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Suppose you have devised some new way of presenting an advertisement (see link for a pseudo-example), and you don't really know how much you should charge advertisers to use it. You want to get a fair price, but how should that be determined? Perhaps this way....
Start by picking a fairly low price
(that is, a price that just about anyone would think is low). I'll describe that here as "100 monetary units per month". The monetary unit is quite arbitrary and should depend on the exact type of advertisement medium. So, a single monetary unit might be a penny, or it might be a thousand-dollar bill. Or anything in-between, of course.
In the contract between you and the first advertiser that comes along, you specify a clause that goes something like this, regarding that month-long advertisement "term":
"A competing advertiser is allowed to usurp your advertisement, at any time during the agreed-upon term, by paying you the entire amount that you have paid for your advertisement, plus paying us 10% more than you paid us."
Now sit back and watch the fun begin! When the dust settles, you should be receiving the actual market value that the advertisers think your advertising space is worth.
Example "new" advertising medium
ElectroMechanical_20Billboard_20Display
This is a pseudo-example because billboards are far from new. But being able to change the ad easily IS new, so.... [Vernon, May 28 2011]
[link]
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Or you could hold an auction. The advantage
would be that the buyer prepared to pay more per
day would be able to buy more days. You wouldn't
lose income selling the first few days to a lower
bidder, before the higher bidder usurped him. |
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On the other hand, with your system you'd get
paid twice, right? So more
profits than an auction. |
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But on the third hand, with your system, buyers
would only be willing to pay lower rates, because
they'd not be garanteed the full time for which
they'd hoped. Not clear if the equilibrium wold
favor the seller of advertising space. |
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It's clear, though that the system would disfavor
the buyers, since they would risk wasting
money constructing (cost of paint, e.g.) ads that
were usurped. So they'd be willing to pay higher
rates to vendors who used the auction system,
rather than the usurpation system. And the
auction system should be equally efficient at
finding the "true" price, no? |
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Unless you controlled the best advertising space.
But either way, seems like the effect would be to
distort price away from market value, either to
the sellers advantage, or to their disadvantage,
depending on whether they held a monopoly. |
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[mouseposture], you missed a key point in the main text. The usurping advertiser always pays the previous advertiser. This means the very first advertiser does not lose a dime and even gets free advertising prior to the usurping. The usurping advertiser pays twice, and the second payment (to you) is more than the original payment. |
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If the usuper is usurped, then this third advertiser pays the 2ND ADVERTISER the higher cost THAT THE 2nd ADVERTISER PAID TO YOU. And the third advertiser pays an even higher cost to you. Therefore the second advertiser did not get free advertising. For the money it paid to the first advertiser, the 2nd receives advertising for the duration between its own usurpation, and the usurpation done by the third advertiser. |
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Meanwhile, you receive and keep the amounts that all the advertisers have paid to you, heh! |
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The cycle of usurpations will end when someone realizes they will pay for two months of advertising but only receive one month, because the first month they paid for was the cost of usurping the previous advertiser --and this last advertiser did NOT get usurped. |
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(The next paragraph assumes that you do nothing to balance the problem posed to the advertiser in the previous paragraph. But one way to balance it is to let the usurping advertiser have a 2-month term. You did get paid for both of the months, after all! But "wording that" into the contract could be a bit tricky.) |
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However, that buy-two-months-get-one event should only happen once. After the month-long term ends and a new contract needs to be signed, the amount you charge would be the same as the last amount you received (not a 10% increase). Obviously some advertiser was willing to pay that amount! |
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But just in case someone is willing to pay even more, you still include the usurpation clause. |
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//[mouseposture], you missed a key point// When I
wrote it, I knew the response would be prompt, and
would begin with some such assertion. (Why did I
write it? Good question.) One of us is defintely
missing a key point in what the other wrote, and I
think that's as close to agreement as we're likely to
get.. |
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Such an advertisement would need to be non-perishable (non-time sensitive) and would have to be in a medium that was fluid like radio, TV or digital. Production values on perishable advertisements or billboards would make this a stupid gamble; every user is running the risk that their investment in producing the ad will be wasted. |
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[WcW] and [mouseposture], note the original text says, "entire amount that you have paid for your advertisement". Why shouldn't that include the cost of producing the ad? |
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In theory it might even mean it should include the cost that a usurper paid to usurp, but I specifically want to separate that cost from the relatively ordinary cost of producing an ad and buying ad space. Otherwise the total cost to an advertiser will approximately double with each usurpation, and the true market value will end up somewhere in-between two large incrementations, hard to pinpoint as precisely as could be determined by a mere 10% increase in the price with each usurpation. |
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Then you are simply selling an advertising design for 10MU. Since this is a fixed price I suspect that you are not, in actual fact, allowing market forces to determine price. |
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Markets change. I think it not entirely unreasonable to
have a clause agreeing: if several months pass usurp-
less, the price would then incrementally drop monthly,
until ursurpoint is found again. |
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//Start by picking a fairly low price (that is, a price
that just about anyone would think is low). I'll
describe that here as "100 monetary units per
month". The monetary unit is quite arbitrary and
should depend on the exact type of
advertisement medium. So, a single monetary
unit might be a penny, or it might be a thousand-
dollar bill. Or anything in-between, of course.// |
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Now, you see Vernon, this is why a lot of your
ideas get so long. The first five words were
enough for a perspicacious reader. |
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//The first five words were enough for a
perspicacious reader.// |
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Yes, but how many HBers do you think are from
Perspicacia, [MB]? |
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[WcW], you aren't making sense. How is a 10% increase in the price paid to you, each time an ad-usurpation occurs, equal to a fixed price? (The usurper signs the same sort of contract as the usurped, see?) |
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[MaxwellBuchanan], even when I try to explain things in detail (see 2nd paragraph of my first anno here), somebody (like WcW) comes along and manages to misinterpret it. What is your solution to that problem? |
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This isn't limited to advertising, is it? If it
actually worked, it could be applied to just about
anything. Rent, salary, food in a restaurant, car
ownership, etc. |
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If I'm reading this right, the second user of the
resource needs to pay at least 100 + 110 to obtain
use of its remaining portion. If the fair price of
the (partially used) resource would be below that,
there's no point in buying it. |
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I don't generally understand how this is an
unsolved problem. If I wanted the market to
determine a value, can't you just (a) auction it off
or (b) observe what amount of money it is being
traded for? |
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I see uniqueness in the idea, not yet mentioned:
ursurpoint's potential for added ad-space
value/marketability. |
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If an ad-space was known to the targeted viewer as a
'usurp-driven ad-space', along with an indication of
the current value. Then I see that advertising as
potentially more effective. |
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When I imagine two otherwise identical advertising
locations, I focus my attention on the usurp. Given
that the usurp advertisement is designed noticeably:
ursurp-driven with its current value. |
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//Now sit back and watch the fun begin! //. |
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[jutta], I was assuming (should have said something about it) that when the usurper signs the contract, the advertising term begins from that point. The usurper is taking over the advertisement space moreso than the term. So, there is no diminuation of the term as usurpings happen. |
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I agree that the notion could be applied to various other things (but probably not everything). |
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I did mention the possibility that the usurper could be allowed a double-length term, to balance the fact that the usurper did in essence pay twice. The seller can afford to do this since the seller still has the money from the first sale for the original term. AND, as more usurpations happen, the seller continues to accumulate money. |
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So, each usurpation has the buyer paying off the previous buyer by the amount paid the seller, plus 10% more than that, now going to the seller. There was some discussion about the usurper also paying for the production-cost of the usurped advertisement, but that can be tricky (the original advertiser might lie about the amount; the original advertiser might choose to do an usurpation using the exact same ad, and so on). For now, I think this detail should be ignored. |
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I'm beginning to think I need to use a spreadsheet to see and show exactly what the seller gains, in the long run, compared to the term. My intuition thinks that by the time the usurpations stop at the fair-market value for the advertising space, the seller will actually have received a total amount equivalent to that value, for the entire chain of terms during which the usurpations occurred (even though the initial price was low). At most, no more than twice that value. |
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