The companies' co-branded site launched Wednesday, replacing an earlier person-to-person auction site on Terra Lycos run by FairMarket. eBay and Terra Lycos representatives gave few details on the multiyear agreement, saying only that it would last less than five years and that the companies would share revenue as part of the deal.
"This is the next step in what we're trying to do with verticals," said Kim Boucher, vice president of e-commerce for Terra Lycos. "We'll either buy outright the market leaders or...partner with the best of breed.
"For us, it didn't make sense to build something up" in auctions, she added.
The deal marks the latest portal deal for eBay. The San Jose-based company launched a co-branded auction site with AOL in 1999 and later expanded the relationship to include other AOL properties such as Netscape and CompuServe. Last year, eBay teamed with Walt Disney, first launching a co-branded site with Disney's Go.com portal, then hosting official auctions of Disney memorabilia.
eBay agreed to pay AOL $75 million over four years and the Go Network at least $30 million over four years to promote its auctions to their users. The auction giant said recently that it is seeking to renegotiate its deal with Disney, which announced in January that it would shutter its Go portal.
"The Lycos Network has tremendous reach and opens another door for eBay," Jeff Jordon, general manager of eBay's U.S. operations, said in a statement. "As one of the Web's leading networks, Lycos will help generate traffic and exposure for the millions of items available on eBay."
Terra Lycos gave sellers no warning of the deal with eBay. Although the company continued to allow sellers to list auctions on its previous person-to-person auction site on Tuesday, Terra Lycos removed most links to the old site Wednesday and is asking sellers to re-register with eBay to offer their merchandise on the companies' co-branded site.
Terra Lycos expects that it will eventually shut down its FairMarket-affiliated site, but that site is still active, and sellers can continue to access their accounts and list items on the site, Boucher said. Buyers can also access the old auction site by going to auctions.lycos.com.
"We need to figure out how to make that transition easier," Boucher said.
Terra Lycos' deal with eBay is another nail in the coffin for FairMarket's auction network, which attempted to compete with eBay by teaming not only with Terra Lycos, but with Excite@Home, Microsoft and other technology and retail companies. Despite its partnerships with big technology and retail companies and the fanfare surrounding its launch, FairMarket's network never gained enough sellers or listings to challenge eBay or even Yahoo's auction site.
Earlier this year, FairMarket announced its own deal with eBay through which it helps retailers and other companies list items on the leading auction site. As part of a separate agreement announced in March, FairMarket affiliate Microsoft will integrate eBay's auctions into some of its Internet properties, including CarPoint and bCentral.
Terra Lycos' deal with eBay won't hurt FairMarket and could actually help the Woburn, Mass.-based company by bringing more Net users to eBay and in turn to FairMarket's customers who are selling on eBay, said Bryan Semple, vice president of corporate development at FairMarket.
"This is not going to have any impact on our revenue or on our path to profitability," he said.
FairMarket will continue to run Terra Lycos' outlet center.