Is Humble Bundle the new Groupon?
...Ok, I'll bite, why is it mathematically impossible?
So HB a good method for generating demand/revenue once you've crossed that point, but not so before.
As an overall business or project you may or may not end up with a net profit when its all done, but your figures will only improve if the marginal cost of sale is zilch and you can clear the market yet again at a lower price.
Someday someone will invent a working microtransaction system (LOL people have been saying that forever) and all this HB stuff will hit it again for ten cents each (Hey, ten cents times ten million sales isn't all that bad for a days work, and sales always increase as price drops, so I could see it...)
If you haven't covered your fixed/dev costs, and if you misjudge the market quantity demanded at each price points, you could easily drive yourself to bankruptcy by running a Humble Bundle.
The only way Humble Bundle makes it "mathematically impossible" to go bankrupt (which was the claim I was disputing) is if they present you with a perfect demand schedule and then somehow align the price each person pays to that demand schedule, without letting anyone pay above or below their reservation price. Whoever figures this out is probably not going to just use it for independent pay what you want gaming sales.
Well, buying a humble bundle is a potential opportunity cost for each comedian. If someone buys a humble bundle, they are most likely not going to buy whatever show that comedian offered in some other format in addition. Something like a humble bundle could in theory be such an opportunity cost for a comedian that he cannot recoup the production cost of a show because of it.
Or is only the marginal cost of distribution a factor in this idea of "mathematical impossibility"? Is that the only variable that influences a potential bankruptcy?
Its not possible, so far as I know, to get an individual transaction net loss from a humble bundle, so make one sale or a billion its not possible to end up a net negative much less a negative greater than the net worth of the sponsoring company. If you want to see something funny, try typing in a custom amount on a humble bundle less than $1. You get a pop up graphic and she doesn't look amused. This would imply to me that CC processing/amazon processing costs less than $1 for a $1 transaction.
I don't think the potential sales loss exists unless you put a new product on HB. No one does that, its always something older. Frankly a "fan" of these comedians would have bought it a long time ago, so all thats going to happen is they'll get a small stack of cash and a bunch of new fans. Which is cool.
It worked. I hear it worked very profitably.
As an anecdote I blew a lot of money with them after reading the first novel or whatever. Also gained a couple new authors I still like.
There's probably a startup opportunity in other areas where "the first hit is free" works pretty well. Someone should try it with TV shows.
Massage therapy isn't real stuff because you can mark the price to anything you want, then groupon it 75% off. So if a realistic charge for massage is $25/hr (I donno) then you mark up to $100/hr and groupon it for 75% off net $25/hr.
The bankruptcy stories all come from restaurants selling 100K steaks (hundred kilosteaks?) for $1 where the raw uncooked meat alone is $5. Whoops.
What is a fair price for the valuable service of astrological readings? Hard to say when its pure profit unless it involves sacrificing live chickens as part of the act or something like that. I suppose there's always a real estate cost at the bottom if nothing else.
First, Humble Bundle scales. They can pull together a handful of artists to offer some MP3s, and sell it to the whole world. Groupon has to negotiate with small businesses in every market that they want to have a presence.
Secondly, the nature of the goods on offer is different, in that a restaurant or cafe has considerable marginal costs associated with each sale, whereas a comedian selling MP3s has no marginal costs, and even the Humble Bundle team has almost no marginal costs. The Humble Bundle team spends a few cents on bandwidth for each sale, and the artist only loses hypothetical future sales at a higher price.
(edit: pluralized "business")
It should be significantly less than that.