Online auction alliance aims to take on eBay

Microsoft, Excite@Home, Dell Computer, Lycos, Ticketmaster Online-CitySearch and other technology heavyweights have teamed up to form a new auction network in an attempt to take on market leader, eBay.

The network of nearly 100 sites is set to roll out Monday, but an auction link from Microsoft's MSN Web site to the FairMarketPlace, as the network is known, began running on Friday at http://auctions.msn.com.

Scott Randall, founder and chief executive of FairMarket, the company behind the new alliance, said it would function like a virtual warehouse to which nearly 100 auction sites would be linked - as opposed to eBay's single marketplace.

“The only way to survive in the auction business is to be networked and to start something much bigger," he explained.

The network will mean that consumers looking to buy or sell a computer on Lycos' auction site will also be able to buy and sell on auctions sponsored by Microsoft and Excite@Home. Merchant sites that only sell their own products, however, can only show only listings on their own sites.

Each site will list the items for buy and sale under its own brand name and design, but will not indicate where the auctions were originally listed.

However, while consumers selling on Microsoft’s auction site will not see their items appear on Dell's site, for example, which will not include merchandise listings from other network members, customers will be able to see Dell’s merchandise posted on other sites.

FairMarket will generate revenue from its network in two ways. It will receive a flat fee each month for auction hosting, and a one percent cut from every sale undertaken.

The company expects its new network to be able to reach more than 46 million visitors and claims it already lists 70,000 items. This figure will also increase once Microsoft, Excite and Ticketmaster Online-CitySearch formally launch their sites onto the network. eBay, by contrast, has more than three million items up for auction.

But an eBay spokesman said that the new competition simply validated eBay's business strategy. "We do anticipate other players will enter into the space, but so far our track record speaks for itself," he added.

eBay shares fell nearly 7.1 percent to $141 on Friday amid concerns that it would be hurt by competition from the new auction alliance.