I have to apologize for not posting any news yesterday. I went to bed early and just forgot!
One company named as a partner in Microsoft’s announcement on Wednesday, MediaBrix, says it offers “proprietary emotional targeting” to “reach game players at natural, critical points in game play where they are most receptive to brand messages.” “There is going to be an economic incentive to find out when people are most impulsive and vulnerable,” said Ryan Calo, assistant professor at the University of Washington School of Law.”WSJ.com
What’s interesting about this is that there are specific laws that cover door to door sales to prevent individuals being taken advantage of, primarily elderly and lower income individuals who are more vulnerable to these types of appeals. I was involved in a lawsuit concerning credit card sign-ups that would occur after completing banking business. We use this door to door sales rules to modify conduct of these telemarketers. It will be interesting to see if there’ll be any type of legislation that will be designed to protect consumers from what could be very predatory advertising practices.
Amazon is a classic fixed cost business model, it uses the internet to get maximum leverage out of its fixed assets, and once it achieves enough volume of sales, the sum total of profits from all those sales exceed its fixed cost base, and it turns a profit. It already has exceeded this hurdle in its past.
But “flipping a switch” is the wrong analogy because Amazon’s core business model does generate a profit with most every transaction at its current price level. The reason it isn’t showing a profit is because it’s undertaken a massive investment to support an even larger sales base. How does Amazon turn a profit? Not by flipping a switch but by waiting, once again, until its transaction volume grows and income exceeds its fixed cost base again.
Anyway, read the whole thing. It’s interesting.