EBay today announced changes to its auction fee structure and is introducing new feedback rules to try to make its system friendlier to both buyers and sellers.  The company is cutting the listing fee by up to 50% and compensating by increasing its commissions on sold items.

The biggest shakeup will occur for sellers of low-priced items.  For items under $25, eBay is raising the commission from 5.25% to 8.25%.  This threatens the relatively strong market for used video games and music CDs.

One important change to sellers is that the gallery feature, which previously had an attached fee, is now entirely free.  The premium listing features Gallery Plus, Picture Pack, and Feature Plus will continue on with discounted fees.

The news broke during a conference held in Washington with 200 of eBay's top North American sellers.  The changes apply to North America (beginning February 20), and additional changes are forthcoming for Germany and the United Kingdom.

Across the board, the fees to list an item, known in eBay speak as "insertion fees" have been cut.  Company spokesman Usher Lieberman stated, "A majority of sellers will see their fees go down.  We are basing our success on their success and we want to encourage sellers to list more items with us."

Significantly, a major change in the feedback system was also announced.  Sellers can now only give buyers positive feedback.  Whether this will hurt sellers remains to be seen.  In the past buyers tended to gripe less due to fear of a retaliatory negative feedback -- a sort of "I'll scratch your back, if you scratch mine" setup.  The shakeup may lead to more honesty on the part of buyers of their customer experience, but it may also allow some less well-mannered buyers to have an easier time throwing a tantrum over issues outside sellers' control.

To compensate for possible negative effects to sellers eBay is offering new perks to its PowerSellers, the sellers with the most items moved and the highest ratings.  Among these perks are increased match-result exposure for customer searches, further fee reductions, and “other benefits".

Sellers with generally bad ratings will see their match exposure drop.  Also, any sellers with bad ratings for shipping will see their exposure drop, as eBay is particular concerned about sellers' past handling of shipping.

If sellers fall under certain dissatisfaction levels or classes, they will now be forced to provide a "safe payment option".  This is also applicable to sellers with less than 100 items sold.  A safe payment option is defined as either PayPal or a merchant credit card.

PowerSellers now have some additional protection from bad buyers, as well.  The PayPal protection amount for PowerSellers has been made unlimited.  Additional unpaid item protection has also been added for PowerSellers.

Another significant detail on the feedback overhaul is that comments over 12 months old will now not count.  Further comments from Unpaid Item (UPI) buyers and suspended users will no longer count.  In the past these have been thorns in the sides of sellers, as a seller's perfect rating could be marred by a single obviously malicious user that had been subsequently suspended.

EBay's big moves come as an apparent attempt to revive the site's growth.  Despite a broad user base, the site's growth both in terms of sales and registered users has been dead in the water over the last year, showing only minor increases and decreases.  Much of this is due to tough competition from Amazon.com, which charges no listing fees and offers many other on-site services.  It should be interesting how eBay's dramatic changes rest with its dedicated buyer and seller community.