Priceline.Com - Expands Name-your-price Concept To Other Goods And Services

EXPANDS NAME-YOUR-PRICE CONCEPT TO OTHER GOODS AND SERVICES

During 1998 Priceline.com expanded its business model to let consumers name their price for hotel rooms and, on a limited basis, automobiles. Consumers who successfully bid on a car paid $25 to Priceine.com for each completed sale, with dealers kicking in another $75 to Priceline.com. Later in the year Pricline.com began offering hotel rooms from more than 1,000 participating hotels on a name-your-price basis to consumers. While consumers could not pick a specific hotel, they could specify a two, three, four, or five-star rating for their hotel along with a specific city, an area within the city, and the nights they wanted to stay. Matches were confirmed within an hour, and a non-refundable and unchangeable reservation was issued.

In August 1998 Priceline.com was granted a patent on its business model. The model was developed in 1995 by Walker Digital, whose business was to generate patentable business ideas and sell them to other companies. According to Inc. magazine, "Priceline.com 's patent covers 'bilateral buyer-driven commerce,' in which a consumer names the price at which he or she is willing to buy a product, lists acceptable substitutes for that product, guarantees the intention to buy with a credit card, and then transfers to a 'controller' the authority to conclude the transaction. The controller then alerts sellers, who may accept the offer and charge the buyer's card." While Priceline.com was hoping to generate revenue by licensing its patented business model to other Internet firms, many remained skeptical whether such "business model" patents were enforceable and whether the courts would uphold them.

By the end of 1998 Priceline.com was selling 1,000 airline tickets a day. Its aggressive radio and newspaper advertising strategy (later expanded to include television) featured the actor William Shatner as a spokesperson and resulted in the company having name recognition among at least a quarter of the U.S. adult population, or some 50 million people, according to a study by Opinion Research Corp., which listed the top five Internet "megabrands" as America Online, Netscape, Yahoo!, Amazon.com, and Priceline.com.