D2.2: Set of use cases and scenarios

Title: THE EXAMPLE OF MARKETPLACE COMMUNITIES

The Example of Marketplace Communities

Very popular Internet communities are the so-called marketplace communities, whose members are allowed to sell and buy arbitrary items within the community. One of the greatest providers with nearly 95 million registered members worldwide at the end of 2003 (eBay Annual Report 2003) is eBay.

After an item within the community has been sold the respecting seller and buyer somehow have to exchange the item purchased and the reward pursuant to its price. This exchange must be fair, i.e. seller and buyer both have to receive what they have agreed upon. If the item is a digital good (e.g. information) and for the reward electronic money is available, the exchange can be realized by electronic fair exchange (Asokan et al, 1998). In the EU project SEMPER (Waidner, 1996) a framework for an optimal electronic marketplace which allows trade with digital goods, was developed. But most items are physical goods that can be exchanged either directly between seller and buyer or via a trusted third party that guarantees the correct transfer. Many providers offer or mediate an appropriate transfer service against a charge.

But because the price of many items sold within marketplace communities is quite low (e.g. books, CDs, computer games) many buyers and sellers decide to exchange money and item directly. The provider provides them with the other member’s personal data necessary to do this. Usually the buyer transfers money from his account to the seller’s account and after the money has been credited his account the seller sends the item by mail to the buyer.  

This exchange needs trust in each other that own expectations and the other’s behaviour are equivalent. Many of these exchanges are successful, but unfortunately some are not. In the eBay community continuously frauds are discovered where a member pretended to sell items, collected money from buyers, but did not deliver the items offered. In 2002 more than 51,000 complaints about Internet auction frauds in the U.S. were reported to the Federal Trade Commission (Federal Trade Commission, 2003). Although the actual percentage of fraud in such exchange is small (for instance a eBay representative indicates (Wearden, 2004) that “Fewer than 0.01 percent of all listings on eBay result in a confirmed case of fraud”), the nuisance perceived by the customer is high, and can hamper the further development of electronic marketplace communities. 

Reputation systems were introduced to most providers’ service to handle problems that might occur during the interactions between sellers and buyers. This is cheaper for providers than adding expensive public-key measures and infrastructures to give the members authenticity and legal enforceability of digital information within a trade. After the direct exchange of money and item is completed (satisfying or not) both may give comments or/and marks to each other. These are added to the member’s feedback profile (usually together with the annotator and the exchange considered as context information). Before buying from or selling to a person every member of the community can inform himself about the other’s reputation profile.