eBay at 10: Boon and bane

Vintage Barbies dominate one wall of the living room, with several rows of dolls showing her evolution from the mid-1960s. Action figures from the '60s television show "Man From UNCLE" stare patronizingly at the suburban icon. A Shadow Crime Fighter Detection Belt, a relic of an old radio mystery show, offers clues to "the evil in men's hearts" from a shelf nearby.

Close to 3,000 more pieces crowd McKeown's house. Many were bought on eBay, where he has been a regular since two weeks after the auction site launched. He and his wife, Deeann Little, who together run a business licensing and distributing independent films on DVD, have spent tens of thousands of dollars online and made thousands more reselling goods.

And yet, over a dinner in a Chinese restaurant in the suburbs near his home, the lanky, 39-year-old McKeown described decidedly mixed feelings about the auction giant's legacy as it nears its 10th anniversary this Labor Day. eBay is a force in the gray-market economy, of inestimable value to collectors like him, he said. But it has also helped destroy the cozy culture of antique shows and swap meets that once defined the collecting community.

"We've gotten a lot of stuff that I never thought we'd dig up," McKeown said. "But I almost think I'd trade it all to get the shows back."

eBay's disruptive influence on the traditional antiquing and curio culture is typical of dramatic economic change. New industries and marketplaces are born and flourish every so often--usually to the detriment of something many people loved.

Indeed, eBay has become an online economic superpower. The company says it has 157 million registered users, 75 million of whom are in the United States. It makes more than $1 billion per quarter, and supports auctions and other sales amounting to nearly $11 billion per quarter.

"It has made a national market for many things that previously had no market or just local markets," said Harvard Business School economist Alvin Roth. "It makes markets where they didn't exist before, which increases economic efficiency overall."

Then there's the other side of the story, as told by people who haven't followed eBay onto the Internet.

"It's destroyed the antique business," said Steve Natoli, an antiques dealer in Eugene, Ore. "The shows are closing. It's very hard to make a living."

In the beginning
When General Magic engineer Pierre Omidyar coded and launched what was then called AuctionWeb in 1995, none of this was obvious. The site was to be no more than a hobby for Omidyar, who sold his first item--a broken laser pointer--for $14.

At the time, regional shows for collectors were common and well-attended. Many of the best were true communities, where regular attendees got to know each other.

"The merchandise is in front of you," Natoli said. "You can touch; you can look. The person is in front of you. There is knowledge to be gained there. You can see lots of different things and see what starts to interest you."

In the San Francisco Bay Area, for example, a show called the PMA filled three convention center buildings and spilled over into parking lots just a few miles away from eBay's headquarters.

PMA organizer Patrick Brogan said he even thought of allying with eBay briefly. The young online auction company had a booth at a 1998 PMA show, but when Brogan saw employees telling shoppers that they could stop paying to come to antique shows and shop at eBay for free instead, he quickly ended the relationship, he said.

The eBay executive who oversees collectibles said that event happened before his time at the company, but noted that the company has continued to sponsor and attend other shows. Later this year, the company is inviting a group of people from across the collectibles markets to the eBay offices to talk about working together more closely, he added.

"We're not trying to displace (offline sales); we're trying to offer another channel," said Laurence Toney, eBay's senior category manager for collectibles. "Our goal is reaching out to the community and understanding what it is that eBay can do to help keep interest in collecting alive. That's really important to us."

But even as far back as the late-1980s, parts of the collector culture were going electronic. Some companies, such as Toy Shop magazine, sponsored phone auctions. Sellers were also using the Internet's Usenet newsgroups, with people posting the equivalent of classified ads online, and experimenting with e-mail-based auctions.

The rise of eBay
Omidyar's AuctionWeb--later renamed eBay--was a quick draw for people like McKeown. The Sacramento toy collector heard about the new site just two and half weeks after it launched, and was

Omidyar himself saw the site as a community, at least as welcoming as the offline collectors' shows and swap meets. He often e-mailed regulars to see if they were happy, and set up forums where people could discuss auctions, eBay itself, or whatever else they wanted.

That's how Jim "Griff" Griffith, an early regular on the site and now one of eBay's chief spokesmen (his official title is dean of eBay Education), ended up working for the company. Griffith was a frequent poster on eBay's forums in 1996. Omidyar eventually called him, and hired him to be an evangelist and guide for people new to auctions.

"From the very beginning, the power of community was something bordering on ownership," said Griffith, who remains one of eBay's most public faces today. "Everyone felt very strongly about it from the very beginning. Nobody's indifferent about eBay."

Over time, that early rough-and-ready feeling started to change, however. Hasbro executive Meg Whitman was brought in to head the company in early 1998, and helped take eBay public later that year.

The next few years saw quick expansion into international markets, growth of features and audience at home, and the acquisition of online payment firm PayPal and other companies. Other companies, including Yahoo and News.com publisher CNET Networks, started their own auctions site. But none ever rivaled eBay's reach.

eBay's expansion has drawn complaints from some users, however, who say that the auction site doesn't have the same community feel it once had. Continually rising fees have ruffled feathers. Some have complained that rules such as a ban on all firearms (including antique muskets) and a lack of appeals processes for cancelled auctions are too arbitrary.

eBay executives say they try hard to stay responsive to their users, even hosting a quarterly "Voices" program where they bring in different people from the community to discuss the site's operations. But they concede that listening to more than a million people is far more difficult than appealing to the original thousands.

"In the early days, the community was self-sustaining, if you let them do things their way," Griffith said. "It's still kind of the same. But when there are several million people involved, and different languages and different locations, creating a support structure to assist and moderate is something of a challenge."

Meanwhile, the offline culture has been wholly changed.

Many of the shows that housed collectors have closed. Brogan's PMA show in the San Francisco Bay Area has dropped from three convention center buildings to just one, with its attendance halved.

Griffith, who still collects antiques, said he has sympathy for the people who miss the past. But change, he added, was inevitable.

"I talk to a lot of collectors and dealers, and there's no doubt that eBay really shook that world," he said. "But if you position yourself as a middleperson in any market and remain static, then market changes can always overwhelm you. You have to be able to adapt."