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TIME MAGAZINE, JUNE 4, 2001, VOL.157 NO.22
Bidding for Greatness
Almost alone among dotcoms, eBay figured out how to make interactivity profitable. Want to buy a stuffed rattlesnake?
By CHRIS TAYLOR
Forget about black monoliths. If the late great Stanley Kubrick had known what was going to be really cool by the year 2001, his seminal movie would have opened with 25 million ape-descendants clustered silently round an awe-inspiring and somewhat unreal auction house. Then to the tune of the Blue Danube, some bizarrely diverse items would shoot weightlessly through the ether—sterling silver Jaguar cars, Sherlock Holmes first editions, Xerox networked printers, a pair of Madonna concert tickets, an ostrich-egg incubator—moving at a rate of 5 million purchases per day. The climactic scene, perhaps, would feature astronaut Dave and arrogant computer HAL bidding furiously against each other for a highly collectible Beanie Baby.
The unreal auction house in question is, of course, eBay, which is in many ways the most powerful pure-play Internet force on planet Earth in 2001. It has recently become the top e-commerce destination, growing at a rate of roughly 1 million users per month. While its brethren in the legendary website club (namely Yahoo! and Amazon.com) suffer alarming slowdowns in growth, eBay posts quarter after quarter of stunning profits (its latest: $21 million, an increase of more than 150% on the same period last year).
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It has done so on the back of a few phenomenally simple ideas, all of which owe allegiance to capitalism in its most raw and ancient form. Anyone can be a buyer and anyone can be a seller. Price is determined by the number of buyers and how much they're willing to pay. Haggling is not only mandatory, it's automated. Sales have a deadline; everything must go. And most importantly the quality of the bazaar increases exponentially with its size. There are rival online auction services—Yahoo! and Amazon.com again—but eBay still has the lion's share of the market, about 85%. Put simply, it maintains the lead because it has the lead. If you're a seller, there's nowhere better to go.
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Jaguar Hong Kong.
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Unchecked by any complex laws of economics, eBay spreads like a virus. There are few geographic restrictions: Australian, Austrian, British, Canadian, French, German, Irish, Italian, Japanese, New Zealand and Swiss versions of the website are available. There are practically no legal restrictions, especially since a San Francisco court recently declared the auction service could not be held responsible for pirated or bootlegged music sold on its site (Napster should be so lucky). Its name has entered the global lexicon: "I bet you'll find that on eBay" has become the punch line to a thousand jokes. For the media, eBay is a bottomless treasure trove of news items—from the boy who tried to sell his soul, to the convicted killer who capitalized on his rapidly evaporating minutes of fame by trading in his hair follicles and calluses. You could argue that such disreputable excess is bad publicity. Then again, there are a million companies out there that would kill to have such anecdotes attached to their name—to be known as the place you can buy absolutely anything and at potential bargain prices.
Which helps explain why corporations from IBM to General Motors are falling over themselves to do deals with the Web auction giant. Disney auctioned off the "D" from the original Disneyland sign. Technology titan Sun Microsystems sold server hardware on the site with million-dollar starting prices. Yet despite such big-league partnerships, it's still the little guy that counts. Unlike your local mall, eBay would not survive for a second without mom and pop operations. Its entire success is predicated on extreme diversity. And you can forget about the pernicious influence of Madison Avenue. In this hypermodern arena of hard-core capitalism, Big Business is forced to squeeze its wares into the same one-line classified ad as the rest of us. The site's internal search engine is the kind of leveling tool Karl Marx never conceived of. Ask for an automobile and eBay is just as likely to turn up your neighbors' five-year-old Pontiac as GM's latest top-of-the-range four-wheeler. The effect is as pleasing as browsing in a bookstore where new and used titles mingle democratically on the shelves, arranged by their content and not by the glossiness of their covers.
The average eBay user stays on the site for an hour and a half, which is an extraordinarily long time by Internet standards (even the bookish Amazon.com user only hangs around for 18 minutes). That's because visitors don't just bargain-hunt or post pictures of their mint-condition pool table; they build communities. Trust is a tangible thing in this world, with sellers receiving an all-important democratic rating based on how often they have delivered the goods as promised by the agreed-upon date. When suspect wares—like supposed organ sales—slip unseen into the massive mElange, it isn't eBay staffers who spot them first—it's the auctioneers, vigilantly policing their own neighborhood. More controversially, veteran buyers employ special software that helps them jump in and snap up items in the last seconds of an auction. But mostly the instinctive acquisitiveness of the denizens forms the kind of lasting bonds that are too often lacking in off-line society. They meet and swap tips in the chat rooms, they build friendships over sales, they sometimes even wed. Spend any amount of time hanging out here and you will get the impression of a vast, virtual citadel under rapid construction, a tower of Babel with street hawkers on every level, most all of them kept honest by the gaze of their neighbors.
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Peter Winkler/AP.
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If this is a flea market, as some detractors say, it's the most extensive flea market in human history, covering most of the planet's surface and many centuries of our past. Our collective memories are inventoried here, albeit briefly. A quick search reveals current auctions for an ancient Roman coin, a chunk of the Berlin Wall and a Florida voting machine. They won't stay there for long. Items on eBay move at the speed of humanity. We may not be flying to the moon in 2001, but with eBay's help we're constructing something much more meaningful to the average ape-descendant.
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