Code-named "Fremont," a test version of the service launched a week and a half ago for Microsoft employees only, Garry Wiseman, MSN product unit manager, said. The service is expected to be released in beta publicly within the "next few weeks."
Fremont gives users the option of offering goods or services only to contacts on the MSN Messenger instant-messaging service or to groups within MSN Spaces, which is the company's blogging service. In addition, people can send notifications of items for sale through email domains, which would enable them to reach work colleagues, for example.
There's also the option of listing the classifieds broadly through MSN local search, or its regular search engine.
People who have items for sale would have a pulsating yellow star on their Spaces homepage or on the IM window that contacts see. Clicking on the star will launch a small window describing the item and details on purchasing it.
In addition, people will be able to set up a RSS feed to get regular updates on new items being posted.
In building Freemont, Wiseman and his five-person crew tried to make it both personal for people who only want to trade among family, friends and colleagues, while also providing the option of a public posting.
Classifieds is a growing piece of the booming online advertising market that's expected to reach $13.8 billion by 2007, surpassing advertising spent on magazines, according to JupiterResearch. During that timeframe, spending on display ads and online classifieds together are expected to increase at a compound annual growth rate of 25 percent.
By 2010, classified advertising revenue is expected to reach $4.1 billion, JupiterResearch says.
With Fremont, Microsoft expects to make money by selling contextual advertising that would accompany search results, Wiseman said.