Slingshot

One of the interesting things that happen when you browse stuff on websites like Slate is that they bring up a bunch of links at the bottom that are engineered to drive traffis to other parts of their network.  Being smart, they train you to think that the stuff at the bottom of the screen is well-selected.  They do this by – most of the time – selecting fairly well the kinds of articles you’re likely to enjoy based on what you’re reading at the moment.

Then they abuse that trust completely by mixing in some articles that you have absolutely no interest in at all, which are fundamentally misleading, and which were sponsored for publication in the first place.

I came across one of these articles recently, over here.  But before you click, I must warn you not to believe anything you read.

This article is sponsored by a site that claims to have found an amazing way to sell you cheap stuff and totally knock-down prices.

Sounds too good to be true?  Oh this is so much worse than you think!

The site uses an completely unoriginal concept that’s been around for a while called penny auctions in which the price starts incredibly low (say, two dollars for an iPhone), and you have to pay a small fee (say, a dollar) to bid.  The auction has 3 minutes to run, so you better bid fast if you want to win.

You can’t overbid by more than 10 cents, so the best you can do is bid $2.10 for the iPhone, and you’ll have to purchase the ability to bid at $1 per bid, so the iPhone is yours for a total cost of $2.60, if you don’t get outbid.

Every time someone bids, the timer resets back to a full 3 minutes.

The site might advertise on its front page that it sold an iPhone for only $117 a week ago!!!! Hold on to your knickers everyone, because that’s a fantastic deal.  How on earth are these people making money selling something so cheap?

Not all that complicated really…  Since you can only bid in increments of 10 cents, there must have been 1150 bids to get from $2 to $117.  So the revenue for the auction site is :

Bidding costs $1150    ($1 x 1150)
iPhone cost $117

Total revenue of $1267 for a declared sale price of $117.

The real difference between this auction and a normal auction is that you don’t normally have to pay to make an offer.  You certainly don’t have to pay repeatedly to make offers when yours is outbid!  A whole bunch of suckers who all thought they were going to get the iPhone basically subsidized one person’s iPhone and a huge amount of profit for the auction company.

It’s a con, folks.  A shell game for greedy internauts.

It’s based on two simple psychological premises.  The first is that we all think we’re smarter than most people (polls regularly find that about 80% of us think we’re significantly above average), go figure, so we all think we’re going to win because we’re brilliant (I know, I’ll bid at the very last second, nobody else will think of that!!).  The second is that we’re not good at logic when you mix in emotions, so when you see an iPad for $120, you’re too busy wetting your pants with excitement to think critically about what you’re doing, and even if you only bid 3 or 4 times, that’s all the auction site needs, since you’ve just contributed $4 to their profit on this item and all they had to send your way in return were a few web pages.

Please don’t fall for this – please don’t get abused by these internet shysters.

And the most painful part of this is that the people most likely to be taken in by something like this are not people who can afford it - those guys are too busy buying these items in Apple stores.  The people most likely to get conned are the very same people who can only afford items like these if they’re at a quarter of their normal price.  The very people who can’t afford to lose this kind of money.