One of the best Seth Godin blog posts of the year. The whole thing is incredibly insightful. I'm just sampling a quick passage on Priceline that blew my mind.
Seth's Blog: High margins, Groupon and the magic basket for price differentiators
"Priceline was a pioneer in figuring out how to isolate one customer type from another. The reason the original Priceline was so incredibly difficult to use (with blind reverse auctions, etc.) was that they wanted it that way. Anyone who was willing to through that hassle and anxiety to save $100 bucks for a ticket on Delta was clearly not someone Delta was going to have an easy time selling a regular ticket to. In other words, Jay Walker had figured out how to create a second type of air travel. One for cheapskates. The alternative to Priceline was a bus ticket or no travel at all... And Delta was fine with offloading excess seats to them, because they didn't have to worry about alienating their core customer."