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eBay to ban some music and software sales

The auction site will prohibit the sale of software and music on compact disc-recordable and backup software, except where the seller is the copyright owner, according to a posting on its Web site.

eBay will prohibit the sale of software and music on recordable compact discs and backup software packages, except when the seller is the copyright owner, according to a message posted today on the company's Web site.

The new policy addresses concerns that software pirates are doing a brisk business on auction sites. A recent survey by the Software & Information Industry Association, an industry lobbying group, charged that about 60 percent of the more popular software sold on eBay, Excite Auctions, and ZDNet Auctions between August 15 and August 20 was pirated, or sold illicitly.

In its posting eBay said: "For some time, we've been reviewing our policies on the sale of software and music on CD-R (compact disc-recordable), backup software, and 35mm & 70mm movie prints (those big reels in the movie theatres) on eBay. In examining the sale of these items, we've found some instance where users lawfully sell software and music on CD-R and backup software.

"However, we've been contacted by government agencies investigating piracy on the Internet, copyright owners, as well as concerned users about the sale of these items. These constituencies are concerned that most CD-Rs and backup copies are being sold in violation of the rights of a copyright owner."

eBay said it would disallow these items to be listed on the auction site--except where the seller is the copyright owner--"after months of internal debate and discussions with our community." It added: "We understand that some users will be disappointed by this decision, and we're not happy about having to make it either."

The company's new policy on software comes the same week that it prohibited the sale of alcohol and tobacco products. As eBay shifts from an Internet start-up to a more established company, it has been implementing policies to keep it from running afoul of the law, if not community standards.

Users seem to have accepted the newly implemented restrictions on alcohol and tobacco with equanimity, but had earlier raised a fuss about a ban on firearms, as well as a policy reversal on so-called reserve auctions, which establish a minimum price on a listed item. Until this past August, eBay had allowed sellers to designate an auction as a reserve auction for free and didn't charge for listings.

The company retreated from plans to require a minimum price for reserve auctions under a storm of protest, as many users threatened to take their business elsewhere. Combined with a recent spate of outages, which similarly encouraged users to try out such auction newcomers as leading portal Yahoo, the outcry seemed to persuade eBay to modify its stance.

The Santa Clara, California, company, which claims to offer more than 3 million items in some 1,600 categories, is well ahead of the field, but rivals are said to be gaining. Earlier today, Microsoft, Dell Computer, Lycos, Excite@Home, and other leading high-tech companies announced they will join together in a group of almost 100 Web sites offering a combined auction service intended to tackle market-leading eBay. (See related story)

The news caused the company's shares to fall 10.75 to 141 today, a 7 percent decline.

On the other hand, eBay's dominance was reinforced by 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.