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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
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Copyright 2011, Teleshuttle Corp. All rights reserved. / Patent pending

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Digital Problem=Opportunity #1
The 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
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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
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Embrace the opportunities!
…Partial steps already taken:
• Free trials
• Freemium
• Pay What You Want
…What else?
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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
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6.
--Thanks to John Blossom, Shore Communications (ContentBlogger)
“Pay as You Exit: FairPay Explores New Content Pricing Discovery Regimes”
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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)
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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
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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
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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 /Service
Buyer Conventional Set-Price Zone
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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
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Business Contexts
• Subscriptions / ongoing services
• Other ongoing relationships
– Aggregation: iTunes, Amazon, App stores, …
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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
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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
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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, …
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Where to start?
(Examples for Music Subscriptions)
Acquisition =“Fuzzy Freemium” versions, tie-ins, gamification,
membership ”club”
Retention Low usage, low price
Premium “club” segments curated, early access, downloads,
added features
Usage /style segments Low/high usage, low/high cost, …
Content segments: Long-tail / genre indies, back-list, genres
Device segments phones, embedded systems
“Deserving” sellers compensation to artist
Trials, sampling, coupons, specials
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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)
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FairPay
Customer Dialogs about Value
Richard Reisman
Teleshuttle Corporation
fairpay [at] teleshuttle [dot] com
212-673-0225
Teleshuttle.com/FairPay
Blog: FairPayZone.com
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19.
SUPPLEMENTARY
SLIDES
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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
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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
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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
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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)
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