Online auction site eBay is changing its policy on digital items that are delivered electronically. Instead of selling these items via auction, eBay now requires sellers to take out 30-day classified ads for $9.95 to sell digital goods. The change is intended to prevent sellers from artificially boosting their feedback ratings by selling thousands of identical downloads for as little as pennies. There's no feedback involved in the classifieds section, but classified ads will show up in a regular eBay search.

The inherent problem with digital downloads is that there are pretty much no delivery costs, and once you produce an item you can sell it over and over again, which gives sellers the ability to game the system. Of course, we know a few record company execs that don't see things that way. And to be perfectly honest, we're not convinced the classifieds section is the right place for digital goods, because while we don't want to see anyone beating the feedback system into submission, if you legitimately sell items that have value on a regular basis, it would be nice to get some positive feedback for your efforts.

Users can still sell digital goods in traditional auctions -- as long as they provide physical media which requires shipping. If you've got software on a CD or DVD for sale, that's fine. Just don't offer buyers the option of digital downloads or you'll be in violation of eBay's new terms of service. That said, when we checked this morning, there were plenty of auctions still available for digital downloads. It'll probably take eBay a while to clean house.

[via Techdirt]

Online music retailer AnywhereCD is closing down within the next few days. The online retailer took a different approach toward music sales than pretty much anybody else around. The company's business model was based around selling CDs and throwing in free MP3 downloads. Or maybe it was the other way around.

If you ask us, there were two fatal flaws in the plan:

1. They were selling DRM-free tracks, which kept many record labels from signing on (they had only managed to get a contract with Universal).
2. They were hardly adding any value to your CD purchase, since anyone who buys a CD can rip their own MP3s just as easily as they can download them from the internet.

Anyway, AnywhereCD never really caught on, and plans to shut down as soon as its contract with Universal expires. In the meantime, the site is having an "everything must go" sale, which means you can pick up complete albums for $7 a piece. But you'll have to navigate a pretty difficult site to find the music you're looking for. You can browse by genre or search by band name. But if you're not sure the artists you're looking for are on the Universal Label, good luck.
[via paidContent and socalTECH]