It seems that just about every company, advertiser, and even plenty of users associated with the location space emailed me with pitches, ideas, thoughts, etc. To say that space is red-hot right now, is putting it mildly. One of the companies that reached out to me was Brightkite, one of the earliest hot location players.

CMO and co-founder Rob Lawson admits that the network has been “pretty quiet for a while,” but hints at some exciting stuff coming up for March (yes, around the time of SXSW). But he also wanted to share some things they’re working on right now, and a few interesting bits of data.

Notably, Brightkite has over 2 million active users currently around the world. While that might seem small compared to the bigger social networks like Facebook and Twitter, that’s actually four times the size of the newer rival Foursquare, that is getting much of the hype these days. Another interesting tidbit: Brightkite has had localized promotions in place for some time now, and they’re seeing strong usage.

What users of Foursquare may know as check-in or mayor special, Brightkite calls Local Promotions. And they have a page on the site where local businesses can sign up for free. On that page, they note:

We would love to help your bar, cafe, coffee shop, or business reach out to the local community through local promotions. We’ll let nearby Brightkite folk know your business gives them preferential treatment, and that they should stop in for a visit. Fill out the form below to get started.

Brightkite says these promotions are seeing a lot of interest from all types of brands. And usage is strong with over 100 brands including big ones like Gap, Ben & Jerry’s and Time Warner Cable, seeing over two percent response rates when these notifications are inserted into users stream. And the best ones are seeing five to ten percent. When compared to more traditional ads, those numbers are very solid.

Like Foursquare check-in and mayor specials, the Brightkite deals offer things like free (or heavily discounted) drinks and meals, but also extend to things like discounted hotel rooms, car rentals, and even dry cleaning.

So is Brightkite making any money off of these? Yes. While many of the smaller local businesses use the service for free or close to free (to both prove the model and drive growth), Lawson notes that some of the big national brands are spending some big time money to advertise locally. These campaigns range from $10,000 to $200,000, Lawson says.

Something else that interests me about Brightkite is their unique approach to social relationships. When it started, Brightkite had a symmetrical model, much like Facebook and Foursquare, which requires users to accept each other as friends. But late last year, the company switched the model to be an asymmetrical one, like Twitter, where one party can follow another without permission.

This may seem like a horrible idea for a location-based service given the privacy implications, but Brightkite’s is a bit different of an asymmetrical model. “Our model is asymmetrical (like Twitter), but reversed. With Twitter, you decide who to follow but anyone can see your content.  With Brightkite, you decide who to share your content with, but you can only see others if they decide to share with you,” Lawson notes. He continues, “We are convinced this is the right model for location based services – people want to be in control of who knows where they are. We turned away from the handshake model (Facebook, Foursquare) because we found users didn’t like the social pressure of having to accept a friend request. Just because you are happy to share your location with me, doesn’t mean I want to share mine with you, even though we want to maintain a relationship.“

As someone who has dealt with this many times before, I see his point. Lawson says that generally Brightkite users have been receptive to the changes, but says that some older users liked some of the more advanced features of the old model better — and Brightkite is working to get some best-of-both-worlds options for them.

Brightkite merged with another location-based network, Limbo, last year and raised some new funding. They face a battle in warding off the fast-charging hot location networks like Foursquare and Gowalla (not to mention Yelp and the new Google Buzz), but all of them appear to be benefiting from brand interest in the local advertising space.

It’s not entirely clear when Brightkite 2.0 will launch, but indications are that it will be soon. Users have been receiving notices about it. We’ve obtained a whole bunch of screenshots purported to be of the new version. We’ve reached out to the company to verify these, but they definitely look legitimate.

So what’s new? The first thing you’ll notice is that the whole look and feel of the site has been revamped. Gone is a lot of the clutter that distracts from the main location feed. This has been replaced by a revamped top toolbar, and a new bottom toolbar (think: Facebook).

Filters are a key part of Brightkite now. Rather than having three different main streams (Me & My Friends, Around Me, Universe), there is now one with a few different filters. There are also new filters to sort through people using the service by factors like location, sex, and age.

Checking-in has been simplified, as has adding a new place. And Brightkite 2.0 promises simplified privacy settings so you can more easily set where to send you updates (to the public, or just your friends — to Twitter and/or Facebook).

Also new is the ability to “like” other people’s updates. Obviously, this is similar to the functionality found on FriendFeed and Facebook.

But the biggest change to Brightkite is that it is going asynchronous. That is to say, rather than forcing you to accept a friend request to enable other people to see you updates, those people can now simply follow you without any confirmation needed, like on Twitter. They will become your “Fans” while people you also follow back are your “Friends”.

This is an interesting move since Brightkite is a location-based service, and privacy remains the main issue for why all services, like Facebook, don’t switch to this model.

Below, find more screenshots.

In the nascent world of mobile social networking, there are the big dogs (Facebook and MySpace) and everyone who wants to be a big dog. Two of the puppies just got bigger. Limbo is buying Brightkite, which all the tech kids are raving about, in a nearly all-stock transaction. It will change its name to Brightkite in a re-branding move, and gain Brightkite’s engineering team and product smarts. Limbo CEO Jonathon Linner will remain as CEO, while Brightkite founders Martin May and Brady Becker will take over product management and design.

Meanwhile, Limbo brings a lot of cash to the table, having just raised a previously undisclosed $9 million round of financing in January, 2009. Nexit Ventrures was the lead, and existing investors Azure Capital, Draper Fisher Jurvetson, and New Enterprise Associates also participated. Brightkite, meanwhile, started out as a TechStars startup and was funded with just $1 million in angel money. This marks the third exit from TechStars’s Class of 2007—the other two being SocialThing to AOL and IntenseDebate to Automattic.

The combined company will employ 35 people and boast two million active users. That should keep it in the running with other growing mobile social networks such as Loopt, which has more than one million active users, Mig33, which may have 10 million or more and MocoSpace, which has 3.5 million active users. The enlarged engineering team should help Limbo/Brightkite push out new features at a faster pace and keep up with the front pack.

Both Limbo and Brightkite have iPhone apps, and both use Facebook Connect to plug into people’s existing social network. Here is how we described the Brightkite app when it first came out:

The app allows users to syndicate their current location to their friends, meet nearby Brightkite users, and lifestream with the equivalent of geo-encoded Tweets. The application is tied to Yahoo’s Fire Eagle, which allows users to manage their location from a number of other services. The site also uses databases to automatically associate POI’s and cross streets with GPS locations, so user positions aren’t simply displayed as coordinates.

Meanwhile, Limbo is more centered around the activities of the people around you and connecting with them that way. We included Limbo in this roundup, where we concluded it could do a better job with locating the exact position of friends on a map. Brightkite’s Fire Eagle implementation should help with that.

Something tells me this is just the beginning of the consolidation in mobile social networking.

We’ve been bullish about location-based social networks for quite awhile now, especially since Apple announced that it would open up the iPhone to developers. And with two significant developments in this space just this week (more on that below), we thought it would be a good time to take a step back and look at the options currently available through the Apple App Store.

What makes a “location-based” social network different than a normal one? At least as things stand today, location-based social networks run primarily on smartphones that have the ability to determine a user’s current location, usually by leveraging GPS or cellular tower triangulation. The social network then uses your location to reveal nearby friends and places of interest. See our Location Technologies Primer for additional information.

Currently there are six major location-based social networks available for the iPhone (click on the comparison chart to the right). All of them tell you how far away other members are from you, with most focused on helping you find your friends but some designed primarily for discovering strangers. A few of them chart the location of your friends’ on an interactive map (something I actually think all of them should do). They provide a wide range of privacy settings, but all will stop reporting your location when you simply close the application (Apple has yet to release its push notification system that will let these apps constantly report your location in the background). They also vary widely in how precisely they identify the locations of other members, although all but one of them work anywhere in the United States.

After testing this entire batch, I’ve come to the conclusion that none of them is quite ready to achieve mainstream usage. I believe most, if not all, of the following things must happen before location-based social networking becomes the new “killer app”:

• They need powerful notification systems that actively inform you when someone of interest is nearby. Such a system could be set up manually by individually indicating which friends are “of interest”. But it would be even better for the system to learn from your interactions (messages, pokes, wall posts, etc) and affiliations (profile information, common friends, groups) and automatically identify certain people you’d like to meet up with.
• These applications absolutely need to update your location while the phone is sitting in your pocket. Right now it demands too much from users to open the application whenever they want to inform friends where they are. Serendipitous encounters would be far more common with a fully foolproof and automated location-updating system.
• When inviting friends to a service, you need the ability to determine which of your friends actually have a supported phone. Otherwise you’re just spamming a large number of people who matter to you and with very little yield.
• These apps need to get more stable; they crash way too much.
• We need more hooks into web applications so we can share our location and location-based activities not only with other mobile users but with the web at large.
• Those apps that let you see and meet strangers nearby need to highlight both friends of friends and those who share common interests and affiliations.

These are weaknesses shared by all of the current iPhone location-based social networking apps, each of which we cover briefly below.

The Veteran – Loopt

Perhaps the most well-known of these companies, Loopt has been working for years to get its technology on a variety of phones (the iPhone being just the latest and most functional of them). It is also perhaps the most developed of the batch, and the most generic. Use it primarily to see on a map where your friends are located nearby. Restaurant and other local reviews are secondary, having been brought into the app through a partnership with Yelp. Get directions to other users, view their latest status updates (which are often accommodated with photos taken on-location), and ping them when they haven’t updated their location for awhile.

The Mountain View-based company has ventured into the matchmaking business this week by adding a new feature called “Mix” that shows you, for the first time on Loopt, strangers in your vicinity. You can see all of the people nearby who have turned on the Mix feature, and you can filter by types (age, gender, tags, dating status, community) as well. This is Loopt’s attempt to help people hook up at bars (an idea that gets thrown around by many entrepreneurs and has always puzzled me). But if it takes off, it may have even greater sociological effects than Loopt’s core friend-finding capabilities.

The New Kid On The Block – Moximity

Launching into private beta just this week, Moximity is a new location-based social network out of Austin, Texas that wants to help you find both your friends and local establishments. Taking Paul Bragiel’s marketing advice, Moximity is rolling out one geographical region at a time, starting with Austin itself. Everything is local – the restaurant listings, the users, and even the advertisements (yes, this is the only one of these networks actually monetizing on the iPhone right now).

One major quality that sets Moximity apart is the way it handles user accounts. When you join and start configuring, you don’t make “Moximity friends”. Rather, the service pulls in your contacts from Facebook (and later, other sites as well) and lets you track those of your existing friends who also use Moximity. When you post a status message, it also gets pushed out to your Facebook and Twitter accounts.

Moximity would benefit from an interactive map that uses pins to show where your friends are located. However, unlike Loopt, which gives you the precise street address of your friends, Moximity always matches you with particular places (restaurants, stores, etc) so individual pins for users might not be appropriate. Co-founder Bryan Jones says some breed of mapping functionality will be included in the next release.

If you live in Austin, you can get into the service immediately by emailing your name and zip code here.

The Bezos, T-Mobile and iFund-Backed Contender – Whrrl

The best-funded of the bunch is a Seattle startup named Pelago with an app called Whrrl that centers around identifying and reviewing nearby establishments of all types. Locating friends takes a bit of a back seat to the idea that you should share Yelp-like reviews with the people you know.

The information about places is comprehensive. You can find cuisine types, prices, hours, phone numbers, websites, street addresses, ratings and reviews. While you can view the (5-star) ratings and reviews from every member, you’re encouraged to focus on those of your friends. When you view a friend’s profile, for example, their reviews are displayed prominently. That said, you can “fan” strangers if you like their tastes (although apparently only through Whrrl’s thoroughly developed web app).

Whrrl also identifies events that are going on in your area. The combination of event and place information is great but I get the feeling that this app will have to depart a bit from its “reviews” roots to become a widely embraced service. More generic social features (such as walls and notifications) are needed to get me to use Whrll when not looking to share or gather opinions.

Pelago has raised its funds from the iFund, Jeff Bezos, and T-Mobile (among others).

The Schmorgesborg – uLocate’s “Where”

Where is an iPhone app developed by a Boston-based startup called uLocate that has received a considerable amount of funding (at least $15.5 million) over the last several years. It has everything but the kitchen sink. Along the bottom of the app is a dock-like menu that shows a variety of sub-applications, each meant to help you find something in your area:

• Buddy Beacon: find nearby friends
• GasBuddy: find nearby gas stations with low prices
• Starbucks: find nearby Starbucks franchises
• Quibblo: see location-based poll results in your area
• HeyWhatsThat: identify mountain peaks in your vicinity
• The Skymap: learn about the stars and constellations in the sky above you
• Zipcar: find pickup points for Zipcar rentals
• Yelp: find nearby places listed and reviewed on Yelp
• Eventful: learn about nearby events and their venues

The UI needs a bit of work (too many popups) but regardless, this app is handy for quickly finding the nearest of some particular thing on an interactive map (coffee, friendship, wheels, etc).

The Categorizer – Limbo

Limbo is provided by a company that seems to have undergone quite a few transformations over the years. We reviewed the company in May 2006 when it was a bizarre auction service based on text messaging. Back then it was located at 41414.com and you can still see that ancestry in the current logo (just look at the reflection).

The app is, at its heart, more focused on locating strangers and learning about what they’re doing than any of the aforementioned apps. All users are categorized by four types: Members, Contacts, Friends, and Faves. You can opt to share your location with each or all of them, with “Members” being everyone you don’t know, “Contacts” being people pulled in from your phone’s address book, “Friends” being people more important to you, and “Faves” being the most important people to you.

Users are further categorized based on their current “activity” (or status). They are either socializing, eating, playing, chilling, working, feeling, or enjoying a bit of “me time”. You can view users by their particular categories on a “What” page that displays the categories in a grid.

Limbo neither shows you your friends’ locations on a map nor gives you their exact locations (just their general regions, e.g. San Francisco). Both would make this app a lot more useful.

The Wall – Zintin

Zintin has gone even further in the direction of helping you communicate with strangers nearby, rather than helping you find your preexisting friends. Users in the vicinity are displayed in all-inclusive list along with their current status messages. When you select a particular user’s name, it takes you to their Wall, where short notes, photos, and scribbles can be posted by any user.

The Wall is the central, and pretty much only important, feature provided by Zintin (so-called “bulletin boards” are also provided but they’re essentially Walls for particular regions). If you find someone with particularly cool stuff on their Wall, you can request to exchange your contact information and meet them. But most people will just use the app to see what kind of juvenile stuff others around them have decided to share. If you’ve turned on the “allow mature content” setting, then that content is primarily explicit material, so be warned.

Zintin, which has been in development by a few Stanford CS grad students since late 2007, is mostly a curiosity at this point. However, the scribble feature, with which you can make quick doodles and post them for others, should make its way into other apps.

The Elephants In The Room – Facebook and MySpace

Neither of the big American social networks have added location-aware services yet, but they’re coming. Expect them to eclipse several if not all of these services after learning from them.

The applications are pretty good mobile versions of the standard experience. MySpace, which we reviewed last week, provides users with most key features of the service, and they’ve added some nice touches like the ability to upload photos from the iPhone camera. You can download the application here (and add me as a friend).

Facebook’s iPhone app is clearly better. They had a bit of a head start with their web app last year that was at the time the finest example of an iPhone-specific website. The new iPhone app was created by the same guy – Joe Hewitt – and includes deeper integration with the phone. Tap on a friend’s name and call them. Or use the included Facebook chat application and skip those text messages. One big problem with Facebook on the iPhone – it takes forever to load and the application crawls, just like the web version.

Location? Hello?

But both MySpace and Facebook miss the real opportunity to drive usage growth on the iPhone – location awareness. The reason? Privacy concerns. The lost opportunity? Huge potential user growth and connections.

Social networks today rely on friends of friends or real world connections to drive growth. But a handful of iPhone-only social networks actually help drive new connections in the real world. And the backbone of those applications is location awareness.

I’ve written about this opportunity repeatedly in the last year. In February I speculated on the demand for an iPhone-only social network to drive real world social interactions: “I think an iPhone-only social network…would be a huge hit…if it had presence awareness and was able to tell you both where your friends are and what they are up to. And also let you meet new people around you who were open to it.”

In April I saw a demo of the new product Loopt was building for the iPhone. It had all the features I suggested, and more.

Users of these new social networks can choose to notify other users when they are physically close to them, and show a picture, first or full name, and basic profile information. If you’re both in the same bar or at the same conference, you can browse and filter other users to find a date or do a business deal.

And you know how awkward it is when you run into someone that you sort of know but have forgotten their name or what they do? Your phone can see them coming and alert you. That means you can have richer conversations with people you are acquainted with but don’t know very well.

These new social networks can help you meet new people, remember details of the people you already know, and find your friends when they’re nearby.

MySpace and Facebook are sitting on the sidelines while these new networks try to get a foothold. And it’s all because of privacy concerns and fear of litigation.

Privacy (and those pesky Attorneys General)

The media loves nothing more than to talk about sexual predators lurking around the big social networks. Both MySpace and Facebook have had to make big changes to their privacy policies, particularly how they set up accounts for minors. So when the product guys say “hey, let’s add a feature so that any MySpace user can see the basic profiles of any other MySpace users near them,” the lawyers freak out.

Certainly privacy rights need to be considered, and Loopt has already had some problems with unintended invites going out (although this hasn’t happened to me and I’ve been using it since launch). But they can be addressed by allowing users to opt out of showing others their location, or only showing it to certain types of people (by age range, sex, friends of friends, etc.). And minors can be permanently segmented from older age groups as well.

To be fair, both MySpace and Facebook have said they will eventually roll out location based services to help users meet each other. It’s unlikely any of the early networks will get an insurmountable lead on the new platform anytime soon, so they can take their time with their lawyers to make them comfortable. But if they wait too long, or release overly-restrictive products, that may change.

We’ll have more to say on this shortly – our goal is to have iPhone users at our meetups and conferences be able to network with each other, swap contact information, and meet new people. Hopefully by our big August Capital party on July 25, TechCrunch readers will be using their iPhones for a little social networking.

We’ve been gathering videos and overviews of many of the applications and have held them until now. We received demo vidoes for dozens of applications, ranging from basic games to complex GPS-enabled social networking applications. Below are some of our favorites.

Among the apps that we didn’t include below (primarily because of their simplicity) are Recorder (a voice recorder), Movies (movie showtimes), and iMaze (a basic maze game).

Social Networking On The iPhone:

The iPhone, with cult-like users and location aware technology, is the perfect social networking device. Earlier this year we speculated that someone would emerge with a killer social networking app for the iPhone. It turns out that there are lots of contenders.

Loopt

Loopt – We’ve been tracking Loopt’s efforts around their iPhone application for months now. In April we posted early screen shots of the app without saying who had built it. Think of Loopt as a simple social network to find local businesses, message friends and send status updates with where you are (using the iPhones location technology). And a key difference with Loopt and many of the other networks below: you can meet new people who are nearby, if they choose to share that information. If everyone used this, you could see who’s single in a bar before you approach them (and flirt with them by phone first), and know the first name and job of everyone at that cocktail hour at the tech conference. We’re big fans of Loopt, and will have more news on them later today. For now, download the free application here.

Limbo

Limbo – Limbo is another geo-aware social network that behaves like a mashup of Twitter, Loopt, and Whrrl. One of the app’s most compelling features is its grid-like diagram that visually groups your friends according to what they’re doing (for example, all of your friends that are Out Drinking will be lumped together, even if they aren’t necessarily drinking in the same place). The app accomplishes this feat by forcing users to select from a predefined hierarchal list of activities (while this might sound restrictive, the list is pretty comprehensive). This categorization allows users to see what they’re friends are up to without having to sift through each of their messages.

On the geo-positioning front, Limbo allows users to interact users who are within a close radius (about a quarter mile), in a manner that is similar to Loopt. You can download the app here for free.

MySpace

MySpace – The MySpace iPhone app is everything you’d expect from a multi-billion dollar company: the app integrates seamlessly with the massive social network, allowing users to add friends, exchange messages, upload photos, and do just about anything else they could do from their computers at home. They aren’t yet integrating with the location features, but expect that in the near future. If you are a MySpace user, you’ll be using this constantly. You can download the app here for free.

Shozu

ShoZu – The ShoZu iPhone app allows users to interact with a number of social websites, including YouTube, Facebook, Flickr, and a number of others. Users can upload photos to these services, comment on other users’ profiles, and send status updates, depending on the site involved. You can download the app here for free.

Utilities and Reference:

The introduction of the iPhone app store has effectively made the iPhone the ultimate utility belt. We’re seeing no shortage of apps that aim to make life easier for users, and while many of them are a little too simplistic (how many tip calculators do we really need?), others will be godsends for some people, serving up the latest sports news, on-demand drink recipes, and restaurant recommendations.

Save Benjis

Save Benjis – Save Benjis is a shopping tool that will look up a product’s price according to its model number. Using model numbers instead of product names helps take the guesswork out of pricing comparisons (for example, it would be much easier to compare two computers with their model numbers versus a name like “MacBook Pro”). The app integrates the Safari web browser, so users can browse and purchase goods on a website from their phone if they find a better price. You can download the app here for free.

Pocket Express

Pocket Express – Pocket Express is a news and information service that is available for a number of smart phones. The app allows users to browse through news articles written by the Associated Press on topics that include politics, science, and world news. Users can also browse through sports scores, weather reports, and movie information. You can download the app here for free.

Urbanspoon

Urbanspoon – Urbanspoon brings a fun (and gimmicky) solution to choosing a restaurant for dinner. After using the phone’s GPS to detect restaurants in the area, Urbanspoon presents you with a slot machine-like listing of cuisine types and price. To activate the slot machine, you give the phone a hard shake (the accelerometers inside the phone will measure the movement). The dials will spin around a few times, and you’ll be presented with a suggested restaurant (you can shake again if you’re not satisfied). You can download the app here for free.

Cocktails

Cocktails – Cocktails is a well designed reference for “potent potables” that will put traditional bar-tending guides to shame. Users can browse through a large index of drinks, search by ingredient or drink name, and label drinks as favorites for future reference. The app also includes information about the type of serving glass to use, as well as the date that each recipe was created (there are often multiple recipes available for each drink). You can download the app here for $9.99.

ForeFlight

ForeFlight – ForeFlight is an iPhone app that is aimed towards pilots (both recreational and professional) rather than your average consumer. The app allows users to find nearby airports, maps, diagrams of airports, and lookup of plane information by tail number. The app also includes the A/FD, the Airport and Facilities Directory, which includes location data like field and approach information and location data on hotels. You can download the app here for a whopping $69.99 (the highest price in the store).

Audio and Video

App providers will make use of the 3G iPhone’s speedy network with streaming audio and video apps that will allow users to consume a near-limitless amount of content without having to sync up with their computers. Unfortunately, the iPhone is still unable to record video, so all media uploading will be limited to photos for now.

Kyte Mobile Producer

Kyte Mobile Producer – Kyte’s Mobile Producer is a mobile image uploading app. Users can upload the images they take from their iPhones directy to Kyte Channels that they’ve embedded in their blogs or onto their Facebook profile through Kyte’s facebook app. Users can also compile their images into slideshows, complete with captions and polls, which can also be played through the their Kyte Channels online. You can download the app here for free.

mdialog

mdialog – mdialog’s iPhone app allows users to browse through content that have been uploaded to the video site. The app is reminiscent of YouTube, allowing users to share and bookmark their favorite channels, leave comments, and browse through a “What’s New Section”. Users can also attach polls to their videos. You can download the app here for free.

Pandora Radio

Pandora Radio, our flat out favorite application so far, is an audio app that streams music to the iPhone over Wi-Fi, 3G, or Edge. Pandora is a popular music service that creates a “Music Genome” to analyze music a user likes and then recommend new artists. Users can enter the name of an artist or song they like, and Pandora will generate a streaming playlist, even if they haven’t created a profile. You can try out the app here for free.

Update: Here is a late addition:

Jott

Jott – Self-dubbed “the notepad you’ve always dreamed of,” the Jott iPhone app records your voice and turns it into text. You can add items to specific lists and cross them off once you don’t need to worry about them any longer. Additionally, all of your notes are backed up online. You can try out the app here for free.

The company is quick to issue press releases around the incredible deals that winner’s managed to get. This press release, for example, talks about a Salt Lake City woman named Sondra Peterson who won a $35,000 Hummer on a bid of $36.65.

It’s not quite that simple, of course, or Limbo wouldn’t have much of a business model. Bids must be placed via text message or via regular phone. I placed a bid on the 42 inch plasma TV and it required a total of four messages – two sent and two received, to finalize it. Based on my pricing plan, that’s $0.22 on my cell phone bill, some of which Limbo will receive in revenue share. Also, the TV is a Limbo premium auction, which means I was charged an additional $0.99 for my bid. That’s a total cost to me of $1.21, and Limbo is going for more: my last text message said

“Too High! Your bid of 1938c is unique, but there are 265 lower unique bids. Bid again? Rply “HDTB XX” where XX is yr bid in cents. *Bid award: 10 Loot”

If I place another bid, another round of text messages will be billed to my phone along with another $0.99 bid charge. With all of these charges it isn’t hard to see how Limbo can become profitable on a per auction basis. All of these “loot” points are designed to get me to bid often as well. You get these each time you bid, and they can be traded in for tshirts and other items once you’ve accumulated enough of them.

If you aren’t skeptical enough after understanding the basics, the fine print may be enough to keep you away.

Auctions run for a very long time (the TV auction runs from May 15 to June 5. Such a long auction period means there will be a lot of bids, and the chances of winning go down dramatically. Once you place a bid you are automatically going to receive a text message every time a new auction occurs, which you can opt out of only by sending another text message. If you use your home phone, things may be even worse. Limbo explicitly states that they will use your information for marketing purposes. Expect tele-sales calls.

And if you win, shipping isn’t free. You will be charged normal UPS rates on the item (or alternatively you can give them rights you use your picture for promotional purposes). And finally, you will be taxed on the difference between the value of the item and what you actually paid as normal income. So that Hummer that Sondra Peterson won cost her a lot more than $36.65. Not only was she taxed on $35,000 in income, but I can’t imagine what the UPS shipping charges on a Hummer might be.

So all in all, the vast majority of bidders will be paying Limbo without any meaningful chance of winning, they will be subjecting themselves to numerous SMS and other fees, they will be giving explicit consent to use their phone numbers for marketing purposes, and the winners are forced to pay out of pocket fees for taxes and shipping of the item. So, after trying out the service and reading the detailed rules, Limbo seems like more of a gimmick to me (and a costly one) than a chance to get cool stuff for nearly free.