RealTime IT News

Windows Live Classifieds Muscles Into Market

It's a full-scale online classifieds war with the impending entry of MSN into the free online listings game.

Microsoft confirmed that it's gearing up to launch a free consumer-to-consumer listings service as part of its Windows Live offerings.

The still-unnamed service is based on an internal Microsoft bulletin board called MicroNews, according to Garry Wiseman, the product unit manager for the project.

"In January or February, … it became clear that people were becoming more and more comfortable with listing things online," Wiseman said. "We had a couple of unique services we could integrate to make a really good experience."

Those ingredients include mapping and messaging. MSN Virtual Earth is being rebranded to Live Local, and it will be integrated throughout the classifieds service. Each listing will have a map button that allows users to see its location. As well, users can move a slider to widen or narrow the area of proximity in which items should be located. Live Local mapping buttons also will appear next to the initial list of classified search results.

Users will be able to limit access to their listings to their instant messaging buddies or to a single domain, such as Microsoft.com or Harvard.edu.

Wiseman acknowledged that there needs to be other ways to broaden the universe of prospective buyers without necessarily opening a listing to the entire Internet. "In the future, we'd like to integrate it with other types of social networks," he said.

The team is pondering instituting some sort of reputation system, as is used by eBay , or a way to flag items or provide feedback, like craigslist offers. One possibility is to display information on how long the seller has been a member, how many items have been sold and whether there have been complaints.

"So, we do have the concept of reporting abuse of the service, but we're still trying to figure out the right way to do it," he said. He hopes to solve the problem in the next few iterations of the service.

According to a recent report by the Pew Internet & American Life Project, about one in six American adults sell things online, and they tend to be early adopters of technology and intense Internet users.

The largest segment (26 percent) was adults aged 29 to 40; men were more likely than women to do so, as were those with an annual household income exceeding $50,000 and college graduates.

In other words, this self-selected demographic is an advertiser's dream. MSN could charge a premium for displaying paid ads to this group, without any other targeting.

Wiseman said MSN will show contextual ads against the classified listings. For example, when someone searched for "couch," ads for Ikea and an antique store might show up.

"The nice thing about the contextual ads is, they'll be out of the way, so it's not interfering with the user experience, but they'll also be relevant," he said. Because each item listed will be geo-coded, ads also can be targeted by location. Other models, such as upselling free listings to display ads, are possibilities, Wiseman said, but the team's first priority is to get the service up and running.

Google also is rumored to be putting together a free classifieds service, perhaps on the foundation provided by Google Base an online database that takes structured data feeds from merchants and job search services but also lets users upload all kinds of content.

Gartner analyst Allen Weiner said that the big guns' entry into classifieds won't necessarily harm sites dedicated to listings. Instead, he said, MSN, Google and Yahoo view classifieds as a necessary component of their overall feature sets. "They don't view online classifieds any differently than podcasts or pictures or videocasts," he said. "They're a vital content component that seems to round out the picture of what consumers are looking for."

Weiner added that classifieds are a powerful way to show off search and RSS capabilities.

"The differentiation a Google or Yahoo or MSN can add to the equation is the ability to really customize search," Weiner said, by integrating classifieds with services such as mapping.

MSN plans to include a built-in mini e-mail box for each listing and to enable sellers to offer blind instant messaging, so that they can immediately answer questions from buyers without exposing their MSN Messenger nicknames. The classifieds will be integrated with MSN Alerts, Messenger, Spaces and MSN Shopping, as well.

Weiner didn't see a lot of negative impact on eBay from the search providers' classifieds offerings, but he said they should be a wakeup call to the online marketplace that it's time to add features that would keep its service up to date.

"Craigslist is far more vulnerable to a successful iteration of this than eBay," he said, "because the thing Craigslist does lack is the payment mechanism and storefront capability, which these others will have."

According to the Pew survey, Craigslist, the network of local sites, was by far the most popular classifieds destination, drawing 8.76 million visitors in September. Craigslist was followed by Trader Publishing Company, with 8.1 million visitors and Cars.com at number three with 3.74 million visitors.

Craigslist CEO Jim Buckmaster was not concerned about MSN's entry into his company's field. "Because we operate from a public service mentality, we don't tend to worry too much about competition," he said.

Craigslist opened more than 100 new local sites in 2005. It has 18 employees and annual revenue of around $25 million, according to an estimate by research firm Classified Intelligence. The only source of revenue is paid job listings on the San Francisco, New York City and Los Angeles sites.

If employers stopped paying for job listings, Buckmaster said the company might move to displaying ads against listings. "There are lots of other ways we could make money to support the service," he said.

Despite that healthy traffic, much of which is focused on craigslist forums where users share information, complain about their lovers and dis each other, the service retains a local feel.

"Since we don't do any advertising, most people come to the site through a referral from a friend or loved one, which gives it a nice quality," Buckmaster said. "People seem to appreciate it's a very local service and you're likely to interact with people who are near you."

Wiseman hopes MSN's classifieds can garner some of that community feeling. Instead of soliciting feeds, as Google did for Google Base, he's prepared to let the service grow naturally -- and knows that could take up to a year.

"I want this to be a person-to-person marketplace, not a place where people upload thousands of listings," he said. "I'm hoping that we'll have these unique assets to the service that will entice people to come in."