then. Star ratings aren't that useful anyway, but when rating something there is an implicit assumption that it's for a given price. A phone may be five stars at $50, but someone buying it at $150 would be disappointed. There will probably be independent services to keep track of the prices (Firefox extension, anyone?).
That said, if they can get rid of the stupid .99 prices, I'll consider it.
I don't know if anyone else thinks, these articles tie hand and hand. Reading through today. With this patent wouldn't this give Google the right to Sue the publishers from the following article http://yro.slashdot.org/story/12/09/07/1311244/judge-approves-settlement-in-ebook-price-fixing-case. As pointed out this is illegal in the US, but other than the government chasing violation. This would allow Google to assist. I guess this is just my thoughts on the matter.