Monetizing Digital Offerings …A Radical Re-thinking                                                                       ...
Digital Problem=Opportunity #1The Long Tail of Price Sensitivity                       • Green revenue:                   ...
Digital Problem=Opportunity #2          A digital “product”?• Near-zero marginal cost• Selling entitlements to access  – B...
Embrace the opportunities!…Partial steps already taken:• Free trials• Freemium• Pay What You Want…What else?              ...
View Pricing Holistically!A value discovery process  – Optimize price over the relationship    • Risk a few transactions  ...
--Thanks to John Blossom, Shore Communications (ContentBlogger)     “Pay as You Exit: FairPay Explores New Content Pricing...
FairPay Dialog  Gated FP Offer                       Accept/buy/use                   Set “fair” price                    ...
To Customers• Pay only what seems fair to you -- after you try it• Agree to set price fairly -- in your own judgment  …and...
Seller Control and Predictability?          Frame/nudge and track• Managed dialog -- “choice architecture”  – Seller      ...
FairPay Value Discovery Engine                 Frame/nudge and track        Offers                                        ...
Engage Customers in Real Dialog        Real-time, Real-life Market Research• Dynamic pricing and value discovery  – Real w...
Business Contexts• Subscriptions / ongoing services• Other ongoing relationships  – Aggregation: iTunes, Amazon, App store...
Platform and Database Opportunities• Single vendor – internal process solutions• Cross-vendor – added leverage  – Shared i...
Usage/Value Pricing - Buyer-friendly• No ticking meter / No usage shock• Price “considering” usage, but…  – Buyer factors ...
Price Discrimination - Buyer-accepted   Economic optimum: price tracks to value• Buyer “self-discrimination”• Engages buye...
Where to start?                (Examples for Music Subscriptions)Acquisition =“Fuzzy Freemium”           versions, tie-ins...
FairPay Dialog        Continuing Feedback – Balance – Convergence – Inclusion  Gated FP Offer                      Accept/...
FairPayCustomer Dialogs about Value          Richard Reisman      Teleshuttle Corporation   fairpay [at] teleshuttle [dot]...
SUPPLEMENTARYSLIDES                19
The Not-So-Crazy World              of “Pay What You Want”• Real Successes (mostly special offers, customer acquisition)  ...
Publicity Value                 to Early Adopters of FairPay• Pay What You Want offers generate  dramatic publicity     (R...
FairPay Development Status• Patent filings (published by USPTO 12/1/11)    – High level s/w architectures, rich functional...
Product / Service Category Examples• Anything with low marginal cost    – Long-tail / low-demand products (expand market /...
Process Automation and Control              Integration with existing systems•   Offer management / merchandising / CRM•  ...
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Reisman on FairPay at MITEF "Better Strategies for Monetizing Digital Offerings" 12-1-11 (See Updated Presentation*)

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(SEE UPDATE AND VIDEO*) FairPay presentation by Richard Reisman, Teleshuttle Coprporation at MIT Enterprise Forum of NYC "Better Strategies for Monetizing Digital Offerings" 12/1/11.

*FOR A MORE CURRENT VERSION OF SIMILAR PRESENTATION, SEE
Reisman FairPay Overview -- Adaptive Win-Win Relationships / Revenue Strategy - Latest Version
http://www.slideshare.net/rreisman/reisman-fairpay-overview

FOR VIDEO SEE
http://www.fairpayzone.com/p/blog-page_14.html

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Reisman on FairPay at MITEF "Better Strategies for Monetizing Digital Offerings" 12-1-11 (See Updated Presentation*)

  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 Product FairPay Fairness Fair 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 Teleshuttle.com/FairPay Blog: FairPayZone.com 18
  19. 19. SUPPLEMENTARYSLIDES 19
  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. Publicity Value to Early Adopters of FairPay• Pay What You Want offers generate dramatic publicity (Radiohead, Panera Bread, Humble Indie Bundle, …)• FairPay sellers can play the same card (as a form of “Pay What You Want”)[Added 1/3/12] 21
  22. 22. 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 – ennovent.com (begun 4Q11)• Free consults on use 22
  23. 23. 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 23
  24. 24. 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) 24

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