Auditions are wonderful for job seekers: they allow you to evaluate the company much more deeply than the company evaluates you. If the work is tedious, boring, and uninspired, you know that this job isn't for you.
I once applied to a company that insisted on interviewers doing a test first. Just looking at the questions on the test, I knew this wasn't a company I wanted to work for, so I didn't even bother doing it. They asked me "why didn't you do it?" and I told them I knew this job was a poor fit just by looking at your test questions. I'm not sure if that is what they intended, but the benefit was good for me.
You are not wrong. I have experienced the same thing myself. I'm not saying the audition system is a bad system -- I'm merely pointing out a flaw, that a week-long contract is a lot of time to ask me to work on a project for you if I already have a job.
There are certainly many benefits to the audition system, or Jeff wouldn't have even mentioned it!
I once applied to a company that insisted on interviewers doing a test first. Just looking at the questions on the test, I knew this wasn't a company I wanted to work for, so I didn't even bother doing it. They asked me "why didn't you do it?" and I told them I knew this job was a poor fit just by looking at your test questions. I'm not sure if that is what they intended, but the benefit was good for me.