Money for nothingPublication date: 18 January 2014
Originally published 2013, in PC & Tech Authority
(in which Atomic magazine is now a section)
Last modified 18-Jan-2014.
Briefly, in 2011, there was an iPhone app in the top-ten most-money-made list, called "FSZForDesigner". It cost $US169.99.
All it did was display text, in different fonts and colours.
But there it was in the top-grossing chart. At a hundred and seventy dollars.
The same vendor also had a 32-dollar calculator app of quite remarkable awfulness...
They cost $51.99.
Some seemingly-pointless but strangely-popular apps have unadvertised special features, like for instance the ability to tether your iPhone to a computer without paying large fees to your dreadful phone company. But only a crazy person would spend $170 for that. Some terrible apps also shoot up the charts because someone paid for lots of fake five-star reviews. But FSZForDesigner was on the money chart. Somebody was actually buying it.
One explanation for this could be money laundering. Someone with a lot of secret cash from their lucrative business turning babies into smallgoods makes a pointless app with a very high price, and hands their dirty money to shills, who buy said app. Now seventy per cent of the money (less whatever the shills get paid) comes back to the criminal, as a nice clean cheque from Apple.
Expensive crap-apps may also be bought with stolen credit or gift cards, or with hacked iTunes accounts. Most victims of this sort of thing can get a refund, but every victim that doesn't is money in the crap-app-maker's pocket.
(This is also a possible explanation for strangely expensive e-books that don't look as if any sane person would ever buy them.)
What's definite, though, is that similarly worthless yet expensive items can be found in other digital markets.
Take Wikipedia books, for instance.
As I write this, there are hundreds of thousands of eBay listings for books "edited" by Jesse Russell and/or Ronald Cohn, whose byline is on almost everything from crapbook megabrand "Bookviva", or from their similarly entrepreneurial colleagues, VDM Publishing.
What all of these books have in common is that they are composed entirely of loosely-connected articles from Wikipedia.
There's nothing illegal about this. Wikipedia is all Creative-Commons licensed, so if you give the right attribution and don't put a more restrictive license on your Wikipedia reprints, you can sell them to anyone who'll pay. But all you can offer is un-updated Wikipedia articles on paper, the actual market for which would not, you'd think, be all that large.
This would be a tough way to make money if there were actually hundreds of thousands of these pointless books cluttering up a warehouse somewhere. They're not, though. They're actually printed on demand whenever some schmuck takes the bait. Which schmucks clearly sometimes do, because these books have been on sale for years now.
Delivered, these books cost from about $15 to hundreds of dollars. (The cheapest, as I write this, is $AU37.99 and contains a few Wikipedia articles having to do with the Cardassians from Star Trek. The most expensive is about Monet, possibly in French, and costs £214.80 plus a very reasonable £1.61 for delivery.)
Amazon was rotten with these things, too, but they've managed to prune back the forest of Russell-and-Cohn and VDM Publishing books to only a few dozen hits. In mid-2013, though, there were still almost forty thousand Amazon hits for VDM books. (You couldn't actually see them all from a search, though, on account of Amazon limiting searches to a mere hundred pages of results, at 12 items per page.)
I don't think Bookviva or VDM are in the money-laundering business. They just slap large prices on printed Wikipedia articles and wait for someone to take the bait. Almost all of the listings for these things make it clear that they're straight from Wikipedia, so there's no fraud going on.
When there were still zillions of VDM books on Amazon, they had a very impressive price spread. None were under seventy US dollars ex delivery, but they topped out at thousands and thousands of dollars. For one book.
The most expensive, in German and having something to do with education, was for sale used, for a mere $US15,678.21!
(Today, the cheapest Wiki-books are still the thick end of a hundred bucks, but the most expensive ones are only a few hundred.)
These huge Amazon prices are usually caused by automated price-setting software, which is yet another way to make money on the Internet without contributing anything useful to the world. Price-setting robots exploit arbitrage gaps, by listing products which the robot-operator doesn't actually have, but which the robot-operator can buy from some other vendor. 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.
(A less despicable version of this system is a robot that checks for other people selling what you're selling, and automatically sets your price one cent lower than theirs, as long as it's still high enough for you to make a profit.)
Arbitrage systems like this provide a valuable service in elementary economics textbooks, because there it's assumed the arbitrage trader is bringing products to buyers who otherwise wouldn't be able to find them. An arbitrage trader could, for instance, visit a little second-hand bookshop and see what they have for sale, then list those books on Amazon at higher prices than the bookshop charges. If an Amazon user who lives far, far away from the bookshop buys one of the books, the arbitrage-trader goes to the bookshop, buys that book and sends it to the customer. Everybody's happy, and a real service has been performed.
The standard Amazon and eBay arbitrage robots, though, only look at things being sold on that same site. If they're really clever, they may list Amazon-available products on eBay and vice versa, and throw in listings from Etsy and other online marketplaces. Usually, though, they just take something on sale on a given online marketplace and list it again on the same site for a higher price.
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 that don't actually even have a warehouse.
(Back in the land of elementary economics, this cannot happen, because of the superpowers of the theoretical homo economicus, the inelastic spherical cow of Elementary Economics Land. Homo economicus is perfectly rational and has perfect information about the markets in which it participates. Homo economicus cannot be snowed under by a great quantity of overpriced listings for a product, or otherwise fooled into buying the same thing for a higher price because, for instance, of an incorrect assumption that the higher price must indicate a better-quality version of the product. Most economics is not elementary economics, and compensates for the untidiness of real-world market information and human cognition with the concept of "bounded rationality".)
Astronomical prices arise when two or more arbitrage-exploting price-setting robots discover matching items in each other's listings, and get into a feedback loop and each start bidding higher than the other's prices, with no sanity checking.
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.
For this reason, at one point an Amazon seller listed a book about the developmental biology of flies that cost 23.7 million US dollars. That's nothing, though; a CD-ROM also about biology listed for 2.9 billion dollars in 2010, though an attempt to actually buy it, regrettably, failed.
Getting back to the Wikipedia-books people, what makes them particularly heinous is that Wikipedia already has a book-printing feature! Just click "Print/export" on the left side of any article, and you can compile books containing whatever articles you like. You can then download them as e-books for free, or get them printed by "PediaPress".
PediaPress printing costs a similar amount per page as the Wikipedia-books people charge (not counting the crazy robot prices). But you get to have exactly the articles you want in your book, up-to-date as of today.
And, more importantly, you don't contribute to the wealth of people whose target market is "the inattentive, ignorant, and preferably inebriated".