It's great if the new employer pays you. But what about your current employer, the one at which you've just had to spend half your annual allotment of vacation days in order to audition for a new job that you might not get?

Auditioning is definitely the best way to, well, audition people. But it puts a constraint on your candidate pool, and depending on your company and your industry that constraint can be a problem. In 37signals' situation this doesn't matter - they're built entirely on open-source tools, they don't require relocation, they can hire freelancers from a pool of freelancers that they themselves created and fostered and routinely market to, they are so famous and impressive that even in a tight labor market people will line up to try and impress them, et cetera. But there are many companies that aren't 37signals, though the 37signals evangelism team is certainly trying to change that. ;)