eBay Bans Auction Listings of Digital Downloads

On March 24, 2008, an announcement was made on eBay that would negatively impact thousands of people selling digitally downloaded media. Sellers were given a mere seven days to prepare.

The message came from Brian Burke, Director of Global Feedback Policy. According to his statement, digital goods can no longer be sold via auction style or fixed price. Effective March 31, 2008, "all goods that can be digitally downloaded or transferred electronically must be listed using the Classified Ads format."

Classified Ads on eBay are lead generation listings. Similar to placing an ad with your local newspaper, interested buyers fill out a form or call you if your phone number is provided. The transaction takes place as arranged between the buyer and seller.

These are not actual eBay transactions and therefore no feedback is exchanged. It is basically a means provided in which buyers and sellers can connect.

This change was made to protect the integrity of eBay's feedback system since digital media can be mass produced by the thousands at little or no cost to the seller. This would potentially result in an inflated feedback rating for sellers of virtual products when compared to sellers of physical merchandise.

Who is affected by this change? The most common digitally delivered items are eBooks, but the policy change includes sellers of audio mp3's, digital videos, websites, domain names, graphic design services, photo services and any other type of service that is delivered electronically.

What are the options? Many digital media sellers will opt to conform to eBay's new policy and use the Classified Ads format. However many will be unsatisfied with this option since they will no longer be getting feedback. This will seriously affect their Power Seller status.

However, the Classified Ads format is not a bad thing. Sellers can use the leads to build mailing lists and they can still deliver their products electronically.

Others will opt to convert their digital media to a physical format by burning the information onto a CD Rom or creating a paper format. (Think: nicely designed binder) The plus side to this option is that sellers are no longer restricted by eBay's digital item policy. Previously, digital items were restricted to the "buy now" option. Sellers converting to physical media can now sell auction style with the potential for higher sales on individual items through bidding competition.

One of the downsides to the new policy is that the digital media sales can no longer be automated. With digital delivery, a seller could place an auction for 1,000 copies of an eBook or audio material. As purchases are made, the buyers are automatically directed to a link where they can download the media. Sellers were literally selling products and earning an income while they slept.

With a conversion to physical media, sellers will be required to monitor auctions, communicate with buyers, package and send the media using standard mail.
Another selling point for physical media is that it has a higher perceived value. Buyers are getting a physical product - something they can touch and see. Something delivered to their mail box instead of to their in box. A professionally packaged product could be worth ten times the value of a .pdf document containing the very same information.

While the official eBay announcement initially caused a stir among digital sellers, this policy change could turn out to be a blessing in disguise and increased revenue for digital media sellers everywhere.