When he was a boy, John Jacobs followed his parents to one craft, gem or mineral show after another. "I grew up traveling," he recalls. "There was a show every weekend. I had to do some home schooling."

These days, Jacobs doesn't have to travel unless he chooses to do so. He is the one running the marketplace at Artfire, a Tucson, Arizona-based website whose members specialize in selling gems, jewelry, and other handicrafts. And his mother no longer has to travel either; she sells instructional DVDs that show how to create beads and other crafts online through Artfire.

"What we are creating is an alternative for people to having to construct their own artisan Web sites," says Jacobs.

Jacobs sold millions of dollars worth of merchandise on eBay through User IDs such as Foxy Findings. The moment you speak to him, it quickly becomes clear why he wanted to start his own marketplace. "We paid millions of dollars to eBay in fees." His big objection: eBay's insertion charges. "Even paying them a million in fees per year would still have made sense from a business standpoint. There was no reason why they had to charge those (listing) fees." Today, Artfire members pay no listing or final value fees; the only fee is a premium membership package that costs $12 per month.

Jacobs first got started selling on eBay when, on one of his trips to sell at craft shows, he encountered representatives from the site who were encouraging them to sell online. At one time his company was the largest supplier of beads on eBay. But when more and more crafts began to appear at cut-rate prices from countries such as China, business began to suffer, he says, and craft suppliers began to move to sites like Etsy.

Artfire was launched in 2008 and is a small operation, with less than 15 employees. Jacobs and co-founder Tony Ford, the site's Chief Operating Officer, have avoided seeking venture capital. "Our overhead is low, and we are in the black on our books," says Jacobs. "We were profitable six months in."

Using social networks for advertising also keeps costs down: Jacobs answers emails on his BlackBerry as quickly as possible, and regularly posts on Facebook, Twitter, MySpace, LinkedIn, and Plurk. Community Directed Development is the guiding principle of the site: members control what functions and features are on the site, which is only in keeping with their nature as creative people. Members choose between a free Basic account, which enables them to list 12 items at a time (though this may change to unlimited free listings in the near future), and a Verified account for $12 per month.

Both packages allow members to host sites on the marketplace and to have a custom URL. Both give members a RapidCart utility that lets them list and sell their Artfire merchandise on their blogs. The Verified account adds features such as the ability to post up to 10 photos for each product, and a Facebook Kiosk that lets Facebook users advertise and sell their Artfire products on their fan page (link).

The absence of listing or commission fees and the effort to keep costs low have paid off handsomely. Ford boasts that in its first year - a year when a worldwide economic depression started - the site generated more than $1 million in sales. The site just added a bulk-listing tool that lets sellers import their items for sale from Etsy. Artfire plans to grow in 2010 to include a content delivery network that will include the ability for sellers to display their wares with rich media.

"We have bootstrapped Artfire to this point. That changes our perspective," explains Jacobs, who is committed to keeping fees down. "We don't have to hit certain profit marks. I know the challenges a seller has to go through."