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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?"
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?
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 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.
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.
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?
Google, you've changed.
They have? You know something we don't?
I've changed, too. I'm applying for a patent on Unpredictable Weasel with my chaotic buying habits. I'm certain to cause a divide by 0 at some point in their algorithm. You'll know it happens when their main site goes down.
A feeling of having made the same mistake before: Deja Foobar
It's not different, that's whole point. Bargaining involves human thought processes. Most human thought processes are poorly understood. If you can create a well-defined procedure that replicates a mysterious human thought process, you've clearly done something innovative.
Which is not to say I'm happy about businesses finding another way to gouge me,...
While schemes like this may drive up profit margins to some extent, I think the goal for a lot of retailers in using schemes like these is to keep the actual prices paid for products private and in house. The schemes prevent competitors from price matching and destroy comparison shopping sites like Nextag and (oops) Google Shopping, since their robots will no longer be able to collect meaningful prices. All the vendors will think "This way customers will just stay on my site" And that will be true, so long as the vendor is Amazon or Walmart.
The backlash will be people reporting the prices/discounts they were given for products when they review them. Vendors will respond by deleting that information from the reviews, which will upset their customers who will in turn switch to review aggregator sites like Epinions.com for their reviews, which will in turn be bought by Google, Amazon, or Walmart.
No, their slogan is "Don't, be evil". I thought everyone knew that by now.
Socialism: a lie told by totalitarians and believed by fools.
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.
Given how hard trolls like Apple are slamming companies without sufficiently large patent profiles, Google needs to be able to defend itself. If it sues anyone over this sort of bullshit except in self defense you have a case. As it stands, failure to patent this would be stupid.
Its just as likely Google filed this to prevent Apple/Amazon from using it.
After all, google sells ads, (and android music/apps/video) but not a great deal of other stuff.
They would not be the most likely users of this technology. They might sell the info to other on-line retailers, but those people will be undercut by retailers who don't buy this service from Google. In other words, use of this technology is likely to put the seller at a disadvantage, because even people who will pay more, want to pay less.
Selling Ice in Texas is easier and will fetch a higher price than selling Ice to Eskimos.
But in Texas, they aren't stupid. Given the same Ice at two different prices they have no problem making up their mind.
Sig Battery depleted. Reverting to safe mode.