All of MP3 and Tradesports: Two Sites Worth Checking Out

Alright, both these sites have been around a while so maybe you have heard of them. I, however, only discovered them recently so I imagine others might be interested.

All of MP3 is a brilliant site for downloading music. Based in Russia, the site allows you to download music at incredibly cheap prices. The cost for an album is the generally less than two bucks and a single track costs ten to fifteen cents. Unlike iTunes, All of MP3 charges for bandwidth rather than the song. Prices for longer albums are higher and vary depending on file format and bitrate. This is actually one of the nice features of the site: the user can select the format and quality of the download. If you want near CD quality you can get it; if you are like me and just want something listenable, you can choose lower quality and pay less. The selection of music is good and I have had no credit card problems. Sure, the legality is questionable but in a world where copyright laws are over enforced one should take the advantage of the few times when the laws benefit the consumers, not the corporations. For a full discussion of the legal issues involved, see this Wikipedia entry.

The second site I’d recommend checking out is Tradesports, a prediction market modeled on future exchanges. In fact, it is a future exchange. The site offers contracts on a variety of events, including sports, politics, and current events. You can bet on the baseball games, the Tour de France, the Democratic and Republican presidential nominations, congressional races, and a host of other subjects. For each event, contracts can be bought (if you think the event will happen) and sold (if you think the event won’t occur). If the event takes place the contract expires at 100; if it doesn’t, it expires at 0. On each trade are two people, one on either side: a buyer and a seller. The exchange just establishes the contract (and takes a small cut of each trade in fees). To buy or sell you have to take the price someone is offering or find someone who will take your price. The price of the contract reflects the probability the event will occur. For example, right now contracts for Hillary Clinton to be the Democrats 2008 presidential nominee are trading for just over 43, implying a 43% chance Clinton will be nominated. If you by the contract thinking Clinton will be nominated and she is, your profit would be the difference between the price you paid and the final contract expiration price of 100.

At this point volume on the site isn’t great, which means that for many events the spread between the ask and bid prices makes trading difficult. Poor liquidity also largely nullifies one of the potential advantages of the this type of market: unlike a sports book, on Tradesports you can trade during the event. If, for example, Albert Pujols hits a home run, the market on the game will change as more people want to buy the Cardinals and sell their opponent. Unfortunately, only major events actually have active trading during the event (World Cup games, Yankee-Red Sox games, etc.); you generally can’t trade during, say, a Wimbledon match. One other drawback are the fees. They are a bit high in my opinion, although they are cheaper than what you pay a sports book when you factor in the better odds.

In addition to Tradesports, Betfair and Inkling both operate similar predictive markets. All three sites are interesting tests of the predictive power of markets, such as the wisdom of crowds. At this point though, issues of volume, fees and full transparency limit the value and the usability of these sites. In a few years, however, as these companies upgrade (or a new generation of predictive market sites emerges), I expect these sites will largely replace sports books. Once the kinks are ironed out and more people sign on, predictive markets, which already generally offer better odds, will have advantages in fairness and flexibility that traditional sports books can’t match.