“Selling something should be as easy as taking a picture on your phone,” said Zheng. And, so, he and a few partners have built a start-up — EggCartel — that does just that. The company’s EggDrop marketplace is designed to allow anyone with something to sell to snap a few pictures with their iPhone or Android device and list it for sale.

The other unique tack that EggDrop employs is a “falling price auction.” Those listing items choose a starting price and a floor, with the price dropping over a 72-hour period until an item is either sold or reaches that lower limit.

That, Zheng said, should allow EggDrop to appeal to both bargain-hunting buyers as well as sellers who are more interested in getting rid of unused items than getting every last dollar.

“It eliminates haggling so you don’t have to argue back and forth,” said Zheng, EggDrop’s CEO.

EggCartel, which has raised $1 million in seed funding from BlueRun Ventures and SV Angel, among others, is launching its Web site on Tuesday and already has the iPhone application in Apple’s store. The company hopes to have the EggDrop app for Android available on Wednesday.

The biggest challenge for any marketplace start-up is, of course, gaining enough scale to make the market work. To address that, EggDrop allows users to post their items to Twitter and Facebook, as well as to Craigslist from within their application.

Zheng also said the scale issue, though a challenge, is not as big a hurdle as one might think.

“What you are going to find, surprisingly, is you don’t need millions and millions of users to get to the point where local marketplace is liquid,” he said.

In general, Zheng said people tend to sell a few key categories of stuff — furniture, toys, games, electronics. “They tend to have a more general appeal compared to collectible items you see on eBay,” he said.

EggDrop also isn’t charging listing or transaction fees, though it might someday offer paid-for premium services.

Zheng points to the alpha test that the company did last year with only a couple thousand users. All the items, he said, were sold, including two cars, which surprised even Zheng.

For now, EggDrop is starting small. There are only seven employees, Zheng said, “including the intern.”

Although users from anywhere in the U.S. can sell items, Zheng said the marketing efforts will center around the company’s hometown of San Francisco and perhaps a few other major cities.

It’s just the latest challenge for Zheng, who worked at Google from 2002 until early last year, working on everything from Android, to paid ads, to Google Video, to building operations in China with Kai-Fu Lee.

“Every year and a half I love to work on something different and challenging,” Zheng said.

(Editor’s note: I misspelled Zheng’s last name in the initial version of this story.)

Of course. But has it raised nearly $1 billion?

That’s the number being thrown around today by VCExperts, which claims to have seen documents filed by Groupon with the Secretary of State’s office.

And our sources say that’s the right number, with the company’s valuation placed at $4.75 billion, but that the deal hasn’t firmed up yet, and it doesn’t involve any one major new investor. A Groupon representative declined to comment on the report.

In the meantime, Groupon has the gigantic round it raised eight months ago to lean on. BoomTown’s Kara Swisher reported in April that Groupon raised $135 million at a $1 billion valuation.

The big thing that’s likely changed since then is the company’s run-rate, now at $2 billion annually (up from the previously reported $500 million).

The group-buying site, which offers consumers discounts of 50 to 70 percent on things like trips to spas and restaurants, already has a plethora of investors.

It has raised money from the same Russian investors that backed social networking powerhouse Facebook and game phenom Zynga, as well as from Digital Sky Technologies and Battery Ventures. In December, Groupon nabbed $30 million in its second round of funding, led by Accel Partners.

The money in April was being set aside for growing the business and getting ahead of its numerous rivals.

One investment source that has since dried up is Amazon, which decided to back Groupon’s nearest rival, LivingSocial, with $175 million. Kleiner Perkins has been named as a potential candidate, but it would also be nice to see a deep-pocket media company step in.

Newspapers, specifically, have been hard hit by a shift in local advertising and classifieds. A Groupon partnership could make it less appalling that they’ve missed yet another trend.

The company, which launched in April 2005, originally set out to aggregate classified ads from various media outlets to list on its own site, but Craig Donato, founder and CEO of Oodle, said Facebook has now become bigger and is generating 80 percent of its traffic.

Just like with newspaper classifieds or listings on Craigslist, users can post items they want to sell or buy on Oodle or the Facebook Marketplace. Many Facebook users may recognize it from the weekly email the service sends out detailing what items are for sale in their extended friend groups.

Donato said Facebook has become the ideal intermediary to make connections for selling vs. Craiglist, which has gained a reputation for sketchy, or just flaky, behavior among its anonymous users.

“It’s people not showing up, or they show up and say they’ll give you half price. But once we start to introduce an identity, and show how you are connected through mutual friends, or the same college, it introduces social norms. It’s people acting like real people.”

In this scenario, Donato thinks it could even encourage people to recycle items–as opposed to making a profit off them.

Oodle commissioned a survey, which was conducted by Harris Interactive, that found 69 that percent of U.S. adults said they’d rather give away or share unneeded items with friends or acquaintances rather then sell them. In the new format, users can share a “want ad” that’s visible to friends.

To that end, Oodle is mostly scrapping its original business in favor of increasing its relationship with the social network.

It will no longer seek new deals with media outlets, and will push users on Oodle.com to sign up using Facebook Connect. It’s also redesigning the way the listings look, and changing the way emails are designed.

Is it too much reliance on Facebook?

Donato doesn’t think so: “It is the social fabric of the Internet. Facebook has established a social layer and we want to fully embrace it.”

Ms. Norrington, who runs eBay’s marketplace business–which accounts for more than half of its revenue–decided to leave for “personal family reasons,” the company said.

People familiar with Ms. Norrington’s decision said it was driven by concerns for the health of a family member.
The 50-year-old executive will remain at eBay through March, with Chief Executive John Donahoe heading the marketplaces division until Ms. Norrington’s successor is named.

EBay (EBAY) declined to make Ms. Norrington available for comment. In a statement, Mr. Donahoe said, “Lorrie has led eBay Marketplaces through significant fundamental change as we drive a multiyear turnaround strategy to enhance the shopping experience for buyers and sellers.” The marketplace business includes eBay’s auction and fixed-price listings, as well as a classifieds site and the StubHub ticket exchange.

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In testimony, Craigslist’s external lawyer, Elizabeth McDougall, a partner at Perkins Coie in Seattle, and William Powell, Craigslist’s director of customer- service and law-enforcement relations, offered the San Francisco company’s first comments on its Sept. 3 move to shutter the adult-services section and replace it with a banner reading “censored.”

Craigslist has no plans to reopen its adult-services category in the U.S., and the company is now employing technical and manual review measures to keep illegal sex ads from migrating to other parts of its site. Mr. Powell said sex ads are moving from Craigslist to other sites, including Village Voice Media’s Backpage.com.

He said no other site had adopted its best practices, which included creating special victim search interfaces for law enforcement and manually reviewing every adult-service ad.

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Last year, when executives from Cablevision (CVC) announced plans to turn their  paper’s Web site into a pay-to-play proposition, I dreamed up a way it could work: Maybe Long Island residents who wanted to peruse the paper’s classifieds would pay up. Nope.

Since the wall went up three months ago, only 35 people–as in not quite three dozen–have paid the $5-a-week fee for Web access, the New York Observer reports.

The Observer’s John Koblin quotes a Cablevision PR person who says that the “modest” pickup isn’t a surprise, but that’s some very unconvincing spin. Putting up a pay wall isn’t cheap or easy: Why bother if it only generates an extra $9,000?

Here’s the full statement from Cablevision/Newsday:

Millions of Cablevision customers in the New York tri-state area and 75% of Long Island households, including all Newsday home delivery subscribers, now have exclusive access to newsday.com at no additional charge. Internal research shows that Newsday’s Web site is an extremely popular new benefit to hundreds of thousands of Long Island Cablevision households. Given the number of households in our market that have access to Newsday’s Web site as a result of other subscriptions, it is no surprise that a relatively modest number have chosen the pay option.

As PaidContent notes, Cablevision can also argue that the real idea behind the pay wall is that it’s supposed to make existing subscribers feel like they’re getting something of real value (advertisers too, supposedly). But it’s hard to argue that online access is a “value-add” if only 35 people value it.

It’s also hard to argue that Cablevision’s problems offer any clue about the prospects of the New York Times’s (NYT) coming pay wall. Because the Times is a different beast from any other paper in the country.

I would be interested, though, in learning how the Minneapolis-based Star Tribune did with “Access Vikings Premium,” a $20-a-year pay wall it put up around most stories about the home team last season.

I could see the thinking behind this one, which showed up around the same time Brett Favre joined the team. And this was the year to try it, since the Vikings had a great season until they blew the NFC Conference game, as is their wont.

But in my personal one-man focus group, the pay wall only served to keep me from visiting StarTribune.com at all. I see now that the paper seems to have dropped the wall around content it used to ask me to pay for, so perhaps I wasn’t the only one. I’ve asked the paper for more details.

UPDATE: Strib spokesman Ben Taylor gives me a no comment, which apparently has been the paper’s stance on this for many months. MinnPost’s David Brauer explains, while noting that three of the paper’s biggest traffic days have been spurred by Vikings news.

Ms. Whitman, who served as eBay’s CEO from 1998 until 2008 and is now running for governor of California, added that eBay originally had hoped to purchase all of Craigslist; however, she learned it would be impossible to gain a controlling interest without purchasing stock from Craigslist owners Craig Newmark and Jim Buckmaster.

The comments came on the first day of a trial between eBay and Craigslist, which are fighting about the size of the e-commerce giant’s minority stake in Craigslist, the online classified Web site.

During testimony and cross-examination, Ms. Whitman faced questions related to confidential information eBay received as an investor in Craigslist and how eBay conducted itself while establishing its international classified businesses.

EBay, based in San Jose, Calif., bought a minority stake in Craigslist in 2004 for $32 million, paying half for the shares of Phillip Knowlton, a Craigslist co-owner with Messrs. Newmark and Buckmaster, and half to Craigslist for additional shareholder rights, which included a seat on Craigslist’s board.

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Surprise! They’re not that awful, at least by the diminished standards of the newspaper industry:

Excluding one-time charges, the publisher earned 16 cents per share on revenue of $570 million. Analysts expected the Times (NYT) to lose a penny per share on revenue of $561 million.

Ad revenue declined 26.9 percent, which is unpleasant but better than the previous quarter, when it dropped 30.2 percent. Internet revenue dropped by 7.2 percent and Internet ad revenue was down 8.2 percent. Both of those results are improvements over the previous quarter as well: Last quarter, Internet revenue was down 14.3 percent and Internet ad revenue was down 15.5 percent.

Some cautious optimism from CEO Janet Robinson:

Looking ahead, visibility remains limited for advertising in the fourth quarter. But as is the case across the media sector, we have seen encouraging signs of improvement in the overall economy and in discussions with our advertisers. Early in the fourth quarter, print advertising trends, in comparison to the third quarter, have improved modestly, while digital advertising trends are improving more significantly.

A little more color on digital: The big improvement this quarter was driven by a turnaround at the Times’s About.com content mill: Revenue was up 7.2 percent, way up from the 5.1 percent decline posted in the previous quarter. This makes sense, given that About is driven by pay-per-click ads and these have come back across the industry, led by Google (GOOG).

But the story is less impressive at the Times’s traditional Web sites. Ad revenue there was down 18.5 percent, which is better than the 21.6 percent drop the previous quarter, but nothing to write home about. As it has done in previous quarters, the publisher blames the decline on a drop in online classifieds, and I assume that much of the drop stems from vaporized employment ads. If this is the case, it’s going to be hard to move those numbers significantly for quite some time.

On May 5, the Palmetto State’s Attorney General Henry McMaster threatened to prosecute executives from the online classifieds site, if ads on the site play a role in a prostitution case in South Carolina.

Then last week, Craigslist announced steps to introduce a new review system for every single adult services listing on the site. It did this after consulting with the attorneys general from several states, who complained the site had become a preferred way for prostitutes to advertise their services.

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For eBay, whose shares have plummeted some 43 percent in the last year, the moves are further efforts to prop itself after the declining performance of its core marketplace division.