The Cash Cow called Telebid
I will now try to explain to you the cash cow that is Telebid, a new company backed by Wellington Partners. For now, I do believe, that they are all very happy indeed, even though user churn is likely high, and there is a risk of being put into the gambling pot. But let me explain.
Telebid is a new kind of auction in that you can say “Bid”, meaning you pay 0.50 EURs and the bid on the product increases 0,10 EURs. So yes, each bid costs. The auctions are all timed, and when somebody bids, the remaining time increases a bit, meaning that an auction can run for a very long time. Then there are some special things like a “Fixed Price Auction”, meaning that the last bidder remaining, with nobody bidding again, will win, and get the product for a fixed price.
All this sounds very weird indeed but if you do the math on a few products you will be utterly amazed. All the products in the system are made available by Telebid. So let’s do a little calculation.
A nice item is an LCD TV and Telebid might be giving that one away for a fixed price of 99 EURs, even though it would normally cost 1200 EURs. Guess what, that sounds like a very attractive deal and so lots of people start bidding on the TV. In the end, the final bid is 280 EURs. Still looks very attractive. But let’s do the math.
The final bidder now paid 99 EURs, plus his bids. As each bid increases the price by 10 cents and prices start at 0 EURs, 280 EURs final bid means 2800 bids. As each bid costs 0,50 EURs, that’s a total of 1400 EURs of bids. Of course not all of those come from the winner, so she might have gotten a deal, but in total, Telebid made 1499 EURs on a TV that costs 1200 EUR (and probably less) in a standard store.
The most amazing auction I have seen a short while ago was a fixed price auction for a nokia n95 black 8gb. The winner got it for 1 EUR. The phone costs 799 EURs. The final bid price was 1161.50 EURs, meaning 11615 bids, or 5807,50 EURs… for Telebid.
But based on the new law on lotteries, they probably need a license. The “Staatsvertrags zum Glücksspiel in Deutschland will give more detail in german.
Here is a quote: “Ein Glücksspiel liegt vor, wenn im Rahmen eines Spiels für den Erwerb einer Ge-
winnchance ein Entgelt verlangt wird und die Entscheidung über den Gewinn ganz o-
der überwiegend vom Zufall abhängt. Die Entscheidung über den Gewinn hängt in je-
dem Fall vom Zufall ab, wenn dafür der ungewisse Eintritt oder Ausgang zukünftiger
Ereignisse maßgeblich ist. Auch Wetten gegen Entgelt auf den Eintritt oder Ausgang
eines zukünftigen Ereignisses sind Glücksspiele.”
Translation: Gambling is when the chance to win requires paying a fee and winning is largely dependent on chance. Chance is given when events in the future that are uncertain decide if you win. That sounds very much like what Telebid does.
As they say, when something sounds too good to by true, it probably is.
P.S.: my brother just told me that we talked about something like this 5 years ago with two friends but came to the gambling bit back then already. damn. :)
Update 2009–08: Actually by now they have a new name called Swoopo and it seems to not be gambling because users decide when an auction ends, not chance alone, even though for you it might feel like chance :)