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In what will go down in Internet history as probably one of the lamest decisions ever in e-commerce, running second only to the firing of AOL CEO Jon Miller in 2006, eBay announced yesterday it will no longer allow any digitally downloadable product to be sold via an auction. You read that right, if you sell an ebook, digital recording, electronic forms, WordPress templates (or any template), digital graphics, ecards or anything else that can be transferred electronically, you are being kicked out of auctioning your goods on eBay like a red-headed stepchild. Don’t let the door hit you on the way out.

This utterly remarkable and shortsighted policy update was announced only 7 days before its scheduled implementation, giving those who make their living off of digital goods little recourse. All digital goods are scheduled to be removed from eBay auctions and stores as of March 31. All sellers of digital goods will now have to spend $9.95 per listing to place their products as a 30 day listed classified ad. This policy will put many eBay Power Sellers and hundreds to thousands of others effectively out of business because of the high initial cost of a classified ad. Sellers who market their digital downloads through eBay stores and have been able to list goods for mere pennies, cannot afford to list hundreds of ebooks, mp3’s and other items for $9.95 each.

eBay hastily decided this arcane policy because some digital sellers use these goods to manipulate the feedback system and artificially boost their status. The way this works is some sellers market near worthless ebooks for 1 to 99 cents and list hundreds of auctions only looking to increase their feedback numbers and ratings. So instead of eBay dealing with the problem, they make a blanket policy that hurts everyone, good and bad, who markets these products.

This is an incredibly ignorant move on eBay’s part. I have personally sold our Vegan Meal Planner on eBay via auction and classified style and have had much better success with auctions. Auctions excite people into making a buying decision, classified ads don’t.

If you are listening eBay, the answer is not to move backwards. Last time I looked at a calendar it was 2008, the digital information age, and the last company (AOL) that forgot where they were, lost more than 60% of their users nearly overnight. The answer is to deal with the people who manipulate the feedback system if that’s the problem, not to put legitimate merchants out of business.

To see how completely out of touch eBay is on this issue only requires one to read the completely inept statement issued just yesterday on their web site. Brian Burke, Director of Global Feedback Policy states, “Digital goods are often reproduced at little to no cost to the seller.” Well, yes they often are, but often they are not. My wife and I poured about 70 hours worth of work into our vegan meal planner and I am sure many information sellers spend multiples of those hours producing their products as well. The duplicity of this statement is evident in the fact that much of the junk, and I do mean junk, sold on eBay comes from the country that is the worst violator of human rights on the planet. Many of the hard goods sold on eBay are produced in the sweatshops of China, “at little to no cost to the seller.”

Lame eBay, just plain lame.