Collecting stuff comes naturally to geeks, from comic books to locks of hair from Star Wars actors. For decades, we trolled through conventions for that elusive X-Men issue or Anthony Daniel’s silver tresses. The internet changed all that with the creation of eBay in 1995. eBay gave geeks, and some normal people but mostly geeks, and chance to spend their hard earned money in the hopes of getting mailed something they wanted. eBay encouraged the Long Tail of geek hobbies, giving anybody a chance to clean out their garage in the hopes of finding someone else’s treasure. The fun of eBay auctions have started wearing off, but the nostalgia is still sinking in.

This week a french court ruled eBay had to pay $63 million to Louis Vuitton for not doing enough to prevent counterfeit goods on its website.  eBay is even liable for users selling legit products because Vuitton claims no one can resell its products.

This ruling makes eBay responsible for the actions of its users.  One of the only good parts of the United States’ DMCA are the Safe Harbors which means service providers, like eBay, cannot be held responsible for what its users do.  This allows websites and ISPs to focus on providing services and goods for users without worrying about legal responsibility if things are taken out of hand.  France doesn’t have the same protection.

The problem is somehow eBay is expected to know what’s counterfeit and what’s real.  A similar argument is being made against YouTube over copyright, claiming its too much work for copyright holders to police the site so YouTube should do it itself.  How is eBay supposed to know what’s allowed to be sold and what isn’t?

eBay’s early years capitalized on the unique strengths of the internet, building a multi-billion dollar enterprise off of auctioning everything from broken laser pointers to movie scripts. Business Week’s Catherine Holahan sees a change in eBay’s business, moving from auctions to now earning half its revenue from the Buy it Now option where the seller sets the price.

eBay’s growing reliance on fixed price sales leads to question why auctions are dying off. It seemed the internet was built for auctions, allowing a large number of people to sell and buy as they wished. Holahan writes auctions initially had novelty and excitement that has since died down due to power users gaming the system and leaving average Joe’s without empty-handed. Buy it Now is stress-free. Michael Masnick points out eBay now has more competition, where low auction prices are now competing with every discount retailer online. Nick Carr claims eBay was just a fad, but if that’s true, it was a huge $40-billion market cap fad.

I agree with Mathew Ingram’s point that auctions work for some things, not others, and eBay needs to balance the auctions with new business models. The challenge will be convincing people it’s more than an auction company.

I think eBay has more problems than that, specifically Amazon’s claimed a great deal of the retail space eBay could have dominated. eBay introduced store fronts to give small retailers online spaces without the vast expenditure, but Amazon’s service is much more developed. eBay can try competing head on with Amazon, but playing catch-up is never fun and rarely effective (good luck Microsoft). eBay’s stumbled with its expansions, acquiring Skype and StumbleUpon without effective synergies (and now rumored to be trying to sell Skype). Evolving from pure auctions to some kind of e-commerce giant will be challenging, but hopefully invigorating to the industry. Plus, it’ll be good to give Amazon some more competition.

Myspace controls 80 percent of the social networking sites. Google has 50 percent of web searches. eBay, PayPal, Flickr, etc. The web, for all its range and unlimited information, enjoys anointing single sites as the rulers of that particular genre. For all the discussion of media consolidation and big business in the physical world, online seems to have an eerie effect. Even when options appear, web users prefer to join/stick with the leaders in each field.

The reason for this appears obvious. The most popular web sites thrive on user-generated content, from eBay’s auctions to Myspaces my-spaces. Why join Faceparty.com when all my friends are already on Myspace. With Google, YouTube, Wikipedia, and other sources of information, users want all their information in one place. But this presents a difficult business and advertising challenge.

First, how do companies expand and/or start-up in this monopoly based climate? New social networks and search engines keep popping up against the Myspace and Google juggernauts (even Microsoft is having trouble here). Does this mean every new business is going to have to be an original, home grown idea. And if so, how many standard sites can I fit into my daily schedule.

Second, how, if at all, can web monopolies hurt/help business and users? Already, Google is the lord of web advertising. High placement on popular search terms can guarantee a website’s success, with similar results for paid Google ads. But YouTube and Myspace have yet to find real business models, still in the experimental stages, so their place as a controlled market force, like Google, remains to be seen.

And lastly, how does this happen? For any web start up, the question can no longer be, how do I make a new search engine. It has to be about how do I make something completely new. Then ask, how do I get everybody to use it. How, if at all, can this viral marketing be manipulated. Myspace, YouTube, Flickr all work without any advertising and are monsters in their genres.

A few exceptions, to note. Job sites are quite plenty. Craig’s List appears a decisive leader in all things classified, but HotJobs and Monster compete on pretty fair ground (and HotJobs has the backing of Yahoo!). Yellow pages and dating sites also do not seem to suffer from monopolies. At first glance, there seems to be a link in the need for local or specialized information, but many of these sites offer very redundant information (with similar features as Google Maps compared to MapQuest, both with yellow pages, and even Myspace for dating sites).