How eBay Drives iHype

Over at Lost Remote, Michael Gay has posted an entertaining rant about iPhone reporting.

"Every station has done this before: some big product comes out, a producer goes to eBay and searches for it, and they quote the highest price they can find to make it sound like a bigger story. Stop it. An extreme is not a story, and it adds hype to a story that doesn't need your help to be bigger…," he writes. "[W]hat does it add to the story when you report on national TV that the cost [of an iPhone] on eBay is $2,799? I just found one for $20,999,999 (at least shipping is included). That doesn't mean that's how much the phone costs."

CBS News fell into this trap on Saturday's "Evening News." Towards the end of a balanced piece on the much-hyped product, reporter Michelle Miller said the following: "Just how hot is the iPhone? Well, at this New York City Apple Store, and others like it across the country, they refor--retail, rather, for between five and $600. On eBay, they're going for as high as $1,300."

The "going for" bit is the issue here. Corey Spring did some research and found that "[a]mong those [eBay] auctions that did close successfully, few were having the large markup that many expected to see the iPhone go for from third-party sellers... and a significant amount were only making their money back, even closing at a loss."

That isn't to say that an iPhone hasn't sold for $1,300. But it does mean that the $1,300 figure isn't terribly representative. The explanation for why the iPhone hasn't been going for all that much on eBay has to do with simple supply and demand: The product is still available in most stores, so the average consumer doesn't have much reason to pay an inflated price online.

While Miller did say "as high as $1,300," – and deserves credit for making it clear that that figure marked an extreme – Gay is right to point out that unrepresentative eBay numbers don't necessarily benefit a story. And it's not as though the iPhone needs much more in the way of hype.