EVERY YEAR, thousands of people from around the world descend on an American city to spend the weekend discussing everything from bubble wrap to counterfeit goods and the Russian mafia at eBay Live, the online auction giant’s annual jamboree.

The get-together has always been a fun affair, with silly hats and jokey T-shirts, but there was never any disguising that eBay is a serious business. With 233m customers worldwide, the world’s largest online retailer sold $60 billion (£30 billion) of goods last year.

A car gets sold on eBay every minute, a music player every 16 seconds. Thousands make a full-time living buying and selling on eBay - African villagers are sending their children to school on money they make by selling goods on the site. By any measure, eBay is one of the great successes of the internet age. So why were these people booing?

This year’s conference took place in Chicago and was the most controversial in the seven-year history of eBay Live.

The company had been expecting 10,000 people. It looked like half that number had turned up and the exhibitors’ hall seemed to have been reshuffled to hide the gaps.

Many people walked out when eBay chief executive John Donahoe took the stage to make his keynote address. His predecessor, Meg Whitman, used to get rock-star treatment, mobbed by fans on the floor. But at least the crowd was polite to Donahoe. They booed his No 2, Lorrie Norrington, president of eBay Marketplaces, the company’s core auctions business.

After introducing some controversial and unpopular changes, the pair knew they needed to do some schmoozing. Donahoe showed pictures of himself as a child; he even introduced his parents. Norrington told everyone how well they were doing. But for all the buttering up, the crowd turned nasty as Norrington began explaining the changes.

In the past six months a storm of protest has howled from America to Britain to Australia over radical changes to fees and the way items are listed and paid for on eBay.

The move that triggered the most boos concerns the way buyers and sellers rate their transactions. It was one of the unique characteristics of eBay that both buyer and seller would rate their transaction. The idea was to build a community of trust where both parties knew - by reputation - who they were dealing with even if they were separated by thousands of miles. Now eBay sellers are up in arms over a change that means they can leave only positive feedback for buyers.

“For the past dozen years we together have built one of the most unique businesses and we have done it through trust,” said Norrington. “Building trust is a priority for us and it should be for you too. But some of our users have developed bad habits.”

Leaving “retaliatory feedback” for buyers was driving away business and was not acceptable, she said.

The boos began. “Bring it on - we love it. Tell us how you feel,” she said gamely.

The eBay community is certainly doing that - on eBay’s chat boards, their own websites and any place they can get themselves heard.

Elaine Bennett Scheib is one of an army of small eBay sellers who believe the company has used them to build up its business and now wants to dump them to make way for much bigger fish.

For the past nine years the self-described “stay at home mom” has sold her paintings and drawings of fairies and other cutesy beings through eBay. She has a 100% positive record, meaning every one of her customers was happy with the business they did with her.

“You’re the greatest, thank you,” wrote one recent customer. Another wrote: “I love this fat fairy.”

Happy fairies, happy customers. The only one who isn’t happy is Bennett Scheib. She thinks eBay is trying to drive her out of business. “They are rude and arrogant,” she said. “They want me gone as quickly as possible.”

She is one of a growing band of angry eBay sellers who started boycotting the firm from May 1. Some are defecting to other sites or going it alone. Others have even begun lobbying Google in the hope it will launch a rival. If there was a big enough rival to eBay out there already, the exodus would “blow their doors off”, said Bennett Scheib.

Not everyone is unhappy. Chris Dawson, author of the Tamebay.com eBay blog, described this eBay Live as the most professional he had attended. “They are doing a number of things that they had to do,” he said. “Good sellers will change. It may be painful but they will do it.”

Dawson said eBay now faces more competition in a world where expectations for online shopping have risen rapidly. “eBay can’t just stand still. But it does seem to be trying to do a lot of things at once,” he said. “There are reasons why eBay is changing and they are unlikely to stop. Boos or no boos.”

Donahoe said he wanted the company to operate less like a car-boot sale and more like a shopping mall. Most eBay sales are auctions, with bidders vying to secure what’s on offer, but the company has been growing the number of goods its sells at a fixed price. Fixed-price sales accounted for 42% of the total in the last three months of 2007.

To speed up the gentrification, eBay has started offering discounts for big sellers and changes in its search process that favour them with good feedback.

It’s not just small sellers who are finding the new system frustrating. Bruce Hershenson, boss of Emovieposter.com, a vintage-cinema memorabilia company, has sold more than $13m of goods on eBay since he signed up in 1998. He recently quit eBay for good and is dedicating his efforts to his own website.

The recent price changes will result in his fees going up 40% annually and, he said, eBay wants to ditch people dealing in “vintage” items in favour of those selling new goods.

Norrington denied that this was eBay’s intention. She said good sellers had nothing to fear. “Our goal is to bring buyers and sellers together in the safest way,” she said. “The internet is continually evolving. It’s all about staying focused on our customer.”

As far as Hershenson is concerned, that customer isn’t him. “Normally I can understand business situations like this,” he said. “I might not agree with them but I understand. But this I don’t get at all. They are just trying to copy Amazon.”

And well they might, said Jeffrey Lindsay, analyst at Sanford Bernstein. He felt eBay had to change or die. “Our view is that management have about a year to turn this company round,” said Lindsay.

eBay posted a 22% jump in first-quarter profits, boosted in large part by the performance of Paypal, its online-payment system, international sales and the weak dollar. But growth in active users at eBay’s core business was almost flat and the number of new listings was up only 4% from the previous quarter.

Its core business is growing at about 9% year on year, said Lindsay, about half the rate of the e-commerce market in general. Amazon is growing at 32% a year and positioning itself as an alternative to eBay.

“Amazon has superior customer service and almost zero fraud,” said Lindsay. “eBay has seller fraud and counterfeit-goods problems.

“As the internet matures, its audience expect more and eBay has to make its sellers deliver.

“This is the first time in five years that they have addressed eBay’s core problems. The real question is, have they left it too late?”

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