Ebay looks to cash in on blogs

Ebay wants to create software tools that will allow the online auction company to cash in on the rapid growth of blogging, a senior executive told the Financial Times.

The group’s plans reflect a wider push by many of the world’s largest companies
to tap into the potential revenues from blogs. More than 75,000 blogs are created each day, adding to a current total of about 35m, according to Technorati, which tracks blogs. This rate of expansion has attracted interest from executives from a range of industries.

But many are unsatisfied with their current options for engaging with the
fragmented and independ­ent-minded community of bloggers.

Courtney Holtpeter, a strategist at Universal Music, said: “There are not enough touch points between the places that music fans, for example, are finding out about new things and the places they can buy those things.”

Ebay wants to build bridges by developing software which it can then put in the hands of bloggers, allowing them to create links between niche communities and relevant products.

“Our approach would be to develop new tools that we can turn over to bloggers, so they can define the natural shape of the marketplace on their own. That is how Ebay originally developed,” Doug McCallum, UK managing director of Ebay, said in an interview.

He said some of the ideas for this software were likely to come from Ebay’s open-source network.

While Ebay’s plans are still in very early stages, similar software is being launched this week by MeCommerce, a venture-backed company that will allow bloggers to insert product listings inside their blogs and keep 50 per cent of the profits.

The service reflects the kind of embedded approach companies have been groping for.

The idea behind the software is to allow bloggers to recommend music, books, DVDs and T-shirts to readers who can make impulse purchases without leaving the blog. MeCommerce provides the inventory and the distribution using the same
partners as Wal-Mart and Barnes & Noble, and uses payment systems such as Google Checkout.

The San Francisco start-up is unusual in that it was created to allow non-profit groups to raise money in the wake of Hurricane Katrina.

But this week it is spinning the service out as a wider e-commerce platform for bloggers, and is in talks with partners such as Reebok and several major music labels. Yobie Benjamin, co-founder, said the 50/50 revenue split was part of its “ethical commitment to empowering people” to develop micro-businesses.

The entrepreneur does not expect the product-serving technology to turn the company into the next Google, but he thinks there is a gap in the market between what is available from Ebay and Amazon.

“We think we can fundamentally alter the way retailing is done. We want to take away all the barriers to becoming an online retailer,” he said.

“Ebay can’t do this because they don’t have the inventory. Google don’t have the distribution infrastructure. Amazon would have to change their entire financial structure,” Mr Benjamin argued.

The prototype has received rave reviews from bloggers.

Ryan Wall, a blogger, wrote: “Bloggers in the past had to use other major retailers that only offered them a 4 to 8.5 per cent return on their sales. The products were purchased under the supplier’s umbrella brand and the blogger didn’t retain customers for repeat purchases.”

“With MeCommerce, consumers buy directly from the advertisement by using a simple interface to complete the purchase. This has interesting ramifications on the consumer’s mindset and blogger branding. Since the consumer never leaves the blog during the purchase, the consumer perceives that he or she is directly supporting the blogger,” he said.

However, it will be the ability to convert this initial enthusiasm into transactions that will determine the level of investment by larger companies.