Net 2.0's Biggest Blunder: Ebay Bans Digital Download Auctions

At a time when most companies are going "green" and the internet moves steadily toward an increasingly virtualized landscape, Ebay stands stubbornly and decidedly in the pollution filled past.

Itunes booms. Amazon finds success with its own mp3 store and moves into ebook downloads promoting instant delivery and none of the environmental harm caused from manufacturing and shipping product. How does auction powerhouse Ebay react to this sudden demand for instant gratification? By banning digital download auctions from its site altogether.

"I was almost out of business overnight," reports a longtime Ebay user that requested to remain anonymous.

"My products were all downloadables, custom graphics and templates I create myself. With the new rules you can still sell your item if you burn it on a CD and ship it traditionally. Regardless, my sales still dropped dramatically and have since never picked back up. Customers don't want to wait for a CD to arrive in the mail and pay shipping. Many don't even understand that it's Ebay forcing me to sell this way."

Many retailers have since moved away from Ebay and set up their own online storefronts.

This is exactly what former Power Seller "studiorec***tools" did, setting up his own storefront at studiorec***tools.com when Ebay decided to ban all digital download sales from its site (this includes sales of mp3s, website templates, sounds for musicians and recording information ebooks such as the ones studiorec***tools sold, and anything else that can be delivered digitally).

At a time when Itunes expanded their digital download sales by adding videos to their already extensive mp3 catalog, Ebay decided digital downloads were no longer a necessary item to allow for a sale on the site.

"It really made no sense," says former Power Seller studiorec***tools. "I was paying over a thousand bucks a month in seller's fees and my account was rated higher than 99% for customer satisfaction. I was a Power Seller one day, the next practically told to close up shop. It was a mind blowing decision that I still don't fully understand to this day, they lost a ton of money and their stocks plummetted soon after."

While the glory days of Ebay may be over, many sellers still hold out hope for an improved auction site to emerge from the shadows. Some had hoped it would come by way of Google, but as of yet nothing solid has yet to materialize in this respect.

In the meantime, most sellers have simply set up their own shop: much like StudioRec***Tools.com and it's former Ebay Power Seller.

- Tech Reporter May Thompson