As Saul Hansell points out on the New York Times Bits blog, eBay is currently suffering from a major identity crisis. As we reported earlier this year, eBay's attempt to drive users away from auctions and towards fixed-price transactions ('Buy-it-Now') drove a lot of users away from the service, which, after all, used to be all about auctions. As Hansell rightly points out, a lot of this is meant to make users feel more secure about shopping at eBay, but at the same time, the company has also managed to annoy its traditional base of smaller sellers by focusing more on large retailers, while confusing users about what eBay really wants to be (auctions or Amazon competitor?).

Of course, it is also important to note that the current state of the economy also doesn't do eBay any favors. Consumer spending in general is down, and a lot of the items purchased on eBay were often collectibles and other items that were not necessities.

This is a radical opening of the previously white-listed YouTube monetization strategies. Have you made a video of your band performing its new single, or your company's new product demonstration or your nonprofit group's expose of corporate misbehavior? If you'd like to have that video highlighted on the site, now you can - for a price. What price? What can you bid?

The service appears to be having technical difficulties at launch, I was unable to bid for improved placement of a video interview with my dog or of myself threatening to eat a live baby chicken, content that in my naive days I expected to soar to the top of the charts on its own merit.

YouTube started displaying advertisements inside selected partner videos a year and a half ago and moved to include selected videos in AdSense campaigns just over a year ago. We don't know how well those campaigns have monetized but both of them felt less creepy than today's announcement.

We'll be curious to see how many of YouTube's publishers are interested in purchasing views on the site and what that will do to the content community there.

At the very least, the class of slime balls that take money to inflate YouTube popularity numbers for their clients will now face a pricing challenge at the hands of the auction market.

Dba.dk is Denmark's largest online classifieds and auctions site and has been able to challenge eBay in its own market.

Fewer Auction - More Direct Transactions

EBay's move to acquire classifieds sites and payment services is part of the company's strategy of putting less emphasis on auctions and more on direct transactions. EBay is currently in a bit of a slump and its workforce reduction is clearly meant to keep cost under control while the company restructures its business.

Final Value Fees

While the listing fees have been reduced substantially, the overall fees for a listing still includes what eBay calls a 'final value fee,' which is determined by the sales price of the item to be sold. These fees have been simplified, but also increased. Overall, however, this change in eBay's pricing structure could result in substantially lower cost for a lot of eBay's sellers.

Consumers Don't Want Auctions

As Laurie J. Flynn in the New York Times points out, these changes are also driven by a change in consumer behavior online. There is simply less interest in the auction model these days, which, even though it might be very exciting, just isn't as convenient as just heading over to Amazon and buying a product right away.

And Amazon is exactly the company that eBay should fear the most. For consumers buying anything on Amazon is easier (and often cheaper) than going to eBay - and it isn't loaded with the same potential for fraud. Amazon is also constantly making it easier for sellers to list their items in its database.

eBay argued that these changes will lessen the likelihood of "bad buyer experiences" by increasing trust and security between buyers and sellers. But competitors, including Google (allegedly), Paymate, eWay, Qpay, BPAY, American Express, and a handful of eBay seller organizations and Australian banks have lodged counter arguments with the ACCC.

About individual 650 eBay users also submit counters to the ACCC. According to the Comission, "The overwhelming majority of these submissions were opposed to the notified conduct and raised concerns regarding restriction of choice, increased fees and issues associated with PayPal's security, dispute resolution and customer service."

In the end, the ACCC decided that the proposed eBay TOS changes would have "the effect of substantially lessening competition in the market in which PayPal operates" and likely result in "reduced choice for consumers, higher transactions costs and reduced innovation in online payment systems." Therefore, the ACCC released a draft notice denying eBay's request. However, this isn't necessarily the end of the issue. Under ACCC rules, eBay has the right to request a public conference at which all interested parties may speak their case to the ACCC, after which the Commission may reconsider their ruling.

For now, though, PayPal will not be the only option for eBay users in Australia -- and for that, sellers are mostly very happy. eBay's seller forums are this morning filled with threads of almost unanimously happy sellers cheering on the initial ACCC ruling and musing over what effect it might have on governments in other countries where eBay operates.

In and of itself, that's not a huge deal. eBay is making moves to put more emphasis on the BIN-only format to guard against the slipping popularity of web auctions -- if auctions do turn out to have been just a fad, eBay is making preparations to reinvent itself as a traditional fixed price marketplace in the vein of Amazon. What should be of greater worry for eBay, though, is the number of sellers dissatisfied with moves the company has made over the past few months -- many made in part to push BIN pricing. Without sellers it doesn't matter which is the dominant pricing format.

eBay would argue that the number of active users has actually increased year-over-year by about a million. eBay's measurement of "active users," though, includes any user that has "bid on, bought, or listed an item in the previous 12-month period." So recent changes won't catch up to that measurement for awhile.

Sellers at Odds with eBay

We reported in February about a seller revolt at eBay that caused eBay listings to dip as many as 13%. It's impossible to tell if the boycott by sellers was the actual cause of any drop in total listings, but the larger point is that sellers felt the need to organize a boycott at all. That boycott was specifically about two policy changes at eBay that increased back end fees on auctions (which favors the BIN-only pricing) and changes to the feedback system that now prohibits sellers from leaving negative feedback for buyers.

But those aren't the only changes eBay has made recently that have put the company at odds with some of its most prolific sellers. One of the biggest was the switch to "Best Match" as the default search results view in a large number of categories on the site earlier this year. Many sellers railed against the switch, with some saying that the search algorithm had caused their sell through rates to fall dramatically. eBay's site wide sell through rates appear to actually be at the lowest point in many years.

That could be due to the company's recent partnership with Buy.com, who has flooded the site with fixed price listings (around 500,000 at any one time), with an abysmal sell through rate hovering around 5%. The Buy.com deal is indicative of eBay's slow transition away from its core auction format toward a more Amazon-like marketplace. But it comes at the expense of sellers in the categories in which Buy.com sells, many of whom have seen their sell through rates and visibility hurt by the flood of Buy.com listings.

At an eBay presentation to shareholders in January, the company showed off a prototype of a new split screen listings page that splits BIN-only listings off from auction listings and pushes buyers toward accepting a BIN (pictured above). Though only an idea that eBay is considering, the potential design change has some sellers worried.

"The sellers are leaving, with each new change you can see more posts on the eBay message boards where they are posting they are done, closed their eBay stores, ended their listings and are off," eBay seller nancybusinraleigh, who has been selling on the site for 10 years, told me. "And since eBay is doing the 'death by a thousand cuts' approach, this will continue." Nancy herself has stopped selling on eBay in favor of her own storefront.

Conclusion

Competing with Amazon on fixed price sales may be difficult for eBay. Amazon's sales increased 37% to $4.13 billion in the first quarter, eBay's net revenue from its "Marketplaces" (primarily eBay and Half.com) rose 14% to $1.26 billion. And if sellers are really leaving the site, then there is a potential that eBay could see a drop in volume. Fewer seller options, no product reviews, and no "Amazon option" that offers free shipping could spell trouble for eBay when attempting to compete seriously in the fixed price market. Major deals with large retailers like Buy.com notwithstanding, alienating the small sellers and auctioneers who helped build the site is probably not a smart move for eBay.

eBay's real future may lie with PayPal, though. PayPal accounted for just $559.7 million of eBay's total revenue last quarter (approximately a quarter), but year-over-year revenue has increased 34% -- the best year-over-year growth rate of any division at the company except Skype (which makes up just a tiny fraction of the overall business).