I actually used to write book arbitrage software, and this person has managed to completely misunderstand it.
I'm not arguing here for its societal value, just that dan appears to have misunderstood some fundamental bits about how it works.
> Robot 1 offers Book A for $10. It probably doesn't have it in stock, but it knows where it can buy it for, say, $9, drop-ship it to the customer without ever seeing the acutal product, and make a buck on the arbitrage. Robot 2 notices this and lists the same book for $11, hoping to do the same thing. Robot 1 notices Robot 2's listing, doesn't know or care that Robot 2 is another arbitrage trader, and reprices its listing for the book to $12. Robot 2 notices this and goes to $13, and away we go.
This makes no sense; the fundamental rule of amazon bots is that consumers buying used books almost always buy the lowest-priced used book available. So the bot war would send the price down, not up.
Why in the world would bot 2 offer the book for $11? It would know that nobody would buy it when there was one already listed for $10.
The silly-high-priced books that I saw when I was working for the book company were rare long-tail books. One of the discoveries that many people have made is that for rare books, whether or not you understand what the heck it is, some % of them will get bought even if they're listed for silly high prices. Enough people will pay thousands of dollars (not an exaggeration) for a used copy of a book that they can't find elsewhere that stocking the long tail of books can in fact be very valuable.
That means that, when you find lots of rare books, your incentive is to throw out some crazy-high price for each, because some % of them will, in fact, get paid, making the whole enterprise worthwhile.
edit: Arbitrage on the same market Does Not Work, in my experience, and to just claim that it does with no evidence doesn't make it any more likely to do so.
>Why in the world would bot 2 offer the book for $11? It would know that nobody would buy it when there was one already listed for $10.
The author covers that point with this quote:
>In this case, buyers could easily find the "original" products for themselves, and pay less... but the search results are cluttered with millions-sold arbitrage super-stores
Our Oriental Heritage, by Will Durant currently has about 56 used copies for sale on Amazon. It's not especially rare; I bought it to fill out a half-set I bought from an antique store for $20. But the two highest prices are $225.00 and $588.99 when there are seven listings under $3.00.
That's just one example that I noticed the other day. Presumably, the cheaper copies are either poor condition or from high-volume stores. The middle prices seem to be in better condition, from lower-volume sellers. The higher prices are from sellers with many different levels of volume. Presumably, they're hoping for the inattentive-buyer market.
You wrote the bots, and I wrote the code that (tries) to keep them from messing with Amazon (as an intern).
People on Amazon don't just buy the lowest priced item: They buy from whoever won the "buy box": The big "add to cart"/"buy now 1 clock" buttons. You seem to be talking about selling used books, where the market is a little different than "new" items.
Price is obviously the biggest determination of who wins, but you can be disqualified because you don't have a high enough ranking, and other factors related to customer satisfaction.
So an established merchant may win the buy box even if they're 50 cents higher. And that's exactly where this scheme comes into play, as soon as you've got two of these bots playing off each other and no other sellers qualified to win the buy box.
> This makes no sense; the fundamental rule of amazon bots is that consumers buying used books almost always buy the lowest-priced used book available. So the bot war would send the price down, not up
Consumers often take into account seller reputation. If a book is $20 at a seller with stellar feedback from a large number of customers, and $18 at a seller with very little feedback, I'll probably buy from the $20 seller.
What happened in the case with the two bots on Amazon was that one bot was pricing for a seller with a stellar reputation based on a lot of feedback. It was finding the low price from sellers whose reputations were not as good, and setting the price enough above that to make a profit reselling from the low seller if someone ordered.
The low seller's bot was using a strategy of undercutting the lowest other seller.
The amount the first bot was adding was more than the amount the second bot was undercutting by, so the net result was the price zoomed up.
> That means that, when you find lots of rare books, your incentive is to throw out some crazy-high price for each, because some % of them will, in fact, get paid, making the whole enterprise worthwhile.
This has been studied and documented in detail, about a year ago - five minutes on google will find it. Basically, someone tracked the two prices for a single title rising in lock step - just the thing you say makes no sense.
My own book, which is available new from Amazon for around $12, has listed for several hundred thousand dollars from a reseller.
> Why in the world would bot 2 offer the book for $11?
Dan's explanation:
"The price-setting robot sets its price far enough above that of the other vendor that if someone buys, the robot-owner can buy the book from the other vendor, send it to the customer, and still make money."
To make money - out of nothing except a listing - only requires a buyer, either misguided, malicious or unfortunate. This might even work in large numbers by pure chance. Or it might not, but someone is trying.
> consumers buying used books almost always buy the lowest-priced
There it is, a bet on the complement of "almost always", at an insignificant cost.
I did something similar in the early 2000s. I sold public-domain books (as in created by government agencies) as pdf on cd on eBay.
The cost varied between $1-$10 with $5 shipping, and would cost me $1.20 out the door. I had everything automated with a robotic disc publisher/printer and stamp printer that I would work maybe one hour a week and bring in a couple hundred dollars each week.
It was definitely a great source of side income. The main market was people who didn't search google, since they could take the title of the auction, put it in google, and usually find the PDF right there.
There's still people doing the same out there but now the market's flooded and there's much less profit margin available.
Depending on the size of the dataset, you may have been providing a valuable service to those on dialup (however unwittingly). I remember how even a download of 50-100MB would take dedication to keep everyone off the phone for hours and pray that there were no interruptions upstream. Paying $10-15 for a guaranteed CD of what I wanted would have been well within reason.
Money laundering seems like an interesting explanation, but there are far better and less risky ways to launder money. Cash businesses, or even bitcoin are superior to "selling" an app that could be taken down at any time, that requires credit cards on file to purchase, and whose transactions Apple or a credit card company could freeze, reverse, or cancel at will.
It would be fairly trivial for Apple, in cooperation with a law enforcement agency, to source the transactions, map the patterns, and triangulate to likely points of origin. And it would probably arouse a lot of suspicion if an app of such obviously bullshit quality suddenly started raking in millions of dollars in sales -- thereby making sales of the app inefficient and risky as a laundry-integration method.
I suppose the whole thing relies on iTunes gift cards and credits, rather than credit cards, but why overcomplicate things beyond there? Buying and reselling gift cards at a moderate discount would launder your money just fine, while limiting your exposure to third-party risk.
Apropos of nothing, the dissection of the high-priced crapware reminded me of "I Am Rich," the infamous and short-lived iOS app from 2008. It cost $999.99, and all it did was display a glowing red gem and a tagline on your screen. Evidently, at least eight to ten people bought a copy before Apple swung the ban hammer.
Apropos of nothing, the dissection of the high-priced crapware reminded me of "I Am Rich," the infamous and short-lived iOS app from 2008. It cost $999.99, and all it did was display a glowing red gem and a tagline on your screen. Evidently, at least eight to ten people bought a copy before Apple swung the ban hammer.
I never understood why Apple banned that application. There was no fraud involved. The application did exactly what the description said it does (show a glowing red gem for 999.99) and it didn't violate any of the (quite arbitrary at that time) Apple app store policies, or requirements.
If you want to put your douchiness on display by paying so much cash for no other reason than to yell out to the world that you can afford to throw 1000$ out of the window it shouldn't be up to Apple to put a stop to it.
I assume it was a matter of fear about bad publicity on Apple's side. Nevertheless I thought pulling this app was one of their more innane decisions.
"One explanation for this could be money laundering."
Reminds me of something a few months or so back (in 4chan/g/) when Samsung had some sort of a campaign that gave it's users free android market credits. I don't remember how you had to authenticate yourself, but it was easy to fabricate and people did it multiple times over. As a result, people made really bare android apps to buy from themselves to turn that credit into real money.
You authenticated by entering the serial number of the Galaxy Note 2. Many people obtained them en masse from youtube users unboxing the phone who didn't bother covering it. Others, I think, just brute forced the serials to enter. Not sure if that worked.
I;m interested if google caught them or not. Surely they'd notice a spike in expensive app purchases using gift cards (if they measure things like that).
I would assume it's purchased from stolen Apple IDs and/or credit cards. That seems a whole lot more straightforward and likely than someone handing out dirty money to a bunch of people with legit Apple accounts.
this sounds like a plausible approach, although I wonder for how long such a run would work given that very soon, the seller account would be shutdown if 99% of purchases were made by credit cards reported stolen or accruing reverse charges quickly. I could see that work briefly, but the seller account would long be gone now, after a single run even, I'd assume.
unless, this is just nothing large at play, just a random dude stealing cards here and there, less than 100k a year type of criminal activity.
"One explanation for this could be money laundering"
Selling some useless crap for stupid prices is one of the easiest laundering techniques beloved of many people trying to account for a sudden influx of wealth. Oh ? The suitcase of cash, well it's like this, I sold some old jeans, my wrecked chevvy and a busted tennis raquet to some nameless guy down the [pub|bowling alley|policemans annual ball] and he gave me like $250,000 in this suitcase for them.
I'm sure some of these apps are people having a laugh and then getting an even bigger laugh when someone actually pays the stupid price tag they put on. However, at least some of this has a distinct whiff of laundry detergent and it's always useful to have some schmucks innocently purchasing thrown in for good measure to delay investigators as they follow dead ends to people with more money than sense.
"Selling some useless crap for stupid prices is one of the easiest laundering techniques"
If the goal is to do something completely and utterly ineffective, sure. If you were under suspicion and justified an influx of cash through specious claims, the money would be confiscated as proceeds of crime and you'd be on the hook to prove otherwise. People can argue whether that's fair or not, but the whole reason real money laundering exists is to integrate shady money into legitimate trades and enterprise, and this is a very complex, very involved endeavor: You can't simply manufacture a ridiculous explanation and call it a day, or you might as well simply hand it over when they come calling and put your hands out.
Robot book publishing is really interesting. I think it peaked sometime around 2010-2011 when a lot of "robot books" were available on Amazon. Read more:
Wikipedia had to go through a push around that time to excise any references to such books from Wikipedia itself, because some had crept in, mostly by unsuspecting users who believed they had found an actual third-party book on an obscure subject, and didn't notice it was suspiciously similar to the Wikipedia article. It defeats the purpose of citing sources, of course, if Wikipedia "bootstraps" its own sources by citing print-outs of previous versions of Wikipedia articles as the source.
This does leave a more subtle problem than literal printouts of Wikipedia articles, which is harder to solve. Sometimes journalists and even scholars consult a Wikipedia article for background, and then just repeat something similar uncritically, without independently verifying whether the Wikipedia article is correct. If the Wikipedia article then at some point ends up citing that writing as a source, a hidden reference-loop is created, with Wikipedia effectively "laundering" a self-reference (unintentionally) through a third party repeating something they read on Wikipedia. (Not a phenomenon unique to Wikipedia admittedly.)
When I was building the search for a big ecommerce books site (approximately 20 million products), it was a nightmare trying to filter the print-on-demand products. At the time they were creating new "publishers" on an almost weekly-basis, we were constantly having to tweak our blacklists. The big problem was caused by the titles of all these books being stuffed full of keywords, so for almost any conceivable search they would show up quite prominently.
There were some technological solutions we implemented, but it was a major annoyance all the same.
Arbitrage adds market making value. Just like trading desks that make it so I dont have to (physically) find a person who has apple shares in order to buy some. By making a well (or better) run market, prices can converge to their true value. The seller of the shares can potentially sell to more buyers, therefore finding the highest price possible. The buyer can potentially buy from more sellers therefore finding the lowest price possible. Between the two we get the "most agreeable" pricing .
This is why selling CDs of free things on ebay converged down to the price of a CD + Shipping . Similarly its why (at least for now) bitcoins ought to hang out around the cost of electricity + the capital cost of ASICs ... If the price is much lower, dont mine, if the price is much higher its cheaper to buy electricity and ASICs than to buy bitcoins.
I'd hazard a guess that everyone here understands how arbitrage is supposed to work.
But how valuable is market making, really? Is it always a good thing that "well-run" markets tend towards the extremes of having razor-thin producer excess or razor-thin consumer excess? Because that's what seems to happen in big/equilibrium markets. One party has a slightly stronger bargaining position and the process of market-making teases that out and translates it into "one person wins big, one person wins just-barely-more-than-nothing." In the process, some of that excess winds up in the hands of middlemen, so to argue that "it's a feature, not a bug" you have to show not only that the value of driving one party's margins to 0 is positive, but that it exceeds the sum of the value captured by middlemen in the process.
Sometimes we can throw up our hands and say "eh, you win some you lose some," but other times the result is so unspeakably horrific that this attitude goes from "unproductive" to "evil." Example: labor markets. Is it a feature or a bug that unskilled laborers don't manage to capture any of their producer excess, and that the equilibrium wage would lie just north of what what was required to make work preferable to starvation and homelessness (less, actually, because some people will be willing to invest savings/debt/daddy's$$ in acquiring experience = differentiation = freedom from the crushing competition)?
Look, I don't know of any system that I'm convinced is better. But that doesn't make the market perfect, so let's not pretend that its shit doesn't stink. In particular, is it possible to structure a market in some way to split the excess? Are there any big/equilibrium markets people know of that we could look to for inspiration?
As someone who does not have a lot of money, this article's title intrigued me. However, I was disappointed to discover that the article did not actually provide ways to get money for nothing. Overall, I was overall not very satisfied with the experience of reading this article, mostly because it did not provide me with ways of obtaining money for nothing, even though the title suggested it would. I would not recommend the article to anybody who is seeking to find ways to obtain money for nothing, as the article does not contain such information, and it would be a disappointment for them as well.
OT, but related: One way to eliminate the lower price competitors is to "buy" their stuff, but with a card that has no money/credit on it. It'll be 10 days before Amazon allows the item to re-listed.
Had this happen to me three times in a row on the same item. Why do arbitrage when you can simply nuke any lower-priced competition at no cost?
In my case, every other item for sale, regardless of seller, was at least $150 higher. (I eventually sold the item on Craigslist for cash.)
Now look at them yo-yo's that's the way you do it you code the app on the iPhone store.
That ain't workin' that's the way you do it Money for nothin' and chicks for free
The money laundering hypothesis appears a lot, however I'm not sure I buy it -- the complexity and cost of getting many people involved, with many accounts and payment methods (themselves all tracked), all to then pay 30% to Apple on top, seems like a very convoluted and inefficient method. Worse, the goal of money laundering is to do it as subtly and legitimate-looking as possible, and putting garbage apps at ridiculous prices doesn't seem to meet that requirement.
It seems more likely that someone was trying to game the charts: Some categories need surprisingly little revenue to top, and each of these apps started at ridiculous prices, dropping to the normal $0.99 a month later. Some very naive person may have thought "investing" in buying only a few copies of their app (getting back 70% of it, or even more if they bought discounted iTunes cards) would get them enough exposure that it would pay back (whether through future purchases of the app, or as some sort of backstop to demonstrate their excellence as an iOS developer, etc). This is, it's worth noting, exactly how many books get on best seller charts, particularly in the smaller-market, easily manipulated categories. ^1
Just as a point of reference, I implemented anti-money laundering systems for a banking conglomerate, so I have been deeply involved in analyzing money laundering schemes.
I should add that I would love to make money for "nothing". To make the next Flappy Bird. Don't we all? To be very negative about that has the unpleasant stench of jealousy.
Perhaps these apps are created by developers from other countries who are not as familiar with USD and software value and are just trying to publish something on the App Store.
I could see a young college student in Pakistan creating an app that does something totally random and just throwing an equally random price on it just for the experience.
> It seems more likely that someone was trying to game the charts: Some categories need surprisingly little revenue to top, and each of these apps started at ridiculous prices, dropping to the normal $0.99 a month later.
Hang on... so the top paid apps are based on revenue? I always assumed it was based on the number of downloads.
[+] [-] llimllib|12 years ago|reply
I'm not arguing here for its societal value, just that dan appears to have misunderstood some fundamental bits about how it works.
> Robot 1 offers Book A for $10. It probably doesn't have it in stock, but it knows where it can buy it for, say, $9, drop-ship it to the customer without ever seeing the acutal product, and make a buck on the arbitrage. Robot 2 notices this and lists the same book for $11, hoping to do the same thing. Robot 1 notices Robot 2's listing, doesn't know or care that Robot 2 is another arbitrage trader, and reprices its listing for the book to $12. Robot 2 notices this and goes to $13, and away we go.
This makes no sense; the fundamental rule of amazon bots is that consumers buying used books almost always buy the lowest-priced used book available. So the bot war would send the price down, not up.
Why in the world would bot 2 offer the book for $11? It would know that nobody would buy it when there was one already listed for $10.
The silly-high-priced books that I saw when I was working for the book company were rare long-tail books. One of the discoveries that many people have made is that for rare books, whether or not you understand what the heck it is, some % of them will get bought even if they're listed for silly high prices. Enough people will pay thousands of dollars (not an exaggeration) for a used copy of a book that they can't find elsewhere that stocking the long tail of books can in fact be very valuable.
That means that, when you find lots of rare books, your incentive is to throw out some crazy-high price for each, because some % of them will, in fact, get paid, making the whole enterprise worthwhile.
edit: Arbitrage on the same market Does Not Work, in my experience, and to just claim that it does with no evidence doesn't make it any more likely to do so.
[+] [-] jbenz|12 years ago|reply
The author covers that point with this quote:
>In this case, buyers could easily find the "original" products for themselves, and pay less... but the search results are cluttered with millions-sold arbitrage super-stores
[+] [-] mcguire|12 years ago|reply
That's just one example that I noticed the other day. Presumably, the cheaper copies are either poor condition or from high-volume stores. The middle prices seem to be in better condition, from lower-volume sellers. The higher prices are from sellers with many different levels of volume. Presumably, they're hoping for the inattentive-buyer market.
[+] [-] mcpherrinm|12 years ago|reply
People on Amazon don't just buy the lowest priced item: They buy from whoever won the "buy box": The big "add to cart"/"buy now 1 clock" buttons. You seem to be talking about selling used books, where the market is a little different than "new" items.
Price is obviously the biggest determination of who wins, but you can be disqualified because you don't have a high enough ranking, and other factors related to customer satisfaction.
So an established merchant may win the buy box even if they're 50 cents higher. And that's exactly where this scheme comes into play, as soon as you've got two of these bots playing off each other and no other sellers qualified to win the buy box.
[+] [-] JetSpiegel|12 years ago|reply
[+] [-] tzs|12 years ago|reply
Consumers often take into account seller reputation. If a book is $20 at a seller with stellar feedback from a large number of customers, and $18 at a seller with very little feedback, I'll probably buy from the $20 seller.
What happened in the case with the two bots on Amazon was that one bot was pricing for a seller with a stellar reputation based on a lot of feedback. It was finding the low price from sellers whose reputations were not as good, and setting the price enough above that to make a profit reselling from the low seller if someone ordered.
The low seller's bot was using a strategy of undercutting the lowest other seller.
The amount the first bot was adding was more than the amount the second bot was undercutting by, so the net result was the price zoomed up.
[+] [-] sneak|12 years ago|reply
Oh, so it's just like domain squatting. Got it.
[+] [-] auctiontheory|12 years ago|reply
My own book, which is available new from Amazon for around $12, has listed for several hundred thousand dollars from a reseller.
[+] [-] ableal|12 years ago|reply
Dan's explanation:
"The price-setting robot sets its price far enough above that of the other vendor that if someone buys, the robot-owner can buy the book from the other vendor, send it to the customer, and still make money."
To make money - out of nothing except a listing - only requires a buyer, either misguided, malicious or unfortunate. This might even work in large numbers by pure chance. Or it might not, but someone is trying.
> consumers buying used books almost always buy the lowest-priced
There it is, a bet on the complement of "almost always", at an insignificant cost.
[+] [-] reverend_gonzo|12 years ago|reply
The cost varied between $1-$10 with $5 shipping, and would cost me $1.20 out the door. I had everything automated with a robotic disc publisher/printer and stamp printer that I would work maybe one hour a week and bring in a couple hundred dollars each week.
It was definitely a great source of side income. The main market was people who didn't search google, since they could take the title of the auction, put it in google, and usually find the PDF right there.
There's still people doing the same out there but now the market's flooded and there's much less profit margin available.
[+] [-] gamerdonkey|12 years ago|reply
[+] [-] jonnathanson|12 years ago|reply
It would be fairly trivial for Apple, in cooperation with a law enforcement agency, to source the transactions, map the patterns, and triangulate to likely points of origin. And it would probably arouse a lot of suspicion if an app of such obviously bullshit quality suddenly started raking in millions of dollars in sales -- thereby making sales of the app inefficient and risky as a laundry-integration method.
I suppose the whole thing relies on iTunes gift cards and credits, rather than credit cards, but why overcomplicate things beyond there? Buying and reselling gift cards at a moderate discount would launder your money just fine, while limiting your exposure to third-party risk.
Apropos of nothing, the dissection of the high-priced crapware reminded me of "I Am Rich," the infamous and short-lived iOS app from 2008. It cost $999.99, and all it did was display a glowing red gem and a tagline on your screen. Evidently, at least eight to ten people bought a copy before Apple swung the ban hammer.
[+] [-] CaptainZapp|12 years ago|reply
If you want to put your douchiness on display by paying so much cash for no other reason than to yell out to the world that you can afford to throw 1000$ out of the window it shouldn't be up to Apple to put a stop to it.
I assume it was a matter of fear about bad publicity on Apple's side. Nevertheless I thought pulling this app was one of their more innane decisions.
Wikipedia has a brief entry on that app:
http://en.wikipedia.org/wiki/I_Am_Rich
[+] [-] aestra|12 years ago|reply
Does this mean the developers got to keep their money or not?
[+] [-] tool|12 years ago|reply
Reminds me of something a few months or so back (in 4chan/g/) when Samsung had some sort of a campaign that gave it's users free android market credits. I don't remember how you had to authenticate yourself, but it was easy to fabricate and people did it multiple times over. As a result, people made really bare android apps to buy from themselves to turn that credit into real money.
[+] [-] RankingMember|12 years ago|reply
[+] [-] cooper12|12 years ago|reply
I;m interested if google caught them or not. Surely they'd notice a spike in expensive app purchases using gift cards (if they measure things like that).
[+] [-] eli|12 years ago|reply
[+] [-] mittermayr|12 years ago|reply
unless, this is just nothing large at play, just a random dude stealing cards here and there, less than 100k a year type of criminal activity.
[+] [-] mortov|12 years ago|reply
"One explanation for this could be money laundering"
Selling some useless crap for stupid prices is one of the easiest laundering techniques beloved of many people trying to account for a sudden influx of wealth. Oh ? The suitcase of cash, well it's like this, I sold some old jeans, my wrecked chevvy and a busted tennis raquet to some nameless guy down the [pub|bowling alley|policemans annual ball] and he gave me like $250,000 in this suitcase for them.
I'm sure some of these apps are people having a laugh and then getting an even bigger laugh when someone actually pays the stupid price tag they put on. However, at least some of this has a distinct whiff of laundry detergent and it's always useful to have some schmucks innocently purchasing thrown in for good measure to delay investigators as they follow dead ends to people with more money than sense.
[+] [-] dlhavema|12 years ago|reply
[+] [-] corresation|12 years ago|reply
If the goal is to do something completely and utterly ineffective, sure. If you were under suspicion and justified an influx of cash through specious claims, the money would be confiscated as proceeds of crime and you'd be on the hook to prove otherwise. People can argue whether that's fair or not, but the whole reason real money laundering exists is to integrate shady money into legitimate trades and enterprise, and this is a very complex, very involved endeavor: You can't simply manufacture a ridiculous explanation and call it a day, or you might as well simply hand it over when they come calling and put your hands out.
[+] [-] unicornporn|12 years ago|reply
http://www.chrisrand.com/blog/2010/02/odd-tale-alphascript-p...
[+] [-] mjn|12 years ago|reply
This does leave a more subtle problem than literal printouts of Wikipedia articles, which is harder to solve. Sometimes journalists and even scholars consult a Wikipedia article for background, and then just repeat something similar uncritically, without independently verifying whether the Wikipedia article is correct. If the Wikipedia article then at some point ends up citing that writing as a source, a hidden reference-loop is created, with Wikipedia effectively "laundering" a self-reference (unintentionally) through a third party repeating something they read on Wikipedia. (Not a phenomenon unique to Wikipedia admittedly.)
[+] [-] andrewingram|12 years ago|reply
There were some technological solutions we implemented, but it was a major annoyance all the same.
[+] [-] maerF0x0|12 years ago|reply
This is why selling CDs of free things on ebay converged down to the price of a CD + Shipping . Similarly its why (at least for now) bitcoins ought to hang out around the cost of electricity + the capital cost of ASICs ... If the price is much lower, dont mine, if the price is much higher its cheaper to buy electricity and ASICs than to buy bitcoins.
[+] [-] jjoonathan|12 years ago|reply
But how valuable is market making, really? Is it always a good thing that "well-run" markets tend towards the extremes of having razor-thin producer excess or razor-thin consumer excess? Because that's what seems to happen in big/equilibrium markets. One party has a slightly stronger bargaining position and the process of market-making teases that out and translates it into "one person wins big, one person wins just-barely-more-than-nothing." In the process, some of that excess winds up in the hands of middlemen, so to argue that "it's a feature, not a bug" you have to show not only that the value of driving one party's margins to 0 is positive, but that it exceeds the sum of the value captured by middlemen in the process.
Sometimes we can throw up our hands and say "eh, you win some you lose some," but other times the result is so unspeakably horrific that this attitude goes from "unproductive" to "evil." Example: labor markets. Is it a feature or a bug that unskilled laborers don't manage to capture any of their producer excess, and that the equilibrium wage would lie just north of what what was required to make work preferable to starvation and homelessness (less, actually, because some people will be willing to invest savings/debt/daddy's$$ in acquiring experience = differentiation = freedom from the crushing competition)?
Look, I don't know of any system that I'm convinced is better. But that doesn't make the market perfect, so let's not pretend that its shit doesn't stink. In particular, is it possible to structure a market in some way to split the excess? Are there any big/equilibrium markets people know of that we could look to for inspiration?
[+] [-] mcguire|12 years ago|reply
Hey, hey! Let's not get crazy.
If everyone did that, the first-world economy would disintegrate.
[+] [-] sdegutis|12 years ago|reply
[+] [-] websitescenes|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] sdegutis|12 years ago|reply
[+] [-] unknown|12 years ago|reply
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[+] [-] erichocean|12 years ago|reply
Had this happen to me three times in a row on the same item. Why do arbitrage when you can simply nuke any lower-priced competition at no cost?
In my case, every other item for sale, regardless of seller, was at least $150 higher. (I eventually sold the item on Craigslist for cash.)
[+] [-] lurkinggrue|12 years ago|reply
[+] [-] websitescenes|12 years ago|reply
[+] [-] tempestn|12 years ago|reply
[+] [-] thatthatis|12 years ago|reply
Smile
Hum
[+] [-] corresation|12 years ago|reply
It seems more likely that someone was trying to game the charts: Some categories need surprisingly little revenue to top, and each of these apps started at ridiculous prices, dropping to the normal $0.99 a month later. Some very naive person may have thought "investing" in buying only a few copies of their app (getting back 70% of it, or even more if they bought discounted iTunes cards) would get them enough exposure that it would pay back (whether through future purchases of the app, or as some sort of backstop to demonstrate their excellence as an iOS developer, etc). This is, it's worth noting, exactly how many books get on best seller charts, particularly in the smaller-market, easily manipulated categories. ^1
Just as a point of reference, I implemented anti-money laundering systems for a banking conglomerate, so I have been deeply involved in analyzing money laundering schemes.
I should add that I would love to make money for "nothing". To make the next Flappy Bird. Don't we all? To be very negative about that has the unpleasant stench of jealousy.
^1 - http://online.wsj.com/news/articles/SB1000142412788732386430...
[+] [-] gxs|12 years ago|reply
Do you have any resources? Good books (fiction, but accurate or non fiction) that you could recommend?
[+] [-] frogpelt|12 years ago|reply
I could see a young college student in Pakistan creating an app that does something totally random and just throwing an equally random price on it just for the experience.
[+] [-] lucaspiller|12 years ago|reply
Hang on... so the top paid apps are based on revenue? I always assumed it was based on the number of downloads.
[+] [-] Shinkei|12 years ago|reply