Sunday, October 5, 2008

"Entertainment Shopping:" Grand Theft Lotto

[Alternate sub-titles for this post were: "Social Betworking," "Stoopidity 2.0," "The Venality of Crowds," and "Nothing for Money and Your Clicks for Fee."]

In line at the cafeteria this last Wednesday, I heard a couple guys I don't know talking about the online auction site Swoopo. It seemed, from the little bit I overheard, like eBay with a slight gambling twist. Not for me, as I am an inveterate non-gambler, but to each their own. Then I saw a post about it on BoingBoing, and read more. All I can say, like many of the commentors at BoingBoing, is that PT Barnum was right. There's a sucker born every minute, and two to take him.

The site bills itself as "entertainment shopping." Note: this should be the first clue to anyone who wants to hang on to their money and/or get a decent bargain and/or actually buy something. "Entertainment" is a service. "Shopping" is (generally) for products. When you pay for a service, at the end, you have intangible assets: memories, new skills, an environmental change of some kind. From a pure-poetry standpoint, the phrase "entertainment shopping" is wonderful. The signal-to-noise ratio is incredibly high. I could spend an entire post just unpacking that phrase. Maybe later...

The Cake Scraps blog has a decent anyalysis of the site's mechanics. But the basic idea is that you pay $1 for the chance to raise the price of an auction by 15-cents and be the high bidder. The winner (in most cases; there are several types of auctions) then has to pay the final price, on top of $1 for each of however many bids they made.

So... let's say there's an item that's worth (retail value) $150.00 that finally goes for $75. If you placed the final bid, you would get yerself a nice deal; slightly less than 50% off ($75 price + $1 for the bid). But the total cost of bids to all players (the community?) would have been $500.

It's like eBay, but where the "house" also gets $1 for every 15-cents spent.

It's a variation on a scheme called a dollar auction. And Swoopo actually does auction off money, too. Bid on a $100 chunk of cash. As long as you (personally) bid fewer than 100 times (and win), you come out on top. And, of course, as long as there are enough bids to cover the dollar amount in bid charges, Swoopo wins.

It's brilliant psychology. There isn't even any trickery (unless, as several comments point out, a Swoopo shill or two is doing some bidding). It's perfectly transparent.

The value statement becomes, I believe, very simple: How much are you willing to bet that you're less of a sucker than everyone else who's playing?

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