The auctioneer is up against an Internet icon in the privately held Craigslist. The 21-employee company operates on a shoestring budget, is well-entrenched in every major U.S. city and founder Craig Newmark is beloved by users for his reluctance to commercialize the site.

But eBay enjoys an unusual advantage. For three years, executives at eBay have been allowed to peer deep into Craigslist's operations. Since 2004, the year eBay bought a 25 percent stake in the San Francisco-based Craigslist from a former employee, the auction site has held a seat on the company's board of directors.

Newmark, Craigslist CEO Jim Buckmaster and eBay founder Pierre Omidyar once made up the three-person board. Another eBay representative has replaced Omidyar, according to Durzy.

"We've learned a lot from Craigslist," Durzy said. "We think this market has room for several classified services."

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Microsoft has released a beta version of Windows Live Expo nationwide in the US. Previously in closed beta, Windows Live Expo is now accessible to all US customers and expands the traditional classified ad concept by providing social networking and community features through a free online service.

All products and services listed in Windows Live Expo are geographically identified, or 'geo-tagged', by ZIP code, not city. Windows Live Expo customers have the option to search for items from within a radius of 25 miles of them or the entire country. Live Expo listings are integrated with MSN's satellite-image-based Windows Live Local so customers can view maps and aerial imagery of neighbourhoods.

Windows Live Expo allows customers to choose to view only listings specific to their MSN Messenger Contact List or personal e-mail groups. With MSN Messenger integration, sales can be negotiated via instant messaging. When users send messages about their listings, an alert can be sent via e-mail, instant messaging or mobile phone via the MSN Alerts service. With upcoming Windows Live Expo releases, listings will be accessible via MSN Spaces blogs.

eBay rolled out its Ad format beyond the real estate category, for which the feature has been available exclusively for years. The Ad format is similar to online classified listings in that there is no binding transaction involved. Sellers can post an ad for $9.95 for a 30-day listing; $19.90 for a 60-day listing; or $29.85 for a 90-day listing. The new categories in which Ad format is now available are Websites and Businesses for Sale; Trade Show Booths; Prefabricated Buildings; Travel; Specialty Services; and Everything Else.

The report notes that most classified advertising publishers, including newspapers and online leaders like Monster.com and Realtor.com, follow the traditional pay-for-placement model, but Google is providing free listings and plans to make money through paid ads placed alongside the free content and through upgrade sales to advertisers.

The report examines Google's strategies and potential problems in the classified field, and outlines ways more traditional publishers have to strengthen their classified services to remain competitive.

"Google is being disingenuous, at best, when it claims Google Base isn't targeting classified advertising," Zollman said. "It's making a strong push into classifieds, as we show in this report. The company should be more honest about its plans, both with potential partners and the public. Microsoft, at least, has been straightforward about its 'Fremont' classifieds project."

Code-named "Fremont," a test version of the service launched a week and a half ago for Microsoft employees only, Garry Wiseman, MSN product unit manager, said. The service is expected to be released in beta publicly within the "next few weeks."

Fremont gives users the option of offering goods or services only to contacts on the MSN Messenger instant-messaging service or to groups within MSN Spaces, which is the company's blogging service. In addition, people can send notifications of items for sale through email domains, which would enable them to reach work colleagues, for example.

There's also the option of listing the classifieds broadly through MSN local search, or its regular search engine.

People who have items for sale would have a pulsating yellow star on their Spaces homepage or on the IM window that contacts see. Clicking on the star will launch a small window describing the item and details on purchasing it.

Analysts and blog commentators have been abuzz this week over purported Web page screenshots showing a new service called "Google Base." Another related service could offer online payments and would put Google head-to-head with eBay Inc.'s PayPal payments service.

"Google Base" as depicted in screenshots on Google-watching sites encourages users to post details of their small business enterprises, articles on current events, automobile listings and even scientific research.

"We are testing new ways for content owners to easily send their content to Google," Google spokeswoman Eileen Rodriguez said in a statement.

"We're continually exploring new opportunities to expand our offerings, but we don't have anything to announce at this time," Rodriguez added.