Monetizing Digital Offerings in Networked Markets …A Radical Re-framing FairPay Richard Reisman, Teleshuttle Corporation fairpay [at] teleshuttle [dot] com Copyright 2015, Teleshuttle Corp. patent pending, all rights reserved December 1, 2011 (Updated 7/16/15) Based on presentation at 1
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Monetizing Digital Offerings in Networked Markets …A Radical Re-framing
FairPayRichard Reisman, Teleshuttle Corporation
fairpay [at] teleshuttle [dot] com
Copyright 2015, Teleshuttle Corp. patent pending, all rights reserved
Monetizing Digital Offerings in Networked Markets…A Radical Re-framing
• Dilemma: Pricing for information – “Information wants to be free” - infinite replication– “Information also wants to be expensive” – creation
• Answer: Re-think our value exchange process– Not allocating scarce resources (no invisible hand)– Still need to sustain producersBalance value, ability to pay, cost, profit …How?...
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Monetizing Digital Offerings in Networked Markets…A Radical Re-framing of Value Propositions
• How?: Build value exchange relationships– Exploit new power of computer-mediated relationships– Co-operatively build relationships on perceived value– Learn the right price for each customer …each time Emergent approximation of economically ideal pricing Share more value, with more customers - sustainably Better business – profit, market reach, lifetime valueMore value for society– An invisible handshake …with each consumer
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The Pillars of FairPay
Re-frame: From Transactional to Relational…Transactions as steps in building an ongoing relationship,
• Historically: Prices personalized– Personal negotiation – human buyer and seller– Personal contexts, needs, bargaining powers, relationships– Communal norms (caring, fairness, …even generosity)
• Mid-1800s: Price tags / institutions– Institutional sellers to mass market consumers– Scalable: simple, operationally efficient– Buyer take it or leave it exchange norms, bargain hunting
• E-commerce: Mass-personalization? 1:1?– Why not price?– End race to the bottom – personalize a fair price for value– How to do it effectively, efficiently???
Why not price the experience after it is known?*• Unlike typical up-front offers (Pay What You Want, etc.)• Remove the consumer’s risk discount• Signal supplier’s value and trust_________*= post-pay = ex-post pricing = pay in arrears = pay as you exit = price it backwards
–Thanks to John Blossom, Shore Communications (ContentBlogger)“Pay as You Exit: FairPay Explores New Content Pricing Discovery Regimes”
Digital Problem=Opportunity #2A digital “product”?
• Near-zero replication cost (”Free”)• Not a discrete, scarce “product” • Access, entitlements, usage
– Valued as an “experience good,” a service– Personalized variations (items, time, intensity, volume, …) – …all measurable – rich instrumentation in use
New data on value to each consumer (see data blog post)
• “Free” as a selling tool(trials, freemium, pay what you want, …)
– People are not heartless profit maximizers (eg: PWYW generosity)– Traits: Fairness, reciprocity, altruism, self-image, acceptance, …– Situations: Social/communal norms vs. economic/exchange norms– Treat me as a patron, make me want to be a patron
• Computer-mediated dialog– Facilitate automated dialog about what I value, on what basis …and act on it– Engage me as a patron, show you hear/understand me
• Big Data + Predictive analytics– Validate customer dialogs, incentivize honesty– Customize offerings and how they are framed– Show that you recognize and respect my desires as a patron
Adaptive, cooperative relationships1. Foster social/communal norms2. Segment based on social values3. Nudge buyers toward fairness, perception of value, sharing value surplus
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Phasing in… • Can limit to a contained niche offering • Can build and apply in incremental stages
1. Free survey mode (free, for value feedback only – no fairness gating process)
2. Simple Pay What You Want (pricing unrestricted by fairness – no fairness gating process)
3. Full FairPay (“gated” by fairness, by seller – most of the cost, complexity)
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FairPay can be tested, phased in“Toe-in-the-water” examples for News Subscriptions
Acquisition =“Fuzzy Freemium”Paywall balkers? – special limited usage “trial”
Distinct branding separate from conventional offering 19
Change the Game with FairPay!From invisible hand to invisible handshake
• From: set prices shop for lowest price commoditization
• To: FairPay participative value exchange shop for value, relationship engagement, loyalty
• Analogous to tipping – Easy, intuitive, with rich multi-dimensional nuance– Often happily pay more than you “need”– Free is an option, not a price
• Delight your customers, give them pricing freedom, gain their loyalty– Treat me as a patron; make me want to be a patron– Engage me as a patron; show that you understand what I care about
• Single vendor – internal process solutions• Cross-vendor – added leverage, information
– Shared infrastructure and processes = “Pricing as a Service” (PaaS)
– New: FairPay Fairness Reputation Database• Across vendors and contexts (fairness ratings + details)• Use like credit rating database (FairPay credit line)• Detailed value perception dataDatabase asset, first mover advantage
• Interest by potential platform vendors (Zuora)– Plug-ins / SaaS
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 Digital Services
• Analogs of conventional methods, plus new ones, in any combination – Freemium, Paywalls (metered/soft)– Tiers, segments, dynamic/usage pricing– Custom mix of customer revenue and advertising– Phasing: Survey mode, Simple Pay What You Want– …
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Engage Customers in Real DialogReal-time, Real-life “Market Research”
• Dynamic pricing and value discovery– Real willingness to pay– Specific to actual product/buyer/context/usage– New kinds of Big Data at a micro level
• Ongoing “trials” of mutual value discovery• Focused, flexible value propositions
– Match to customer perceptions, specific contexts, times– Sell value: a positive experience (not focus on price)– Build a relationship - get not just customers, but patrons
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Usage/Value Pricing - Buyer-friendly
• Deadweight loss of “all you can eat” unlimited subscriptions (See deadweight blog post)
• No ticking meter / No usage shock• Price considering usage, but…