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RENEE MONTAGNE, HOST:

Some longtime vendors who sell on the online marketplace Etsy are outraged over new policy changes. They say the site has made a turnaround from its original mission. The one million sellers, made up largely of women, were attracted to Etsy's small business ethos, where items had to meet strict criteria to be called handmade.

Ashley Milne-Tyte reports.

ASHLEY MILNE-TYTE, BYLINE: Under Etsy's new policies, you can now use an outside manufacturer to help make your goods. That is not going down well with some sellers. Rae Padulo is a potter who's been selling bowls and ornaments on Etsy since 2009.

RAE PADULO: Their moniker is, you know, a place to buy handmade. It doesn't say a place to buy factory-made. Which, there's nothing wrong with factory-made, it's just that's not what Etsy started out to be. It started out to be a place where you could get something special, something one of a kind, something made by a human being.

MILNE-TYTE: She feels Etsy is abandoning makers of hand-crafted goods, who, like her, only have one pair of hands. But Etsy CEO Chad Dickerson says the company is still behind lone artisans - they make up most of its sellers. Still, it wants to support those whose businesses are growing - and under the old rules, that was difficult.

CHAD DICKERSON: We found at the point of greatest success for these sellers we're hearing frustration. We heard from a wedding seller, for example, who said that when wedding season came around she was in a state of mild panic attack because she had just reached her limit and was working, you know, 18 hours a day.

MILNE-TYTE: Under the new policy anyone who wants to work with an outside manufacturer has to apply and be vetted by Etsy to make sure the arrangement meets its ethical guidelines.

Alexandra Ferguson started her pillow business on Etsy several years ago working from home. She's since expanded her line.

ALEXANDRA FERGUSON: They're little makeup cases made out of 100 percent organic cotton with the recycled felt letters. We say things like XOXO, Love, Hot - when you're putting your makeup on you're looking hot, man.

MILNE-TYTE: Her business has tripled in the last two years. She now works out of a small factory in Brooklyn with 11 employees. One worker cuts felt letters while others sew.

(SOUNDBITE OF SEWING MACHINE)

MILNE-TYTE: Ferguson says she's proud to be creating manufacturing jobs in New York City.

FERGUSON: That Etsy is now encouraging and embracing that growth to say it doesn't matter how may employees you have - you can have 25, you can have 50, you can have 100 - just means we've now been given free reign to hire as much as we need to sustain our growth.

MILNE-TYTE: It costs vendors 20 cents to list each of their items on the site. Etsy knows not all of them want to grow like Ferguson. And some of its rivals are hovering. Rae Padulo says she's heard from the CEO of a site called Zibbet.

PADULO: He sent an email to every account and said, I made a commitment, we will only sell handmade items on this site, we will never sell manufactured items. It's music to a lot of seller's ears, you know.

MILNE-TYTE: Padulo says she's enjoyed being part of Etsy, but she may close her shop after the holidays. CEO Chad Dickerson says he hates to lose sellers because of the new policy. But in the eight years Etsy's been online. the creative world has changed.

DICKERSON: We have jewelers, for example, on Etsy who are using 3D printing to make parts for their jewelry and those are handmade I think in spirit, even though they're designed on a computer and printed, the parts at least, on a 3D printer.

MILNE-TYTE: He says Etsy sellers can now turn their hands to whatever innovation comes next.

MONTAGNE: For NPR News, I'm Ashley Milne-Tyte in New York.

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