LEARNING FROM FAILURES
Auction Universe
One of the most promising new entrants into the general consumer auction business was Auction Universe. Times Mirror, the parent company of the Los Angeles Times newspaper, started Auction Universe in 1997 and then sold it in 1978 to a partnership of eight major newspaper companies (including Times Mirror itself) called Classified Ventures. These companies were concerned that classified advertising on the Web posed a threat to their newspapers’ classified advertising, which is one of the most profitable elements in the newspaper business. Through their Classified Ventures partnership, these newspaper companies started their own Web sites for classified ads such as Apartments.com, Cars.com, and NewHomeNetwork.com. These sites earn revenue by charging for running ads, selling advertising on their pages, or both. Classified Ventures believes that the Auction Universe site could become an important and profitable part of its Web presence.
Auction Universe closed in August 2000, but Classified Ventures’ classified ad sites continue to operate. The Auction Universe site was modeled on eBay and offered similar types of auctions and services for buyers and sellers. Some critics believed that the Auction Universe interface was more intuitive than eBay’s and included a better search engine; however, the site failed to mount a sustained challenge to eBay’s dominance. Even with major corporate sponsorship and a $10 million advertising campaign behind it, Auction Universe was unable to displace the advantage eBay obtained from the lock-in effect it has created for a large number of auction bidders and sellers.