I've been fascinated of late with the issue of eBay auctions of hot-hot items, like the playstation 3 and others. The story of the Michael Jackson memorial tickets is an interesting one.

17,000 tickets were given out as 8,500 pairs to winners chosen from 1.6 million online applications. Applicants had to give their name and address, and if they won, they further had to use or create a ticketmaster account to get their voucher. They then had to take the voucher to Dodger stadium in L.A. on Monday. (This was a dealbreaker even for honest winners from too far outside L.A. such as a Montreal flight attendant.) At the stadium, they had to present ID to show they were the winner, whereupon they were given 2 tickets (with random seat assignment) and two standard club security wristbands, one of which was affixed to their arm. They were told if the one on the arm was damaged in any way, they would not get into the memorial. The terms indicated the tickets were non-transferable.

Immediately a lot of people, especially those not from California who won, tried to sell tickets on eBay and Craigslist. In fact, even before the lottery results, people were listing something more speculative, "If I win the lottery, you pay me and you'll get my tickets." (One could enter the lottery directly of course, but this would increase your chances as only one entry was allowed, in theory, per person.)

Both eBay and Craigslist had very strong policies against listing these tickets, and apparently had staff and software working regularly to remove listings. Listings on eBay were mostly disappearing quickly, though some persisted for unknown reasons. Craiglist listings also vanished quickly, though some sellers were clever enough to put their phone numbers in their listing titles. On Craigslist a deleted ad still shows up in the search summary for some time after the posting itself is gone.

There was a strong backlash by fans against the sellers. On both sites, ordinary users were regularly hitting the links to report inappropriate postings. In addition, a brand new phenomenon emerged on eBay -- some users were deliberately placing 99 million dollar bids on any auction they found for tickets, eliminating any chance of further bidding. (See note) In that past that could earn you negative reputation, but eBay has removed negative reputation for buyers. In addition, it could earn you a mark as a non-paying buyer, but in this case, the seller is unable to file such a complaint because their auction of the non-tranferable ticket itself violates eBay's terms.

eBay has announced sellers will no longer be able to leave negative feedback for buyers. This remarkably simple change has caused a lot of consternation. Sellers are upset. Should they be?

There's a lot of equipment you don't need to have for long. And in some cases, the answer is to rent that equipment, but only a small subset of stuff is available for rental, especially at a good price.

So one alternative is what I would call a "ReBay" -- buy something used, typically via eBay, and then after done with it, sell it there again. In an efficient market, this costs only the depreciation on the unit, along with shipping and transaction fees. Unlike a rental, there is little time cost other than depreciation.

Earlier I wrote about the frenzy buying Plastation 3s on eBay and lessons from it. There's a smaller scale frenzy going on now about the iPhone, which doesn't go on sale until 6pm today. With the PS3, many stores pre-sold them, and others lined up. In theory Apple/AT&T are not pre-selling, and limiting people to 2 units, though many eBay sellers are claiming otherwise.

The going price for people who claim they have one, either for some unstated reason, or because they are first in line at some store, is about $1100, almost twice the cost. A tidy profit for those who wait in line, time their auction well and have a good enough eBay reputation to get people to believe them. Quite a number of such auctions have closed at such prices with "buy it now." If you live in a town without a frenzy and line it might do you well to go down to pick up two iPods. Bring your laptop with wireless access to update your eBay auction. None of the auctions I have seen have gone so far as to show a picture of the seller waiting in line to prove it.

eBay has put down some hard terms on iPhone sellers and pre-sellers. It says it does not allow pre-sales, but seems to be allowing those sellers who claim they can guarantee a phone. It requires a picture of the actual item in hand, with a non-photoshopped sign in the picture with the seller's eBay name. A number of items show a stock photo with an obviously photoshopped tag. In spite of the publicised limit of 2, a number of people claim they have 4 or more.

It seems Apple may have deliberately tried to discourage this by releasing at 6pm on Friday, too late to get to Fedex in most places. Thus all most sellers can offer is getting the phone Monday, which is much less appealing, since that leaves a long window to learn that there are plenty more available Monday, and loses the all-important bragging rights of having an iPhone at weekend social events. Had they released it just a few hours earlier, I think sales like this would have been far more lucrative. (While Apple would not want to leave money on the table, it's possible high eBay prices would add to the hype and be in their interest.)

As before, I predict timing of auctions will be very important. At this point even a 1 day auction will close after 18 hours of iPhone sales, adding a lot of rish. The PS3 kept its high value for much of the Christmas season, but the iPhone, if not undersupplied, may drop to retail in as little as a day. A standard 1 week auction would be a big mistake. Frankly I think paying $1200 (or a $300 wait-in-line fee) is pretty silly.

The iPhone, by the way, seems like a cool generalized device. A handheld that has the basic I/O tools including GSM phone and is otherwise completely made of touchscreen seems a good general device for the future. Better with a small bluetooth keyboard. Whether this device will be "the one" remains to be seen, of course.

Update:

An eBay reputation is important if you're going to sell there. Research shows it adds a decent amount to the price, and it's very difficult to sell at all with just a few feedbacks. Usually sellers will buy a few items first to get a decent feedback -- sometimes even scam items sold just for feedback. Because savvy buyers insist on selling feedback, it's harder, and sometimes sellers will also sell bogus items just for feedback as a seller. eBay has considered offering a feedback score based on the dollar volume of positive and negative transactions but has not yet done this.

A recent Forbes items pointed to my earlier posts on eBay Feedback so I thought it was time to update them. Note also the eBay tag for all posts on eBay including comments on the new non-feedback rules.

I'm not a gamer. I wrote video games 25 years ago but stopped when game creation became more about sizzle (graphics) than steak (strategy.) But the story of the release of the Playstation 3 is a fascinating one. Sony couldn't make enough, so to get them, people camped out in front of stores, or in some cases camped out just to get a certificate saying they could buy one when they arrived. But word got out that people would pay a lot for them on eBay.

You've seen me write before of a proposal I call addresscrow to promote privacy when items are shipped to you. Today I'll propose something more modest, with non-privacy applications.

I would like PayPal, and other payment systems (Visa/MC/Google Checkout) to partner with the shipping companies such as UPS that ship the products bought with these payment systems.

Ebayers are familiar with what is called bid "sniping." That's placing your one, real bid, just a few seconds before auction close. People sometimes do it manually, more often they use auto-bidding software which performs the function. If you know your true max value, it makes sense.

However, it generates a lot of controversy and anger. This is for two reasons. First, there are many people on eBay who like to play the auction as a game over time, bidding, being out bid and rebidding. They either don't want to enter a true-max bid, or can't figure out what that value really is. They are often outbid by a sniper, and feel very frustrated, because given the time they feel they would have bid higher and taken the auction.

This feeling is vastly strengthened by the way eBay treats bids. The actual buyer pays not the price they entered, but the price entered by the 2nd place bidder, plus an increment. This makes the 2nd place buyer think she lost the auction by just the increment, but in fact that's rarely likely to be true. But it still generates great frustration.

The only important question about bid sniping is, does it benefit the buyers who use it? If it lets them take an auction at a lower price, because a non-sniper doesn't get in the high bid they were actually willing to make, then indeed it benefits the buyer, and makes the seller (and interestingly, eBay, slightly less.)

There are many ways to write the rules of an auction. They all tend to benefit either the buyer or the seller by some factor. A few have benefits for both, and a few benefit only the auction house. Most are a mix. In most auction houses, like eBay, the auction house takes a cut of the sale, and so anything that makes sellers get higher prices makes more money on such auctions for the auction house.

Read on...

Ok, so there's a million things to fix about eBay, and as I noted before my top beef is the now-common practice of immense shipping charges and below-cost prices for products -- making it now impossible to search by price because the listed price is getting less relevant.

I've done a few threads on eBay feedback, today I want to discuss ways to fix the eBay shipping scam. In this scam, a significant proporation of eBay sellers are listing items low, sometimes below cost, and charging shipping fees far above cost. It's not uncommon to see an item with a $1 cost and $30 in shipping rather than fairer numbers. The most eBay has done about it is allow the display of the shipping fees when you do a search, so you can spot these listings.

The reason that eBay paid such a huge price for Skype has now become clear. There were several companies competing to buy Skype, and just before the bidding closed, eBay decided the best way to win was to place a giant bid just a few seconds before the end. (This might be known as bid skyping.)

Earlier, I wrote some proposals for improving ebay style feedback, including not having feedback revealed until both have left it. That has some flaws, but the main reason eBay is unlikely to do this is that eBay likes feedback to be positive, they want to convince buyers it is safe to shop there.

So here's an alternate idea to prevent revenge feedback. Revenge feedback is only vaguely in eBay's interests, in that the fear of it keeps feedback positive, but the existence of it adds to the negatives.

Like many, I am interested in reputation systems, and eBay has built the largest public reputation system. Many have noted how feedback on eBay is overwhelmingly positive -- a 97% positive rating would be a reason to be wary of a seller.

It's also noted that people do this because they are scared of revenge feedback -- I give you a negative, you do it back to me. One would think that since the buyer's only real duty is to send the money that the seller should provide positive feedback immediately upon receipt of that money, but they don't.