Xbox Robberies

Joe

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So, I've been trying to keep tabs on the extravaganza of consumerism surrounding the 360, and I stumbled upon this.

A group of five kids who bought Xboxes with the intention of scalping them was robbed at gunpoint for their swag. Now, while I don't usually approve of violent crime against children, after our previous discussion about eBay scalping, I very nearly wanted to make an exception. Kidding aside, thankfully, no one was hurt.

Where are you guys on this? Is it right that a group of would-be profiteers learned a valuable lesson about gray markets?

How about the guys who committed the robbery? What does that say about the phenomenon at large? People are actually camping out at Best Buys just to steal from people who buy Xboxes. Talk about wolves among the sheep.
 

Joe

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Original Comment by: Slartibartfast

The criminals should be prosecuted, the would-be scalpers have every right to scalp 'em, until MS or Ebay does something about it.
 

Joe

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Original Comment by: Wildcat

I give props to the kids for recognizing a market failure and doing things to correct it, even though their only intentions were making profit.
 

Joe

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Original Comment by: Patrick
http://www.kingludic.blogspot.com
I think the concentration of geek frenzy surrounding the X360, coupled with the nature of the media attention still labeling it as a toy and its players as socially defective, illustrates that the 360 isn't where its at as far as changing the image of games is concerned. That and the logistics of the launch are just pathetic, so really its MS that should be prosecuted.
 

Joe

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Original Comment by: Randall Fitzgerald
http://www.ikimashou.net
I lost faith in humanity a long time ago.

Scalping is immoral, but not illegal in any case. As much as I'd like to pretend to knock their heads around, no one deserves to be robbed for any reason. The weird thing is, the Xbox360 isn't even that great here at launch, but the word is out that they are rare, so it's just begging criminals to get involved. Way to market MS, you got some kids robbed. I will say that fair is fair, and they bought the 360s on the fair, and crime is for lower, unintelligent beings who should probably just get shot. Yay for capital punishment for all aggrivated crimes!
 

Joe

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Original Comment by: Nathaniel Givens

How on earth is reselling commercially available products the "gray market"? Go to Costco or Sams Club one day and watch all the convenience store and other small-business owners load up on candy and drinks for resale. Is this the "gray market"?

There's nothing illegal or immoral about getting an xbox to sell. If people are willing to pay $1500 for it that means that's what it's worth to them. Most of the people buying one an ebay or whatever either could not or would not stand in line to get one.

I preordered way back in July (still don't have one) and as the launch date got closer I had less and less desire to own the thing (and more desire to get a Nintendo Revolution). If I get mine before Christmas, I'm definately going to sell it online. Why would I keep it if I don't think it's worth it? And why would I just give back something that I reserved that the market values that much? It's ridiculous to think that I'm morally obligated to return things that I don't want when i can sell them instead.

-nathaniel
 

Joe

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Nathaniel, your Sam's Club analogy falls short because the candy they're buying up is still readily available to other consumers at Sam's Club. If there was some crazy run on candy, and the only way for consumers to procure more candy is by paying over 100% more than the original price, you're into the realm of price gouging and scalping.

Price gouging is extremely illegal. Just ask the convenience store owner, especially if his sells gas.

Additionally scalping is illegal in more than one state. For a brief overview on what scalping is, check out

I'm not saying reselling something you don't want is immoral, but it's a bit different when a group goes into a store and purchases 10% of its dwindling stock with the express purpose of selling that stock at twice the MSRP, to the people standing in line behind them. It's a question of intent.
 

Joe

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Original Comment by: Nathaniel Givens

I think the Sam's Club example is actually dead on. The xbox360s where I live are "readily available" if by "readily available" what you mean is that you're willing to wait in line for 24 hours. But for those who don't want to wait in line they can get an xbox360 on line. What they are paying for is the convenience. It's not like people can't get xbox360s if they don't want them, they just can't get them *at the MSRP* - and that's not really that relevant since the MSRP is largely artificial anyway (it's not like it's the actual market-established value). The market is defining a price well above the MSRP, and the retailers are creating the illlusion that people are marking up xbox360s online artificially. But the truth is that the *real* price of the xbox is what you see online, the price they charge in a retailer is artifically low. If retailers wanted to increase the price to 1,000 that would be perfectly moral. It would just be really bad press and hence a really bad move - and that's why they don't do it.

The same thing happens with Sam's Club goods. They're readily available to everyone as long as you define readily available as "willing to buy a membership and go out of your way to Sams Club and wait in a really long line". So those who aren't willing to pay for the membership pay a convenience charge when they pick them up at the quickie mart. Since standing in line for 24 hours is a much higher cost for most people then the Sams Club stuff, the markup on the xbox360 is much higher than the markup on a candy bar. But the principle is, in fact, identical.

You see, scalping only applies when you can successfully manipulate the value of a product to rise it above the market value. So if you buy up a bunch of tickets to sell you are creating the rarity and then profiting from it. That's the reason it's immoral. Price gouging is the where case you're taking advantage of a hardship to charge some individual person or group a price that's much higher than you could get away with if there wasn't some hardship.

If someone walks into a Best Buy and picks up all 30 consoles for resale - then you have scalping. That individual has contributed to the rarity (at least in the area) of the product. But since an individual can only get 1 copy per person of an xbox360 they aren't preventing others from buying consoles. So there's no scalping. And the fact that MS doesn't have enough consoles on the market is not a hardship that targets a specific group or individual - so price gouging doesn't apply either.

As long as we're talking about individual who are buying ONE console (per person) than if they want to resell it, play with it, hack it, smash it to pieces, or hide it under their bed that's their right.

This is not a gray market - this is what a free market looks like.

-nathaniel
 

Joe

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But they're not readily available in any classic term. Yeah, you can get a 360 at your local retailer IF you preordered months in advance, AND you're willing to stand in line, AND you preordered additional items beyond what you actually wanted to purchase. I can walk into Sam's Club and buy candy. There's just too many "if"'s and "and"'s to call the 360 readily available.

Beyond that, I don't think standing outside in the cold like a Soviet in a bread line is an acceptable "cost," and offsetting that by doubling the price of an item on eBay just doesn't feel right.

But I'm also not saying one person buying one console to resell is all that dispicable. Hell, we joked about doing it last week. Where I take issue is when a group of five people conspire to buy five consoles - one each - and then offer to sell those consoles back to the people standing in the cold with them. Five consoles out of 50 is 10% - that's contributing to the rarity in that area, I'd say. And if that's the free market, well, I guess I just don't want our market to be that free.

I do think we're actually in a form of agreement, though. I'm not speaking as generally as I might appear. I'm talking more about the kids in the story, rather than the people who decided they didn't want their 360 and decided to strike whil the iron was hot.
 

Joe

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Original Comment by: Dustin Hubbard
http://www.spookytornado.com
I think I side with Nathaniel on this as well... and I'm pretty much just repeating what's been said but it's the beauty of free market. If these people are willing to take the time and energy to stand out in the cold to get one of these suckers they should be able to do whatever they want with them. True I don't PERSONALLY think its ethical to buy out the entire stock to sell them all (retailers are more responsible for this than the buyers, the limit one per customer is good) but if the opportunity arises and you have the funds to do so then I see lawfully little if nothing wrong with it. I don't see a problem ethically with a person buying one with the intent to resale it for a profit. Hell, I did it in my younger days with a Furby. If people don't want to pay a huge price they need to be out their camping with the rest of them. Good discussion though!

On the subject of the robbery... how the HELL did the robbers get away carrying those 5 HUGE 360's? I mean... surely it would've slowed them down tremendously... haha i kid i kid ;)
 

Joe

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Original Comment by: Munir

I share this idea that there's a certain magic price for every product that you can't go beyond, which is to some extent subjective, but eventually a fixed number albeit one you can't pin down exactly. You know, £320 for a premium 360 maybe ok but £560 may not.

I think the reason why more shallow forms of scalping feel uncomfortable (rather than immoral) is because if your 360 goes for $1500, you're pretty sure that's not even what it's worth to the consumer. It's consumer naivity that allows this to happen. They're decision to buy at that price was not a rational, well thought out, intentional choice. If it was, then ok, but otherwise I'd personally feel guilty exploiting this irrational but completely human behaviour.

Unfortunately, we just put it down to a good, perfectly acceptable, capatalist system. I believe value should be dictated by supply and demand, but even the best systems have their flaws, which in this case is extortion. For me there is an unwritten responsibility to make sure these things don't happen if at least just as a personal principle. That's just my view though. :D

As for the story about the mugging, what goes around comes around I guess!
 

Joe

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Original Comment by: Nathaniel Givens

Been away from the thread for a bit.

I think that what Munir has to say is really interesting. I mean, if you have some kid that has just been given 20 bucks for his birthday and has NO idea how much, say, a common pokemon wall scroll is worth (say $4), then even though it's not illegal it would certainly be wrong to sell him a wall scroll for his $20 - especially if you went into a store just for that purpose. And so the *only* element of the whole resale of xbox360s that I find in any way uncomfortable is that it's essentially a toy. Sure - a lot of adults want it, but a lot of kids do too. When there are kids involved, I always want to be extra careful (probably comes from being the oldest of 6 kids in my own family).

But to get back to Joe and the whole Sams Club vs. xbox deal - I think you're confusing a question of quantity with quality. The difference between the Sams Club and the xbox360 is not that it's a different kind of convenience, just that it's a whole lot more convenient to wait in line at Sams Club for 35 minutes (the lines in Costco are always long, I don't know about Sams Club) then it is to wait inline at Best Buy (which doesn't take preorders). You have to understand - the very fact that it is SO much harder to get an xbox360 - regardless of the actions of "scalpers" shows that the price on ebay is the real price.

You're upset that 5 guys can nab xboxes that amount to 10% of a stores stock just for retail. But from the perspective of someone waiting in line to get one for themself - it doesn't really matter. There are SO MANY more people that want xbox360s than there are xbox360s that the actions of a few who just want to resell are not going to be significant. If anything at least the guys that buy for resell aren't taking their consoles off the market entirely.

And the fact is that if MORE people were trying to resell them this wouldn't be bad either - it would actually make the price fall. That's what has happened on ebay already. I was all excited to buy my xbox360 and sell it for like 1,000 but now the prices are down to like 600.

It's not really a question of whether or not supply and demand work. They ALWAYS work - their intrinsic characteristics of human nature. The question is whether or not we allow them to operate freely. In almost all cases I think we should. The price that people are willing to pay is the price that something is worth. It's as simple as that. The only exception should be for things like medicine, food and shelter as well as people who can't make competent decisions on their own (children). As long as your selling the stuff to adults it's not really your place to judge their thought process as rational or not.
 

Joe

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Original Comment by: Randall Fitzgerald
http://www.ikimashou.net
Ok, I agree with Joe. Readily available means I can go get one easily, hell why do you think venues use terms like "hard to come by" and "rare." I guess you could argue that since an endangered species exists, it is also readily available. Hey! This car that there are a limited number of CAN be purchase from SOMEWHERE at all, it just requires waiting and hoping and having someone else not buy it because, oh wait, it's not readily available.

Also, people need to stop putting out this idea that game consoles are toys. Is my computer a toy? No. Is my Treo 650 a toy? No. It's not a toy any more than Ghost in the Shell is a cartoon. Sure, they are not unfit for consumption by youths, but they are not made specifically for them, and are also not the target demographic. That sort of phrasology makes me question most anything game related to go along with it, or to follow from it. Hey! Not all TV stations are for kids, but kids exist, so let's punish the adults by harshly censoring them through withholdings of ad revenue or laws where applicable! It's not a violation of free speech because we're protecting the kids! YAY!
 

Joe

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Original Comment by: Nathaniel Givens

1. You guys are missing the point. What do you need to do to get an xbox360? Go online, type "ebay.com" in your address bard, tyoe "xbox360" in the search and plunk down the cash. How is that not "readily accessible". In the time it took to write your response you could have ordered an xbox360 to be here by Christmas.

That's the entire fundamental principle of capitalism: distribution of goods. If you keep the price artificially low (MSRP) then you have to wait in line for days to get one because supply and demand are out of wack. The result: shortages. If you let the market determine the price (ebay) then anyone that's willing to pay what they're worth can have one.

2. To a kid a console is a toy. That was my only point. To a kid a PC is also a toy, and so is a truck or, for that matter, an M1-Abrams. Not saying they are essentially toys - just that to kids they are.

Ever watch Firefly? Remember the episode "Objects in Space" where Jubal's like "This is River's room, right? But she's not in it now. So is it still her room when she's not in it?" See - we can get very philosophical when we start to talk about whether an object is or is not a toy when "toy" is by definition a word that implies a usage of that object in relationship with a human being. W/out that relationship the word "toy" can't be said to apply or not apply.

-nathaniel
 

Joe

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Original Comment by: Randall Fitzgerald
http://www.ikimashou.net
Ok, the kid considered it a toy, but last I checked, the kid wasn't dropping $400 on the console alone and if the kid played with it like it was a typical "toy" there might be an ass whipping. Just a guess.

Secondly, last I checked, no one on eBay was a major retailer, and even on eBay, I am BIDDING against other people. I am not buying something for a set price, I am winning or losing dependant on other people's want of the object. If I am paying retail or less on eBay, fine. If I am not being outbid by a hungry mob, which is basically the same as a long line, the item I want isn't readily available. Ok, so there is a backflow into the market from jerks, there still aren't enough for everyone who wants one, or even a decent fraction of the people who want one, or claim to anyway. When the MSRP on an item is $400 the market doesn't matter because the market isn't the manufacturer or the distributer. Moreover, I think it borders on intellectuall lewd to talk about the semantics of the work "toy" when you are doing the same thing regarding the term "readily available."
 

Joe

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Original Comment by: Nathaniel Givens

Please don't take this harshly, but there are some basic economic principles you've got to understand. The first one is that goods are ALWAYS scarce. When you say there aren't enough to go around that's just a truism. If there was enough for everyone to have one - and enough of everything that goes into the entire supply line of building them - there would be no economy. Just like there's no economy of air. Well, actualy there's starting to be because clean air is now non-unviersal - but that just proves my point.

The fact is that they ARE readily availabe AT THE MARKET PRICE. And the market price is what you have to pay to get one. What this means is that while you see having to outbid people on ebay to get them as the price going up - it's really just the amount you have to pay going up until it meets the price.

What you really mean is that they are not readily available at a specific price. But candy bars aren't readily available for $0.10 either. This doesn't mean they're not readily available. It just means you have to go up to the price to see that they're readily available. There's not an endless suply of candy bars either - otherwise they would be free too. They are as rare as they are valuable. Not everyone gets a candy bar that wants one. Sit around in a grocery store long enough and some 5-yr old will make that abundantly clear. But anyone that's willing to pay market value can get one. Same with xbox360s. Anyone willing topay market price - now down to about $600 - can get one. If you think that's too high that doesn't make it suddenly "unavailable" anymore than me thinking $3.00 for gas is high makes it unavailable. When the pump is dry - that's when it's unavailable.

So I'm not being intellectually "lewd" at all - I'm just using the technical economic terminology in it's correct way. Maybe "readily available" isn't the right phrase - but the fundamental concept is that goods are ALWAYS rare or they're not goods. Toy, on the other hand, doesn't have a technical definition that I'm aware of so I feel a bit more free to wax philosophical with the term.

-nathaniel
 

Joe

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Original Comment by: bishop

I think that when society as a whole thinks that a certain commodity is important enough, steps will be taken to ensure its availability. For example, the USA subsidizes farm produce to keep its price high, some communities may subsidize gasoline prices, other countries may even control the price of poultry. Joe's article is a good example of this. The city of New York obviously thought highly enough of its service industry to put down legislation to define and control "price gauging".

However, I wanted to note; The fact that the city of New York has legislation against these activities do not define the activities wrong or unlawful for the rest of us. Sure, it may be headed that way, but maybe a city that's less dependent on tourism does not have the same problem and hence; not have legislation against it.

Randall has pointed some good points, yet I feel we're being dragged into a discussion about moral relativity. You obviously feel passionate about the priviledge of procuring one of these xboxes at what you consider a "fair" price. I find it faintly amusing to consider how we as a society will come around to determining what the range of this "fair" price will be.

Nathaniel also has some great points, but I'm sure you'll agree with me that a true free market will never exist. As a society, we'll always impose our collective desires upon it. Now the real trick is how we come to an agreement on what our "collective desire" is.

Impossible? no way, we see it in our day to day lives. The free market is constantly being manipulated; minimum wage for one, the subsidizing of farm produce is another, or how about rent controlled housing?

The xbox? despite how unfair the distribution practice of these consoles are now, it is simply not important enough to us. The supply of these consoles WILL catch up with its demand, and when it does the price will normalize. This is an important difference between the xbox360 and Joe's ticket scalping example. Tickets for a specific show are limited, the xbox360 isn't.

 

Joe

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Original Comment by: Nathaniel Givens

First - an update. The prices on the xbox360 fell from like 1200 to 600 in the days leading up to Christmas. When the store finally got my xbox360 on Dec 23rd, I decided it just wasn't worth the $200 - not to mention I didn't think I could sell it in time.

So I went in the next day to get my $50 deposit back and make sure they called the next guy on the list - hoping that since I didn't really want to get an xbox360 he would be able to grab it in time for Christmas. Leave me alone Bonnie - I heard the name and it was a guy! ;-)

Bishop - I agree that no market is really free 100%. One of the characteristics of a free market is perfect information: meaning all the consumers know everything there is to know about a product. This is obviously almost never true. But the fact remains that we know what a free market is, and therefore we can tell how close a given market comes to that free market.

The only thing I disagree with is that you seem to think that what matters is how we impose our collective desires on the free market system. But I don't think that's necessarily true either. Our collective desires may very well be wrong. Take the subsidies that you mentioned. America and the EU nations both heavily subsidize cotton. The result? Africa's economic development is further handicapped. This is morally wrong, in my opinion.

What it comes down to is this: there's no sensible definition for price outside the free market. It doesn't make sense to talk about a "fair" price - the price is what the market defines it to be. In all respects we should allow the free market to do whatever it pleases except when there's an overriding concern. "I want an xbox360 now" does not strike me as a valid overriding concern.

-nathaniel