eBay Moves Digital Goods to Classified Ads
Sales of digital goods on eBay is contributing to feedback manipulation — both real and perceived — according to Brian Burke, director of global feedback policy, so eBay is changing the way merchants process these transactions. To thwart any attempts to boost ones own feedback through the sale of digital goods, as of March 31 all goods that can be digitally downloaded or transferred electronically must be listed using eBay's Classified Ads format.

The Classified Ads format on the auction site lets sellers list an item as a lead-generating advertisement for 30 days at a fixed price of $9.95. Sellers pay the $9.95 for the 30-day listing fee but are not charged a final value fee because the transaction does not go through eBay. More importantly, because no transaction takes place through eBay, feedback cannot be exchanged between the buyer and seller for the digital goods sold through classifieds.

EBay has not provided specific examples of items that are affected by the new policy, but it's safe to assume that it covers all items delivered through Internet downloads or by e-mail. This includes goods such as e-books, graphics and digital photos, software, domain names, Web site templates, Web hosting and many other types of goods that are sold on eBay in digital format.

Going, going, gone: No more auctions for digital goods. (Click for larger image.)

One eBay seller, Smwoody in Pennsylvania has a small, family-owned business that sells custom-designed crochet patterns on eBay. When completing the sale, Smwoody provides buyers an e-mailed PDF file, a format that is used by many sellers who offer digital goods on eBay. After learning that policy changes would require her to list the crochet patterns in a classified ad format, Smwoody posted the following in a public forum: "I am just sick this morning. I have spent four years and hundreds of hours to make my brand of crochet patterns into a good business. I design them all myself and they will NOT sell as a classified ad. I just don't see it happening. As of this morning, three-quarters of my sales are gone."

eBay Plans to Roll Out Two Additional Feedback Changes
Last week, Lorrie Norrington, president of eBay global marketplace operations, updated sellers on the progress of the feedback protection plan announced in January. After the initial announcement, some sellers boycotted the auction site in February, and went on to organize another boycott expected to start May 1 (see "Miffed eBayers Mobilize for May Break Up").

In her recent public announcement, Norrington said that sellers have made it clear that eBay needs to do even more to protect sellers from dishonest buyers who use the feedback system as a weapon. As a result, eBay is adding two feedback policy changes to be rolled out in May, which Norrington says will better protect sellers from this kind of behavior. In the public eBay post Norrington provided sellers with the following details:

"First, while threatening to use negative Feedback to force an unfair deal is both extremely rare and grounds for permanent buyer suspension, we recognize it has happened in the past and will be tried in the future. If you experience this sort of behavior, please report this to eBay by using the Contact Us from this page.

When we identify a pattern of abuse, or the evidence is clear from your report, we will remove the negative or neutral feedback retroactively. But, we can't identify those patterns without your help and reporting. This is a call to action for every seller.

Second, we have listened to your thoughts on Unpaid Item (UPI) reports and our decision to remove negative or neutral Feedback from a buyer who fails to respond to a UPI. And what has become clear from our conversations is that we need to build in more flexibility for what happens when a buyer responds to a UPI report. What we have determined is that if the buyer does not specifically call out poor seller performance, item condition or transaction problems during the UPI process, eBay will remove the seller's negative or neutral feedback retroactively."

In response to Norrington's announcement, Skip McGrath, eBay Power Seller and author of seven books about eBay and Web marketing, updated his own blog, saying he believes this is a step in the right direction. We'll be waiting to hear if others in the community agree.