MITEF-NYC-111201-Better Strategies Monetizing Digital - Richard Reisman


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MITEF-NYC-111201-Better Strategies Monetizing Digital - Richard Reisman

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MITEF-NYC-111201-Better Strategies Monetizing Digital - Richard Reisman

  1. 1. Monetizing Digital Offerings …A Radical Re-thinking FairPay Customer Dialogs about Value Richard Reisman, Teleshuttle Corporation fairpay [at] teleshuttle [dot] com “Better Strategies for Monetizing Digital Offerings” December 1, 2011 1Copyright 2011, Teleshuttle Corp. All rights reserved. / Patent pending
  2. 2. Digital Problem=Opportunity #1The Long Tail of Price Sensitivity • Green revenue: (capped at set price) • Red head: lost • Amber tail: lost (less to more price sensitive) …Dynamic, context-dependent 2
  3. 3. Digital Problem=Opportunity #2 A digital “product”?• Near-zero marginal cost• Selling entitlements to access – By time, volume, devices, users, … – Unlimited variations …all measurable• “Free” as a selling tool 3
  4. 4. Embrace the opportunities!…Partial steps already taken:• Free trials• Freemium• Pay What You Want…What else? 4
  5. 5. View Pricing Holistically!A value discovery process – Optimize price over the relationship • Risk a few transactions to seek a win-win relationship – Re-integrate discovery and testing • Continuous tracking • Rich usage instrumentation • Dialog 5
  6. 6. --Thanks to John Blossom, Shore Communications (ContentBlogger) “Pay as You Exit: FairPay Explores New Content Pricing Discovery Regimes” 6
  7. 7. FairPay Dialog Gated FP Offer Accept/buy/use Set “fair” price (before pricing) (after buy and use) (Seller ) (Buyer) (Buyer) Extend it Forward Price it Backward(limit FairPay credit) (after trial) Fair to seller??? Track price (Seller) (Seller) 7
  8. 8. To Customers• Pay only what seems fair to you -- after you try it• Agree to set price fairly -- in your own judgment …and explain why it is fair – Predefined reasons (+ free-form comments)• A privilege that is revocable 8
  9. 9. Seller Control and Predictability? Frame/nudge and track• Managed dialog -- “choice architecture” – Seller • reports usage • provides a suggested price schedule – Buyer • sets FairPay prices, in terms of differential from suggested • states reasons for their differential – Seller • evaluates fairness of reasons • frames new offers -- manages FairPay credit and incentives• Nudge buyers toward suggested prices• Test/review value propositions, offers, framing, incentives 9
  10. 10. FairPay Value Discovery Engine Frame/nudge and track Offers Value/Fairness Seller- High gated -Fair Premium FairPay Buyer Offer Buyer Buyer Seller Accepts Tries Sets Tracks Low- FairPay Fair Product FairPay Fairness Offer Seller- /Service Price of Price ? gated Basic FairPay Un- Offer Fair FairPay Zone (revocable privilege) Seller Sets Price Buyer Accepts Buyer Uses (take or leave it) Set-Price Offer ? Product /ServiceBuyer Conventional Set-Price Zone 10
  11. 11. Engage Customers in Real Dialog Real-time, Real-life Market Research• Dynamic pricing and value discovery – Real willingness to pay – Specific to actual product/buyer/context• Profile-based offer model• Trials of mutual discoveryHigher margins + deeper market penetration 11
  12. 12. Business Contexts• Subscriptions / ongoing services• Other ongoing relationships – Aggregation: iTunes, Amazon, App stores, … 12
  13. 13. Platform and Database Opportunities• Single vendor – internal process solutions• Cross-vendor – added leverage – Shared infrastructure and processes = “Pricing as a Service” (PaaS) – New: FairPay Reputation Database • Across vendors and contexts (ratings + details) • Use like credit rating database  Database asset, first mover advantage 13
  14. 14. Usage/Value Pricing - Buyer-friendly• No ticking meter / No usage shock• Price “considering” usage, but… – Buyer factors in • usage • volume discounts (with seller guidance) – Soften the extremes – averaging outPrice tracks to value 14
  15. 15. Price Discrimination - Buyer-accepted Economic optimum: price tracks to value• Buyer “self-discrimination”• Engages buyers -- a rewarding process• Infinite segmentation, in all dimensions – Context, ability-to-pay, usage, time, devices, users, … 15
  16. 16. Where to start? (Examples for Music Subscriptions)Acquisition =“Fuzzy Freemium” versions, tie-ins, gamification, membership ”club”Retention Low usage, low pricePremium “club” segments curated, early access, downloads, added featuresUsage /style segments Low/high usage, low/high cost, …Content segments: Long-tail / genre indies, back-list, genresDevice segments phones, embedded systems“Deserving” sellers compensation to artistTrials, sampling, coupons, specials 16
  17. 17. FairPay Dialog Continuing Feedback – Balance – Convergence – Inclusion Gated FP Offer Accept/buy/use Set “fair” price (before pricing) (after buy and use) (Seller ) (Buyer) (Buyer) Extend it Forward Price it Backward(limit FairPay credit) (in arrears) Fair to seller??? Track price (Seller) (Seller) 17
  18. 18. FairPayCustomer Dialogs about Value Richard Reisman Teleshuttle Corporation fairpay [at] teleshuttle [dot] com 212-673-0225 Blog: 18
  20. 20. The Not-So-Crazy World of “Pay What You Want”• Real Successes (mostly special offers, customer acquisition) – Radiohead – Humble Indie Bundle $6.2MM, $4.2MM funding – Music, games – Restaurants: Panera, Kish – Hotels• Emerging Behavioral Economics – Social norms, fairness, reciprocity, altruism, framing, …FairPay expands on it (feedback/tracking, pay it backward), to retain the benefits, and solve the problems See: Resource Guide to Pricing Wikipedia entry on Pay What You Want 20
  21. 21. FairPay Development Status• Patent filings (published by USPTO 12/1/11) – High level s/w architectures, rich functionality• Public: June, 2010 – Web / Blog• Many positive responses from varied sectors• 1st commercial use – (begun 4Q11)• Free consults on use 21
  22. 22. Product / Service Category Examples• Anything with low marginal cost – Long-tail / low-demand products (expand market / gain revenue) – Short-head / high-demand products (expand market / gain revenue)• Digital content / products /services (by item or by subscription) – News / information / magazines – Music – Video – Games – E-Books – Apps / Software – Other Services• Real products /services – Low marginal cost – Sampling / trials /coupons – Perishable excess 22
  23. 23. Process Automation and Control Integration with existing systems• Offer management / merchandising / CRM• Gated PWYW offer – framing the terms• Payment request / reminder – framing the terms• Buyer pricing explanations – situational fairness• Tracking prices  Fairness rating• FairPay Reputation Database• Value-at-risk management -- FP “credit line”• Seller guidance: Framing, framing, framing (effective choice architecture to nudge behavior) 23