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updated 9/23/2004 9:06:13 PM ET 2004-09-24T01:06:13

EBay Inc. announced Thursday that it will keep its Half.com subsidiary open indefinitely, scrapping previous plans to shutter the e-commerce site in mid-October.

EBay spokesman Hani Durzy said executives decided to keep Half.com open because it still generates revenue and brings customers to eBay. EBay does not break out traffic or revenue data specific to Half.com, but Durzy said that nearly half of all eBay transactions for books, music, video and games come from Half.com sellers.

"Half.com has continued to grow more than we anticipated," Durzy said. "Our first priority being to the marketplace, we recognized that frankly the best thing to do was to keep both platforms open."

The San Jose-based online auction company purchased Half.com in a June 2000 stock swap. Some of Half.com's 65 employees in suburban Philadelphia may relocate to eBay's San Jose headquarters by the end of the year, or they will be eligible for severance packages.

Founded in October 1999, Half.com sells previously owned products such as books, DVDs and board games for at least half the retail price. The Plymouth Meeting, Penn.-based subsidiary is best known for a wacky marketing ploy launched near the peak of the dot-com bubble in May 2000, when the company said it would donate funds to a city that named itself in its honor.

Halfway, a small town in Oregon, changed its name to Half.com to promote that online retailer of books, CDs and movies in exchange for 20 computers for its elementary school and money to spur economic development. Despite complaints from many residents who thought it to be a silly marketing gimmick, the city erected a sign that said, "Welcome to Half.com Oregon, America's first dot-com city."

Half.com is also the subject of a festering lawsuit.

Earlier this year, jurors ruled that the eBay division violated patents filed by Thomas G. Woolston, an entrepreneur who founded an e-commerce company called MercExchange in Great Falls, Va. In May, a federal jury awarded Woolston $35 million, and patent experts said the ruling could force eBay to close Half.com. EBay appealed, and the case is still in the courts.

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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