E-commerce sites are now adding video, as the infomercial enters the age of YouTube. What amuses us about this trend is that it was an early business model, since abandoned, that YouTube founders Chad Hurley and Steve Chen entertained for their online-video startup. Having previously worked for eBay, Hurley and Chen briefly conceived of YouTube as a tool for embedding videos in online auctions. It's gone from far-out idea to standard practice in the cottage industry for selling-on-eBay tips.

Add another layer of losers to Apple's iPhone price reduction announcement — the hordes of eBay resellers trying to profit from the no longer quite so divine Jesusphone. [eBay]

A fascinating tidbit buried in a story about Atlanta mayor Shirley Franklin's allegations of child prostitution on Craigslist: Susan MacTavish Best, Craigslist spokeswoman and girlfriend of CEO Jim Buckmaster, claims that Craig Newmark "is no longer involved in the company's daily affairs," according to the Atlanta Journal-Constitution. And indeed, Newmark, the company's founder, though he was listed on the Craigslist management page a week ago, no longer appears there. Newmark has certainly made enough money, thanks to a 2004 stock purchase by eBay, to retire on. And his "team bio," still online, notes that he's "embarrassed" that the site is named after him. But for the geeks who still idolize him, the idea of a Craigslist without Craig would be hard to bear. Update: We heard from Newmark. His comments, after the jump.

Skype has finally resolved the "outage" that the eBay-owned Internet telephony service experiences last week. The explanation provided: It's all Microsoft's fault. The software company has a regular schedule for downloading updates to its Windows operating system. Skype engineers claim that a large number of reboots following Microsoft's "Patch Tuesday" disrupted its network. Microsoft makes for a convenient scapegoat — especially considering the fact that it offers a competing VOIP service, Windows Live Messenger — but this excuse doesn't hold water.

After an outage that's starting on its second day, Skype, the eBay-owned Internet calling service, continues to reassure its users through its Heartbeat status blog that, although significant login problems persist, Skype's programmers are making progress and that many Asian and European users are now able to use, once again, their computers as telephones. However, the periodic updates do little to clarify the situation.

Overheard at Ritual Roasters in San Francisco, a den of coders and bloggers: "eBay seems so easy to hack. It's a cesspool for pirates."

Amazon.com has, as expected, revealed the details of its new payment service in a lengthy, meandering blog post. Don't bother reading it: The geeks in Seattle take forever to get to the very sharp point. The short version? Jeff Bezos is planning to plunge a long knife right into the heart of eBay CEO Meg Whitman's most important growth business, PayPal. Here's the secret of how the eBay-owned payments service mints money — and how Amazon.com's founder is crafting a boldly savage plan to gut it.

Odds are you've never heard of Chris Downie, or SparkPeople, the diet site he founded in 2001 after leaving eBay. But buyers seem to be interested. We hear that Downie has a $75 million offer on the table. The site has 2 million unique visitors, according to Alarm:clock, making it the third most popular diet website after WeightWatchers.com and Nutrisystem.com, and is expected to break even this year. Seems like a fat price for such slim profits, but diet advertisements are a lucrative staple of the Web.

Sarah Meyers, Valleywag's new videographer, attended Facebook's Lunch 2.0 happy hour and asked Facebookers and other developers what the buzz was all about. She cut through the hype to get the real answer on why Facebook's so hot — the long-rumored IPO, of course.

Everything you know about Craig Newmark is wrong. The tale that Craigslist's founder and CEO Jim Buckmaster like to tell about how eBay got a stake in their company goes like this: Newmark, the clueless business naif, issued shares to an employee, never thinking they'd be cashed in. That employee turned around and sold the shares right under Newmark's nose to rapacious auctions giant eBay back in 2004. It's a good story. But it's nothing like the truth, according to sources close to the transaction. And the truth? That Newmark and Buckmaster, who love to portray themselves as unpretentious types who care nothing for money, can be bought. For a mere $16 million.

Former Vice President Al Gore has solidified his status as a "Valley Guy" by marrying off his daughter to a Sand Hill-financed entrepreneur. Gore's youngest daughter Sarah, a medical student at UCSF, was married July 14th to Bill Lee, founder of Benchmark-backed RemarQ, a messageboard company sold to Critical Path in 2000. The two met at an event for her father's film An Inconvenient Truth, hosted by former eBay president Jeff Skoll, an executive producer of the film. Skoll, eBay's second full-time employee, also served as best man at the nuptials. It's been reported that Donald Trump and Bill and Hillary Clinton were present, but we haven't spied any notable Valley names on the guest list, yet. Know of any? Fill us in.

Two Reddit founders are auctioning the Apple PowerBooks on which they programmed the social-news website. All proceeds are going to charity. [eBay]

In yesterday's earnings call, eBay CEO Meg Whitman's comments on her company's relationship with Google sound like every codependent couple we know: They'll last forever, sparring all the while, or end disastrously. In the meantime, each partner will use every opportunity to chew your ear off about the other partner, hoping to gain leverage over the other in their petty, public battles. And if things get ugly? They'll just pretend they don't even exist:

Why does eBay subsidiary Skype have a Swedish military transport in its Estonian development center? Could it be preparing to take the fight for VOIP customers against new competitors like Ooma to a new battlefield? Read more.

Here's what's new on the Valleywag Calendar:

The brain drain at eBay continues, ChannelAdvisor's Scot Wingo speculates. The plugged-in CEO of the Raleigh-area e-commerce company, a close partner to eBay, has heard that eBay executive Lorrie Norrington is jumping ship. Her rumored destination? Yahoo. Norrington, who currently runs eBay's international marketplaces, is a brilliant careerist: Having leapt from GE to Intuit to eBay, Yahoo would be her fourth employer in less than six years. If Norrington is really going to Yahoo, then perhaps that speaks well, for a change, for that company's prospects. But her departure would leave yet another hole in eBay's management team, since Bill Cobb, her U.S. counterpart, is out on sabbatical. Update: An eBay contact tells Wingo its "categorically not true." But sources at Yahoo strongly believe talks are underway with Norrington. Anyone know more?

The latest culprit: eBay, whose new classified service spells trouble for traditional newspapers. [MediaPost]

We've dissected Time's list of the five worst websites. Now it's your turn to tweak their poll for the best ones to your satisfaction. (Time.com is still using the same weakly protected polling system as the heavily gamed People Who Matter Now poll from Business 2.0.) The kids from Y Combinator, entrepreneur Paul Graham's startup camp, have already admitted to artificially beefing up the votes for Weebly, a Y Combinator-backed startup — but why let them have all the fun? Here are Valleywag's picks on whose ballots to stuff.

Poor, deluded Meg Whitman. The eBay CEO is so out of touch with her customers' discontent that she brags to Bloomberg News about this fact: Less than half of the users of PayPal, eBay's online-checkout service, think it's "good." Granted, Google Checkout, the search engine's rival payment product, comes off less well. But Whitman should be distraught, not gleeful, at such low customer-satisfaction scores.

Kijiji, eBay's online classified service, has landed in the United States with a resounding thud. To see why, just visit the site and compare it to Craigslist. Kijiji shows would-be users a punishingly slow, Flash-animated map of the U.S.; Craigslist, by contrast, loads an imageless list of cities in less than a second. The result is plain to see in the number of listings each site has attracted; Kijiji's take of the U.S. classifieds market, so far, is microscopic. eBay spokesman Hani Durzy brags to News.com about how much the auction site has supposedly learned from Craigslist, in which it took a 25 percent stake three years ago. What do they say about leading a horse to water?