Behold, I have a broken Panasonic DVD player, in the original factory box.

Actually, I have no such thing, and if I did, it would be shoved away someplace where I wouldn't have to face the existential choice of fixing it or throwing it away. But now I realize there is a third option, to list it for sale on eBay, the electronic auction Web site that has revolutionized the meaning of "junk" for nearly 50 million people around the world. Someone else sold one last week for $33.26, plus shipping charges, which meant I would have cleared enough to purchase, say, 16 uncleaned authentic ancient Roman coins at $2 each, and the buyer would have... well, that would be his problem, but maybe he'd know someone who fixes this stuff cheap. By definition, though, we both would have gotten something we wanted, increasing by some tiny increment the sum total of happiness in the world--mine, his and that of Pierre Omidyar, the young engineer who founded eBay in his apartment in 1995, and built a $4.6 billion fortune on the premise that the Internet is the perfect device for the second most important form of human convergence, the meeting of buyers and sellers.

That proposition was proved nearly 170 million times last year, as eBay users exchanged some $9.3 billion worth of goods in 18,000 categories that together cover virtually the entire universe of human artifacts--Ferraris, Plymouths and Yugos; desk, floor, wall and ceiling lamps; 11 different varieties of pocket watches; contemporary Barbies, vintage Barbies and replica Barbies. Admittedly, this was only about 4 percent of Wal-Mart's $220 billion in sales last year--but Wal-Mart deploys a worldwide network of warehouses, more than 3,000 stores and 1.3 million workers. EBay got by with no stores, fewer than 3,000 employees and without taking legal or physical possession of so much as an Indian-head penny. (Of course, that also means it doesn't book the $9.3 billion as revenue; revenues from listing fees and advertising last year amounted to $749 million.)

If Wal-Mart is the exemplar of modern, centralized, mass marketing--the last stage of an evolution that began with the 19th-century department store--eBay signals the coming of age of postmodern, decentralized, virtual marketing. It's a step, says global marketing chief Bill Cobb, toward the creation of "the first worldwide economic democracy." And, while almost anything you can buy at a Wal-Mart, except perishable groceries and firearms, can probably be found on eBay, the reverse doesn't hold. EBay members can sell a five-bedroom, triple-turreted Tudor-style castle in Arizona while Wal-Mart's polyester-backed middle managers would still be wondering where to stick the bar code.

It began, legendarily, as a place for Omidyar's girlfriend to trade with fellow collectors of Pez dispensers. (A new history of eBay, "The Perfect Store" by journalist Adam Cohen, calls that the "romantic" version of eBay's founding.) But in retrospect eBay's success was almost overdetermined. It brought to millions the excitement of participating in an auction, previously confined to those who shop for antiques, thoroughbreds and oil leases. In the nature of an auction buyers may get carried away and overpay--a boon to sellers--but those who prevail get to think of themselves as "winners." And Omidyar, out of a combination of conviction and shrewdness, built his business as a "community" of "members" or "users," but never "customers." Members police their own manners and honesty by awarding one another feedback points for successful transactions; almost nowhere else in the world can you garner so much praise for the simple act of putting a check in the mail. And, now that the technological infrastructure has caught up with the explosive growth of the site, it is almost seductively easy to use. The ability to search across 11 million items puts every belt buckle, router or ceiling fan on the site just seconds away.

May 29, 2002--the day the broken DVD player made its appearance on eBay, with an opening bid of $5--was a fairly typical day on eBay's 19 worldwide sites. Just over a million auctions ended, with gross merchandise sales of $26,422,255--ranging from a $53,100 coin collection down to 49 cents for a set of NASCAR matchbooks. For those 24 hours, NEWSWEEK correspondents at eBay's headquarters in San Jose, Calif., and at computers around the country kept watch on the site, monitoring a river of merchandise as it flowed from garages and warehouses around the world to... well, other people's garages.

What we found was that eBay, while struggling to hold onto its founding values of community and its roots among computer buffs and Beanie Baby collectors, is moving closer to mainstream retailing. Ebay managers are still fanatically attentive to the complaints and desires of their members, who in the last week of May were deluging the company with e-mails protesting, or defending, changes it was making to one of its innumerable electronic forms. Meanwhile, however, the whole basis of the business was slowly shifting.

As eBay has evolved under the leadership of CEO Meg Whitman, an experienced corporate manager who took the reins from Omidyar in 1998, a growing share of items are being sold at a fixed price, rather than by auction; those sales accounted for 20 percent of revenues last year, a figure Whitman would like to boost to 33 percent. Collectibles, which amounted to two thirds of the business as recently as January 2000, now are just one third (although of a much larger whole), and cars have grown from almost nothing to one of the largest categories on the site. Large corporations like Motorola, Sears and IBM now sell directly through their own "stores" on eBay's site. "The pie is looking much more like that of a mainstream retailer," says chief financial officer Rajiv Dutta--although looks can be deceptive in this case. EBay disclaims any ambitions to dominate the vast middle ground of everyday retailing, the khakis and compact discs and cosmetics. Instead it concentrates on the two tails of the retail bell curve: unique or hard-to-find items, such as new computer games that can be sold at a premium, and used or outdated or overstocked merchandise that can be discounted. But in a $900 billion retail economy in the United States, even those two tails cover a lot of territory.

Since everything that transpires on eBay is recorded, and most of it is public, the site constitutes a gold mine of data on American tastes and preoccupations. Had we been watching on September 11, we would have seen, "within minutes" of the World Trade Center collapse, people putting up chunks of debris for sale, according to eBay spokesman Henry Gomez. (The company removed the listings as soon as it found them, although it took no comparable action last year when eBay sellers ran from their TV sets to their computers to be the first to list their Dale Earnhardt coffee mugs.) Last winter saw a booming business in Enron paperweights, key chains, polo shirts and tote bags, which has since tailed off, although by the end of May someone still harbored enough outrage to pay $14 for an Enron "Ask Why" mouse pad. Beanie Babies and Furbies continued their descent into collectible purgatory, from which they can be redeemed only by nostalgia, while buyers bid up bobblehead dolls, which "exploded out of nowhere" last year. This is what the Internet was invented for, the seamless meshing of demand with supply across infinite distance. Somewhere in those terabytes of data we hoped to answer what could someday be a trillion-dollar question: what makes America click?

One pair of used ballet shoes, 6XXX, for $11.50. Secondhand clothing has a somewhat disreputable history on eBay. Until the company banned the practice, there was a thriving trade in women's used underwear, which would sell for as much as $30 a pair. Used ballet shoes could also carry the kind of value-added that eBay frowns upon, but this pair had an impeccable provenance. Jeanene Russell, 28, who recently gave up dancing to become a choreographer with the North Carolina Dance Theater, has been emptying her attic of the new and used shoes she bought, cheap, as a student with the Bolshoi Ballet in Moscow. Listing them at first for a dollar, she was delighted when one pair was bid as high as $32. The pair she sold on May 29 were bought by a young woman in Bellevue, Wash., who no longer dances, but wanted them for a Halloween costume party.

Kitchen sink, new, $50. Stan Searing, 43, of San Jose, describes himself as a "consummate collector," although his tastes run to used amplifiers, power supplies and motor controls, which pile up in his garage until his wife threatens to throw them into the pool. Then, he says, "I go out there and start picking things out" to post on eBay. The flaw in this system is that even in the act of disposal he is irresistibly attracted to eBay's fabulous bounty of electronic gear, so he imposes on himself the dubious discipline of buying only stuff that's smaller than what he's trying to get rid of.

The sink was being thrown away by a friend, and Searing decided he could sell it on eBay instead. He was right; in fact, he sold it twice, the first time for $140 to someone who promptly sent it back because of black specks in the finish. Searing checked with the manufacturer, who informed him that it was normal to have black specks in the finish, but he gave the buyer his money back anyway; otherwise he risked every eBay user's nightmare, negative feedback. Searing put the sink up for sale again, this time with a warning about the spots, and resold it for $50. This was a lot of trouble for $50, he admits, but once he got started on the project, he wanted to finish, and besides otherwise the sink could have wound up in a landfill, and also, there's a lot of stuff on eBay you can buy with that $50.

Of course, ever since there have been garages people have been stuffing them with junk that didn't fit in their living rooms. But some psychologists think eBay's particular format lends itself to an obsessiveness that borders on the unhealthy. The excitement of auctions can captivate people far out of proportion to their real need or desire for, say, 90 hours of "Knight Rider" videotapes (which on May 29 attracted 13 bids as high as $126.53). And the object involved needn't even have the emotional resonance of early David Hasselhoff shows. Kimberly S. Young of the Center for Online Addiction in Bradford, Pa., once treated a man who spent his entire retirement fund of $300,000 bidding on nothing more evocative than lawn equipment and stereos. "We get a lot of eBay addicts," she says.

300-Thread-Count Pure Egyptian Cotton Queen-Size Sheet Set, listed for $159. The sellers were Suzanne Ziesche and Shannon Miller, roommates and business partners in Newport Beach, Calif., who discovered last year that among all the books, computers, wine and airplane tickets for sale on eBay, luxury linens had somehow been left off. So, after a brief excursion into leather-bound portfolios (they bought 80 from a wholesaler and still have 50 left), they found a source for imported bedsheets and began offering them at steep discounts and with hundreds of dollars' worth of lush adjectives (incredible silky softness and sheen) free with every order. In January, after several months of 12- and 14-hour days, they reached eBay's "silver power seller" level, meaning they averaged more than $10,000 in sales a month. "We would never have known how to get into this niche without eBay," says Miller. The four-piece set of sheets sold on May 30 for the "buy it now" price of $159--a relatively new feature that allows a buyer to make a pre-emptive order and avoid the last-minute anxiety of waiting for the auction to close.

Miller and Ziesche thereby joined a cadre of businesses--as many as 200,000--that exist entirely on eBay. They coexist with eBay merchants who are extensions of a brick-and-mortar business, like the Raynham, Mass.-based firm 3Balls, which began as an adjunct to a pro shop at a nine-hole golf course, and now has 20 employees managing a vast trade in used golf equipment; on May 29 alone they sold $24,797 worth of gear. Other entrepreneurs have colonized even more exiguous economic niches, such as clipping and reselling grocery coupons; the same day, someone was offering a bundle of 20 coupons, each worth $1 off two bags of Lender's bagels. After a notably desultory contest they were sold for $1.76 to someone who outbid the only other interested party by a penny. But even traditional businesses have been transformed by eBay's unique capabilities. If you have a stamp store, your customers basically are stamp collectors. But if you list your stamps on eBay, you are selling to an entire universe of collectors who may not know, or even care, what a stamp should cost, because their interest is actually in Lindbergh or Elvis or the Erie Canal. "They type in whatever they collect in the search engine," says Bob Miller, who began dealing in stamps and old postcards on eBay in 1997, "and up pops one of my listings, and they just have to have it." This is exactly the kind of creative ferment that eBay's executives believe will change the world eventually. "I see our role as managing evolution," says Dutta. "There are millions of entrepreneurs saying, how do I use this to make a buck? Some will succeed, and millions will fail."

Daguerreotype of young Abraham Lincoln. Listed at $11 million. Auction closed with no bids. The owner, a New York man named Albert Kaplan, now thinks it was probably a mistake to try to sell this photograph of a dark-haired man in his early 30s on eBay, where it would have more than doubled the highest price of any previous transaction on the site, a $4.9 million private jet. He bought it in 1977 for $25, and a quarter century of research, backed by opinions from forensic scientists, has convinced Kaplan that it is the earliest known image of the 16th president. But its provenance is uncertain, and other authorities on 19th-century photographs remain to be convinced.

One of the great advantages of eBay's own business model is that it can afford to be agnostic about the authenticity of items such as this. Someone who buys it and later decides it wasn't Lincoln after all would have no recourse against eBay (although if he paid for it and it was never delivered he might be eligible for a reimbursement from the company of up to $200, leaving him $10,999,800 out of pocket). But intentional fraud by sellers, while not an issue in this case, is always a concern for eBay. There was a lot of negative publicity last year when someone bid $135,000 for what turned out to be a fraudulent Richard Diebenkorn painting. And it is a direct assault on the company's guiding philosophy, inherited directly from Omidyar, that people are basically good.

Controlling fraud by sellers (and, sometimes, buyers) is in the hands of security chief Rob Chestnut. On May 29, Chestnut's staff of about a dozen was deploying new software to detect frauds, which he pegs at "less than 0.01 percent of all listings." The best defense, eBay officials maintain, is the vigilance of the community, enforced through the feedback system. But con artists know this, too, and they have taken to "hijacking" the accounts of eBay members in good standing. That apparently happened to a young Wisconsin mother who had used her eBay account to sell off a few baby clothes, but on May 29 was horrified to discover that she was listed as the seller of an Apple Powerbook computer at $2,500. She managed, although narrowly, to stop the buyer from sending off a wire transfer to an account in Canada. Chestnut's other responsibility is to police the site for banned items. On May 29, his aides took down a bootleg Barry Manilow video and a fake Rolex, several items with swastikas on them, a live parrot and a shell from an endangered tortoise, and a number of firearms, which have been banned on eBay since February 1999. But no one stopped the sale of...

Candid Jenna Jameson Porn Star Big Boobs DVD, $12.50. We don't know much about the person who won this auction, except that around the same time he paid $7.95 for an Abgymnic abdominal-trainer belt. He had a dream, clearly, and his merged with a million others, carried back and forth across the country and around the world in a torrent of binary digits: all the buyers who saw promise in broken VCRs, fulfillment in Wayne Gretzky autographs, riches in a pound of unsorted Lincoln-head pennies that just might contain the rare 1909S-VDB. You could see Omidyar's vision taking shape, a world in which every single object has, through the miracle of technology, found its way to the person who values it the most. As the young man (we presume) was looking forward to getting to know Jenna Jameson, a 27-year-old woman in Maryland was watching the bidding on a dress she had hoped to wear to her wedding in August. It was a new ivory-colored princess silhouette in size 12, and she had fallen in love with it and bid it up to $355. Unfortunately, she did this without checking the fit, and after tracking down the same model at a store she'd discovered that in wedding-dress sizes, she was something more than a 12. So she was watching the screen in the hopes that someone would come along at the last minute and offer more.

No one did, though. and therein lies the final lesson of a day spent on eBay, that you can almost always find what you're looking for, but it isn't always what you want. No matter how powerful a mainframe you deploy, the algorithm for happiness is a secret no programmer can crack.

In a photo caption in "The eBay Way of Life (June 17), we misspelled Loren Collett's name. We regret the errors.

WITH BRAD STONE IN SAN JOSE, JULIE SCELFO IN NEW YORK, KAREN BRESLAU IN SAN FRANCISCO AND STEVE TUTTLE IN WASHINGTON