eBay for penny auctions?

A subject that comes up in conversation (when you spend as much time talking about penny auctions as I do) is "Why isn't there a consumer-to-consumer penny auction, an eBay/Swoopo mashup?"

The dialectic goes something like this:

Socrates: Why, in all the wide world, isn't there a site where one person, not previously engaged in commerce, can offer for sale to passersby some personal possession -- and be assisted by another person, an auctioneer, that auctioneer being compensated not by the seller, but by each would-be buyer, who pays a small fee even to make an offer.

Plato: I think, Master, that auctioneer would collect the lion's share of the money -- and what man would offer his property for sale, knowing he would receive only a tiny fraction of its true worth.

Socrates: Is there no solution to that objection?

Plato: Perhaps, the auctioneer could share with seller a portion of the fees he collects?

Socrates: Is there not an epistemological problem with that proposal?

Plato: I do not understand.

Socrates: Does the auctioneer know how much a bid has earned him? Are not the bids themselves a chief stock-in-trade of the auctioneer? Each bid has been itself bought in auction, and in those auctions, bids that were bought in auction were expended, and so on.

Plato: And so on, Master, but not ad infinitum. Careful, painstaking bookkeeper would tell the auctioneer just how much was brought in by each bid and its ancestors.

Socrates: It would tell the auctioneer, but not the seller, who would have to rely on the auctioneer's diligence and honesty. And this world is full to bursting with lazy and dishonest men who would pose as auctioneers.

Plato: Perhaps the auctioneer could pay the seller some fixed price per bid expended, regardless of how much that bid truly brought. Or perhaps the auctioneer could guarantee a price for each good. Or perhaps ...

Socrates: Perhaps we have reached the limit of philosophy. Perhaps we just have to attempt it.

Plato: Perhaps.
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What's wrong with eBay?

If you ask investors, nothing. eBay has increased their profits an average 89% year-over-year for the last 10 years, making them the best performing company in the US right now (second place goes to Sealed Air, maker of the world's only additive packing material, Bubble Wrap, way back at 55%), perhaps the best performing company anywhere, ever.

But if you ask the customers, you get a very different answers. To hear them talk, the site is nothing but scammers stealing merchandise and credit-card numbers, thieves selling stolen goods, and retailers dumping seconds and over-runs. The Pierre and Pam Omidyar's original vision of a consumer-to-consumer marketplace for quality used goods seems like a fading memory.

Actually, every consumer-to-consumer (C2C) site has this problem: since the site owners have no control over either side of the transaction, and the basic business model necessarily requires many more transactions than is possible to monitor. A popular C2C website is just blood in the water for every scumball from Mountain View to Mumbai.

I used to run a dating site and it was the same thing: cam-girls (women advertising online strip-shows), credit-card scammers, and other assorted riff-raff made life hell for my customer-service people.

So, can C2C be saved? I hope so, but I'm skeptical. The only possibility I see is if the social-networking sites make it possible to establish what are called "chains-of-trust".

You've heard of six degrees of separation, the idea that every person on Earth is joined by a chain of friend and acquaintances no more than (or "on average", depending on who you talk to) six people long. If Facebook allowed you to know that, oh, Bob went to college with Giles, who used to work with Cynthia, who is in a scrapbooking club with Myron, who's your brother's chiropodist, and each person in that chain vouched for the next, you'd be a lot more inclined to accept Bob's check for that Stairmaster you're using now as a clothesrack.

The only company really doing chains-of-trust is LinkedIn, but unfortunately, that's about all LinkedIn is doing, that and doing résumé searches for industrious employment recruiters. eBay is probably too stodgy to do it, and Facebook itself is too busy.

Maybe someday, I'll get enthusiastic and write a Facebook app for it.
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