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Leading Net sites team on auctions to catch eBay

Microsoft, Dell Computer, Lycos, Excite@Home, and other leading companies will join together a group of almost 100 Web sites in establishing a single auction service intended to tackle the market leader.

Microsoft, Dell Computer, Lycos, Excite@Home, and other leading high-tech companies will join together in a group of almost 100 Web sites offering a combined auction service intended to tackle market-leading eBay.

The companies will share auction listings so that an item listed on one site can be found throughout the network, said Susan Zaney, vice president of marketing at Woburn, Massachusetts-based FairMarket. FairMarket will be responsible for managing the new network, and already conducts auctions for Lycos and Dell. The venture marks Microsoft's first venture into online auctions.

"We're going to provide the auction sites for MSN.com, Excite.com, and Ticketmaster-CitySearch online," said Zaney. "We are uniting all these sites as the FairMarket Auction Network." FairMarket provides private label auctions, which means they host the site for a company as part of its network marketplace, but it still has the "look" and "feel" of each individual company's site, she said.

As previously reported, the auction network is to be announced today.

The move is an overt attempt to catch up to giant eBay, one source said. The "sheer size of [FairMarket's] database" provides formidable competition in the fast-growing auction market, the source said.

This morning, eBay shares fell as much as 8.4 percent on concern that the largest online auctioneer will be hurt by competition from the new auction alliance.

Internet auctions have become wildly popular, attracting users looking for practically every kind of item available. eBay, which claims to offer more than 3 million items in 1,628 categories, is well ahead of the field.

Member sites will continue offering auctions in their own format, meaning users won't know where any given item is originally listed, one source said. Some sites will offer free auction services, whereas eBay charges listing fees.

Meanwhile, Microsoft, Excite@Home, and Ticketmaster-City Search--another network member--all will take an undisclosed equity stake in FairMarket, the source said.

Last month, eBay struck an alliance with online giant America Online, agreeing to give AOL's 18 million members access to eBay's auction site in a familiar AOL format. The move was undertaken in response to increasing competition from Yahoo and Amazon.com, among the many to have added auctions of late.

Now it appears eBay's rivals have struck back, combining to reach the kind of scale only eBay previously could offer. Auction sites are considered more desirable if more goods are available, since the greater variety is more attractive to users.

Companies favor auctions because the interactivity tends to keep users coming back to see how their bids are doing, and because users tend to stay at the site longer. In Nielsen/NetRatings home-use figures released for the week from September 6 to September 12, eBay logged in as the 11th-most visited Web site, but with a leading average user time of 60 minutes, almost double its closest rival.

News.com's Melanie Austria Farmer and Bloomberg contributed to this report.