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.