Original URL: http://www.theregister.co.uk/2012/09/07/google_price_discrimination_patent/

Google snags patent on price discrimination

A sucker found in every cookie

By Richard Chirgwin

Posted in Business, 7th September 2012 01:15 GMT

You might think that the biggest brains in the USA could be put to work curing cancer, but the Chocolate Factory has bigger fish to fry: how to mine what it knows about users to “customize” content pricing.

Not content with the more general practice of slugging users based on geography, Google wants the ultimate in granular price discrimination: if its algorithms decide you’re highly likely to buy something, keep the price high; if you have a low “likelihood” score, drop the price.

Hence – to use an example given by Google – if user A looks highly likely to click the “play” button on Love Story 2010 at $1.99, there’s no need to adjust the price; for user B, if things don’t look so hot, the price gets dropped to $0.99.

As the patent puts it: “adjusting the base price upward based on determining that the particular user is more likely to repurchase the particular item of electronic content than the group of users; and adjusting the base price downward based on determining that the particular user is less likely to repurchase the particular item of electronic content than the group of users.”

El Reg notes that while the patent is new, the idea has been floating around the Google hive mind for some time, since the document cited above is a continuation of an application first filed in 2010.

The focus on digital content is probably an acknowledgement that dynamic pricing is already in place in other parts of the world - such as major league baseball seats. ®