Crowd control at eBay

If over the last decade you have read any of the many books and articles promoting the Net as a new world where people are able to form self-regulating, super-democratic communities, you have no doubt come across glowing descriptions of eBay's feedback system. By providing buyers and sellers with a simple means for rating one another, eBay has been able, we've been told, to avoid lots of rules and regulations and other top-down controls. The community, built on trust and fellow-feeling, essentially manages itself. Tom Friedman, in his book The World Is Flat,

voiced the common opinion when he called eBay a "self-governing nation-state."

Nice story. Too bad it didn't work out.

EBay has been struggling for some time with growing discontent among its members, and it has rolled out a series of new controls and regulations to try to stem the erosion of trust in its market. At the end of last month, it announced sweeping changes to its feedback system, setting up more "non-public" communication channels and, most dramatically, curtailing the ability of sellers to leave negative feedback on buyers. It turns out that feedback ratings were being used as weapons to deter buyers from leaving negative feedback about sellers.

When Bill Cobb, the president of the company's North American operations, announced the changes, he underscored just how broken the feedback system had become:

To give you some background, the original intent of eBay's public feedback system was to provide an honest, accurate record of member experiences. Over the years, we've adjusted the system to add non-public means of providing feedback to try to improve its accuracy. For example, we instituted Unpaid Item Reports in 2006, and that has helped us to hold buyers accountable.

But overall, the current feedback system isn't where it should be. Today, the biggest issue with the system is that buyers are more afraid than ever to leave honest, accurate feedback because of the threat of retaliation. In fact, when buyers have a bad experience on eBay, the final straw for many of them is getting a negative feedback, especially of a retaliatory nature.

Now, we realize that feedback has been a two-way street, but our data shows a disturbing trend, which is that sellers leave retaliatory feedback eight times more frequently than buyers do ... and this figure is up dramatically from only a few years ago.

So we have to put a stop to this and put trust back into the system.

But I think – and I'm sure you'll agree – that the most compelling reason we need to change feedback is so that buyers will regain their confidence on eBay and they will bid and buy more often.

We explored a number of solutions, and talked to eBay's founder Pierre Omidyar, who created the Feedback system. He agrees that bold changes are required to fix Feedback. And that's exactly what we're going to do ... here's the biggest change, starting in May:

Sellers may only leave positive feedback for buyers (at the seller's option).

I know this is a huge change, but we're also putting into place protections that sellers have wanted for years. In addition to holding buyers accountable via non-public seller reporting tools, such as Unpaid Item reports, we are planning a number of other Seller Protections against inaccurate feedback.

He goes on to list seven new "protections," including more aggressive central monitoring of members' behavior and various restrictions on buyers' ability to leave feedback about sellers.

Patti Waldmeir, in a column in the Financial Times today titled "The death of self-rule on the internet," writes, "For those who were there from the start of this experiment in digitising utopia, including me, this is very disillusioning." By "radically rewriting the constitution of the democratic republic of Ebay," she says, the company has closed the book on a certain brand of internet idealism:

For most of [its] 13 years, Ebay has been run largely as a self-policed island, a place where order was preserved less by real world laws than by norms and customs and expectations and reputations that were almost entirely virtual. Ebayers governed themselves by rating each transaction using the site's "feedback" system, where they could report crooks, not to the state but to each other. The theory was that, as in a medieval souk in which everyone knew everyone, everyone on Ebay would know who the crooks were by reading their feedback. Now the company has basically admitted that the cybersouk model does not work: buyers did not tell the truth about sellers, and sellers did not tell the truth about buyers. And in a market where traders lie, the trust that is so central to online commerce cannot flourish.

This isn't unusual. It follows a common pattern that we've seen play out in other "social production" sites like Digg and Wikipedia. (Disclosure: I'm on the editorial advisory board of the Encyclopaedia Britannica.) As these sites grow, keeping them in line requires more rules and regulations, greater exercise of central control. The digital world, it seems, is not so different from the real world.

In a new post about how "bottom-up" communities need "top-down" controls to work successfully, Kevin Kelly notes that "the supposed paragon of adhocracy - the Wikipedia itself - is itself far from strictly bottom-up. In fact a close inspection of Wikipedia's process reveals that it has an elite at its center (and that it does have an elite center is news to most). Turns out there is far more deliberate top-down design management going on than first appears."

Kelly argues that "the reason every bottom-up crowd-source hive-mind needs some top-down control is because of time. The bottom runs on a different time scale than our instant culture." He's implying that, if you gave them enough time, self-governing communities would eventually work out their problems and run just fine - like happy beehives. But that's contradicted by experience. What we've seen happen with self-regulating communities, both real and virtual, is that they go through a brief initial period during which their performance improves - a kind of honeymoon period, when people are on their best behavior and rascals are quickly exposed and put to rout - but then, at some point, their performance turns downward. They begin, naturally, to decay. Leave them alone long enough, and they're far more likely to collapse than to reach perfection.

Kelly confuses human with nonhuman systems. He writes: "The main drawback to pure unadulterated darwinism is that it takes place in biological time - eons. Who has eons to wait during internet time? Nobody." But darwinism has little to do with the development of human systems like eBay or Wikipedia or Digg. People aren't genes (or bees). You can build a good emergent system out of genes because genes are dumb - they don't make their own decisions, they don't consider what other genes are doing, they don't think. People, in contrast, actually do think. Sometimes, we're inspired by fellow-feeling. Other times, we act selfishly or with prejudice or we try to game whatever system we're part of. And the more times we're confronted with other people acting selfishly, or fraudulently, the more we retreat into self-interest ourselves. Trust, a fragile thing, breaks down.

And that's why eBay's feedback system decayed. Time was its enemy, not its friend.