eBay Picks Buyers Over Small-Time Sellers

from the changing-times dept

Every time we've mentioned eBay lately, we've received a long list of complaints in the comments about how awful eBay is. It's become quite clear that there's plenty of dissatisfaction with the company -- and a big part of the problem seems to be figuring out who eBay is really representing: buyers or sellers. In theory, as an impartial marketplace, eBay should be able to serve both sides. After all, you need both sides to be happy to make the marketplace truly effective. However, with growing concerns of fraud on eBay, it seems that the company has recognized that it's more important to focus on improving the experience for buyers -- and less so for sellers, especially the smaller sellers. Witness eBay's recent change to ban sellers from offering feedback on buyers. Apparently too many sellers were using that feature to "retaliate" against any buyer that left negative feedback, and that was distorting seller ratings, often upsetting buyers.

An even bigger indication may be recent deals that eBay has done with big-time sellers, such as Buy.com, who has apparently worked out a special deal with eBay to list various products at fixed prices, with no listing fee. This has plenty of sellers seriously pissed off, as they can't compete with Buy.com in those product areas, but it probably provides a better user experience for buyers -- many of whom just want a cheap price from a trusted seller, and are getting sick of long, drawn out auctions. Of course, for you dot com history buffs, it's a bit ironic to remember that before eBay came along, the "leader" in the online auction space was OnSale -- who did very similar deals with big companies to sell off their inventory. Then eBay came along and its person-to-person sales model pretty much doomed OnSale. Either way, this makes you wonder if this trend will continue, and how it will impact eBay overall. The big sellers may fill in some of the gaps, but it changes the nature of what eBay's platform really provides.

Filed Under: buyers, marketplace, sellers
Companies: buy.com, ebay

Europe Wants A Single Market For Online Content... But Why?

from the details,-details... dept

The European Commission apparently thinks that the big thing holding back the rise of a European online content industry is the lack of a single centralized marketplace for digital content that also includes DRM and other anti-piracy safeguards. It's not surprising why they might think this, but they're wrong. It's a politician's solution, rather than a business person's. It's based on the false belief that copyright is a tug-o-war between content creators and consumers that needs balance on either side. That's simply not true. Saying that it is sets up the economics of a zero-sum game where every winner has a loser. However, that's not true with digital content, with its infinite availability, every winner doesn't need to be a loser. You can set up business models that expand a market, rather than limit it. And, of course, the worst way to try to set up such market is to centralize it and make it the government's job. It has all the hallmarks of a totally boondoggle of wasted government money and effort. Instead, why not let various other business models get tested in the marketplace to see what works?

Filed Under: europe, marketplace, online content

Bad Ideas: Trying To Build A Marketplace Of Virtual Goods

from the let-me-explain-some-basic-economics... dept

I've seen a few company lately trying to build marketplaces around the idea of selling virtual goods, and the latest one, Live Gamer, gets a big writeup in the Wall Street Journal over its plans to build a marketplace for virtual goods and characters from online worlds. This is hardly a new idea, as there's been significant trade in these types of goods either on company approved sites or more informally through sites like eBay. However, it seems quite dangerous to base an entire business on this concept. The economics of virtual goods gets screwed up very easily once you realize that there are no truly limited resources within virtual goods. Sooner or later people figure out how to copy virtual goods, just like they've learned to copy music and movies -- and suddenly the idea of charging directly for those goods becomes a lot more difficult. It's just basic economics. The VC firms betting on this new concept seem to believe that the company (or the various gaming companies) will somehow be able to hold off this economic reality, but that seems incredibly risky. The entire market is based on an economic model based on false scarcity, and that seems quite dangerous. It may work temporarily, but there's a big reality called "infinite supply" that's likely to make any such model come crashing down eventually.

Filed Under: economics, marketplace, virtual goods
Companies: live gamer