TRAFFIC Auction

Admin · #1 12-10-11, 10:00 AM

There is some interesting debate going on with regards whether Rick Schwartz should be able to bid at his "own" Traffic auction next week.

At issue is whether there is a conflict of interest - does RS have an advantage over other bidders because he gets a 15% effective commission? i.e his $10,000 bid would in real terms (compared to another bidder) be only worth $8500. The seller is still going to get the same price whoever wins - it's just other bidders that could feel disadvantaged.

There are two sides to the discussion, and they have been perfectly encapsulated in this post by Domain Shane (and the subsequent comments):

http://domainshane.com/should-rick-s...tion/#comments

What's your opinion?

FirstPageResults · #2 12-10-11, 11:08 AM

Clear conflict of interest when he is bidding and getting paid a commission. Can't really argue with facts.

Even if nothing untoward happens it still looks bad.

domainlover · #3 12-10-11, 11:57 AM

I agree, conflict on interest when a commission is received even though it has been disclosed.

DavidL · #4 12-10-11, 11:59 AM

Quote:

Originally Posted by Admin

At issue is whether there is a conflict of interest - does RS have an advantage over other bidders because he gets a 15% effective commission? i.e his $10,000 bid would in real terms (compared to another bidder) be only worth $8500. The seller is still going to get the same price whoever wins - it's just other bidders that could feel disadvantaged.

There may be a conflict but not strictly in this regard IMO.

In real terms he is only paying $8,500 but he's foregoing his $1,500 commission which he would get if he didn't bid and the underbidder snagged it at $9,999.

So comparing 'balance sheets' it's the same isn't it? He's either shelled out $8,500 and has a domain with $10K (so $1,500 in the black) or he's earned $1,500 (again $1,500 in the black)

Designer · #5 12-10-11, 12:59 PM

Pecuniary interest conflict because he gets financial benefit over others. Even though he is being upfront about it. Whether that makes it right or not?

Shane · #6 12-10-11, 01:02 PM

Quote:

Originally Posted by DavidL

There may be a conflict but not strictly in this regard IMO.

In real terms he is only paying $8,500 but he's foregoing his $1,500 commission which he would get if he didn't bid and the underbidder snagged it at $9,999.

So comparing 'balance sheets' it's the same isn't it? He's either shelled out $8,500 and has a domain with $10K (so $1,500 in the black) or he's earned $1,500 (again $1,500 in the black)

That's exactly what I was thinking.

I don't see it as a problem, provided that it is disclosed to all involved.

Bacon Farmer · #7 12-10-11, 01:45 PM

If he snagged it at 10,000 took his 1,500 commission the net cost would be 8,500 and then he could sell it to the next highest bidder (assume 9,999) and make another 1,499.

Net benefit 2,999.

He needs to make his commission nil on any domain he bids on to be in the clear IMO.

DavidL · #8 12-10-11, 02:14 PM

No you're doubling up I think (although the more I think, the more I'm getting confused!!)

He doesn't 'make' the $1500 and get an effective purchase price of $8,500. It's one or the other.

Shane · #9 12-10-11, 02:20 PM

Yep, bacon is doubling up.

Admin · #10 12-10-11, 03:12 PM

This topic is obviously being discussed on many forums. A online friend of mine posted the following - and with his kind permission, I reprint it here.

It's just a general observation regarding ethics which really made me stop and think. It doesn't necessarily apply to this particular case, but all the same it is interesting!

Quote:

In a college ethics class we were asked the following:

A person calls the classified ads and places an advert. Before the advert is published, someone inside the organization see it and purchases the item. The seller still pays for the insertion of the advert.

Is that right or wrong? The entire reason the professor asked that question is that you can strongly argue it either way. But both sides do tend to acknowledge, their IS a problem here. The sellers did not get the service they expected even though the item sold which was their intention.

Which side would you argue for?

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