EBay Dips Its Toe Into Online Music

The online auctioneer is running a six-month test to decide whether it wants to get into the market.

Online auctioneer eBay Inc. is offering downloadable music through selected sellers in a six-month test to decide whether to join other major companies in the marketing digital media.

The company said sellers chosen for the pilot have to ensure copyright protection for the content and meet service-level agreements. Music buyers won't be allowed to resell the files on eBay.

The trial follows Apple Computer Inc.'s announcement this week that it has passed the 100-million mark for downloads from its iTunes Music Store. Other big-name companies are also entering the market--Sony Corp. is competing with Apple in music downloads and portable music players.

But eBay's market entry isn't seen as a threat to Apple, Sony, Roxio, which owns the Napster service, or other companies that sell music online.

"I see it as a revenue stream for eBay, and not something that's transformational for the industry," said Gartner analyst Martin Reynolds, adding that he would expect music downloading to be a "relatively small percentage" of eBay's business.

Still, eBay offers some unique advantages. It has a lot of customers and it already has the technology in place for financial transactions.

However, to gain significant market share, the company would have to provide music lovers with unique features that couldn't be easily copied by other services, Reynolds said, and "I'm not sure that's likely."

Music bought through eBay will be downloaded and purchased through the seller's site. To be approved to sell through the auctioneer, sellers have to show they have contractual permission to sell the listed music from the rights holder.

Beyond music, eBay is using the pilot to help decide whether to introduce a Digital Downloads category for other media.

In anticipation of fraudulent use of the eBay brand, the company warned buyers not to accept unsolicited E-mails, pop-up ads or other offers that enable downloadable media transactions.

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