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| Top Headline Comments 12-15-08 »
December 15, 2008
"Pure, Distilled Evil in a Business Plan"This comes under the heading "Morally Questionable, But Not Illegal" and I'm not sure it should be made illegal. It certainly is an interesting system, designed to prey on those who don't know any better. I was fascinated to discover the auction hybrid site swoopo.com (previously known as telebid.com). It's a strange combination of eBay, woot, and slot machine. Here's how it works: Swoopo started in Germany in 2005, then extended itself to the UK, Spain, and---in September---the U.S. and Austria. As Jeff writes, it's more of a lottery than an auction. For each user, a single losing bid isn't that costly. But they can really build up fast and at the end all folks who made losing bids end up with nothing. As long as the winning bid is one sixth of the retail price, Swoopo breaks even (*you may want to check my math). But many users are going to be willing to bid the price up higher than a mere sixth of retail. From a legal standpoint, this is a contract for services---the privilege of participation in the bidding---rather than for goods. Ergo, this is not an auction and no one has a right to complain about anything. Swoopo has done even more to protect itself from legal challenge by giving each winning bidder an "unconditional" right to cancel (which actually has conditions on it; heh) the so-called "order" and return the merchandise. I don't object to lotteries because there is no coercion involved. For the same reason, I don't object to gambling or casino-ventures. But even if I did object, that doesn't mean they should be made illegal. What do you guys think? *My math to find the break even: At break even the following condition obtains: There must be a more elegant way to do that, though. I admit, law school makes one's math skills kinda rusty. Somebody put some mathematics to me. | Recent Comments
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