Bubmack
03-09-2004, 04:20 PM
OK..the crying about affiliates making your rake higher is just ridiculous and I thought I would try to change the general warped perspective on this topic.
In a free market, price (or rake in the case of poker)is determined by supply and demand. Now the affilaite is paid a commission for the people that he/she signs up. That is a marketing cost for this business....which is clearly not a component of the supply and demand function.
Adam Smith may not know how to play AK suited when confronted with a three bet preflop...but he would certainly set you clear on this matter.
It would be silly to believe that Party sets it rake based on some sort of expected realization of profit. "well we need to raise the rake because we have all of these affilaites" The rake will be determined by setting it to what the market will bear. When rake is raised, revenues will increase per player but simultaneously a reduction in volume will occur. Managing this trade-off is basically what determines price. Effective management is a responsibility of the company. Some of you have called this greed...I call it smart business.
So when Party raised the rake they estimated that they would make more from the players that remained than they would lose from the decrease in voloume. And guess what...they were right...voloume didn't slip at all. So from a business perspective...it was an excellent decision.
In fact, you can probably expect to see additional rake increases if players dont care. Everyone complained about the rake increase, but no one left.
AS you can see, this whole decision and analysis is outside of the of the affiliate commission. It is all about the demand for their product relative to the substitutes.
So if you want the rake to be lower, change sites and make your buying habits more sensitive to rake hikes.
LOL...ask Choice how that low rake deal is going for them. Doesn't really work does it!! Dont expect rake to be lowered by the sites with strong brands. They would rather compete on marketing, software, and image...things that do affect the bottom line. Party Dominates marketing and image...so as such, expect their price/rake to be the highest.
Now this may make you say "huh"....But I would contest that the only affect the affiliate has on the rake decision is positive for the player. Why? Because...for every dollar increased in rake...Party will only realize a % of this amount. This would mitigate the additional revenue per player for rake increases. So maybe you should than your local affilaite for keeping your rake low!
Bubs
In a free market, price (or rake in the case of poker)is determined by supply and demand. Now the affilaite is paid a commission for the people that he/she signs up. That is a marketing cost for this business....which is clearly not a component of the supply and demand function.
Adam Smith may not know how to play AK suited when confronted with a three bet preflop...but he would certainly set you clear on this matter.
It would be silly to believe that Party sets it rake based on some sort of expected realization of profit. "well we need to raise the rake because we have all of these affilaites" The rake will be determined by setting it to what the market will bear. When rake is raised, revenues will increase per player but simultaneously a reduction in volume will occur. Managing this trade-off is basically what determines price. Effective management is a responsibility of the company. Some of you have called this greed...I call it smart business.
So when Party raised the rake they estimated that they would make more from the players that remained than they would lose from the decrease in voloume. And guess what...they were right...voloume didn't slip at all. So from a business perspective...it was an excellent decision.
In fact, you can probably expect to see additional rake increases if players dont care. Everyone complained about the rake increase, but no one left.
AS you can see, this whole decision and analysis is outside of the of the affiliate commission. It is all about the demand for their product relative to the substitutes.
So if you want the rake to be lower, change sites and make your buying habits more sensitive to rake hikes.
LOL...ask Choice how that low rake deal is going for them. Doesn't really work does it!! Dont expect rake to be lowered by the sites with strong brands. They would rather compete on marketing, software, and image...things that do affect the bottom line. Party Dominates marketing and image...so as such, expect their price/rake to be the highest.
Now this may make you say "huh"....But I would contest that the only affect the affiliate has on the rake decision is positive for the player. Why? Because...for every dollar increased in rake...Party will only realize a % of this amount. This would mitigate the additional revenue per player for rake increases. So maybe you should than your local affilaite for keeping your rake low!
Bubs