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How Craigslist Costs Newspapers Money

Posted by ryuzaki0 on from the surfeit-of-buggywhips dept.

Allnighterking writes "Well you knew it would happen, Now that eBay has purchased 25% of craigslist, the news is out and suddenly newspapers are claiming that it's costing them money (50-65 million U.S. dollars a year). The original Slashdot coverage is here."

34 of 480 comments (clear)

  1. Irony is more than proper clothes care by BrynM · · Score: 5, Insightful
    Anyone else find it ironic that this is being reported by Internet Week - an online magazine that has no print version? Maybe it's time the papers realize that re-printing their content online and requiring everything down to maternal shoe size for access is not a great business model. If some large paper, say in a big city like... um... New York had beaten Craigs to the punch or tried to compete in a similar manner instead of being stagnant in a dynamic medium, this wouldn't be a problem. I guess the old way didn't translate very well into a new medium.

    Oh.. and Go Josh! Woohoo! Congrats!

    --
    US Democracy:The best person for the job (among These pre-selected choices...)
    1. Re:Irony is more than proper clothes care by Quixote · · Score: 4, Informative

      Internetweek used to be a print paper, before the costs (and low subscription numbers) forced them to ditch the dead-tree version.

  2. Re:craigslist? by pdxmac · · Score: 4, Informative

    Fair enough. Not much info in the summary. One could read the article(s), of course. Or, one could, on a whim, type www.craigslist.com and see what pops up...

    If you're too lazy for that:
    Massive online classified ads/community website. Organized based on metropolitan region. Most postings are free. Help Wanted postings in (I think) SF, LA, and NY are the only ones that cost money.

  3. and in other news... by tupshin · · Score: 4, Insightful

    A recent study shows that craigslist has directly saved consumers 50-65 million dollars in advertising costs, and many more 10s of millions of dollars indirectly by enabling direct human-to-human transactions with a minimal effort.

    Hmm...this Internet thing seems to be a disruptive technology...whoda thunk it.

    1. Re:and in other news... by SYFer · · Score: 4, Interesting

      It is indeed a disruptive technology. Craig's has really turned the corner here in SF. I can honestly say that virtually everyone here knows of it (even non-internet demographic types) and it is the first thing mentioned in casual conversation (i.e., "why don't you put it on Craig's" instead of "why don't you run an ad"). The culture here has truly changed.

      It's not complete however, papers still get that new-car dealer business and all the entertainment and retail display advertising--the stuff that ambushes you. The Craig's model only really works for used goods, jobs and personals--the things people look for specifically.

      There will always be a place for ads that ride on the coattails of good content and papers still do this effectively. And you just can't read "the paper" on BART online as easily as you can read it analog style. In fact, I think the newspaper model may even prove more resilient than the TV 30-second spot which is seriously threatened by DVRs and is going through spasms already.

      --
      "...all the labours of the ages, all the devotion, all the inspiration, all the noonday brightness..." yada yada
  4. So what? by drdanny_orig · · Score: 4, Insightful

    This is kinda "dog bites man" ain't it?

    --
    .nosig
  5. ebay... beh by RealBeanDip · · Score: 5, Funny

    "now that eBay has purchased 25% of craigslist"

    Must of got caught up in the heat of the auction, I heard they only wanted 20%.

    --

    You know you're a geek if you've ever replied to a tagline.

    1. Re:ebay... beh by Subm · · Score: 4, Funny

      First it was 1/5.

      Then it was 1/4.

      Then it was 1/37.

      Now it's down to 1/56,000.

      Check again in 2029.

  6. This is getting old... by confusion · · Score: 5, Insightful
    Yet another example of fundamental changes happening to some market segment, and the displaced groups crying. How many times have we seen this?

    I can't wait for the NPIA (news paper industry association - there has to be one, right?) to start kicking in doors with the FBI trying to quash the rouge, free exchange of want-ads.

    Jerry
    http://www.syslog.org/

  7. Re:Well that's too bad.... by fm6 · · Score: 4, Interesting

    I think what really pisses off the newspapers is that Craigslist doesn't even charge for most of its services. They originally didn't charge for any ("we're not a commercial operation!") but finally conceded that they needed some cash flow, and started charging San Francisco area employers for job listings. (Job listings in other areas are still free.) Obviously eBay grabbed that stake in them with the hopes of getting them to realize more of their cash potential. But unless they can find another former employee to buy out, that's not gonna happen.

  8. Cost the Newspapers? by nathanh · · Score: 5, Insightful

    What a bizarre way of looking at it. IMO a better way to look at it is "newspapers no longer extorting $65 million per year from local residents". Or "$65 million once wasted on newspaper classifieds now available for health, education, other productive uses".

    Rather than Craigslist costing newspapers $65 million per year, I think the newspapers have been costing the local residents $65 million per year. Hooray for Craigslist. Boo to the newspapers.

    1. Re:Cost the Newspapers? by ComputerSlicer23 · · Score: 5, Interesting
      First off, let me say this:

      You are correct mostly. Your usage of the word "extorting" is over the top, other then that, I'll mostly concede. No one extorted the money from the people. They willing showed up to participate because they felt it was a good value to them. There we no threats on behalf of the paper to publish a persons secrets if they failed to buy enough classified add space. That would be something that starts to close in on extortion by the paper.

      However, the newspaper is looking at it correctly from their perspective also. I believe this some what analogous to "opportunity cost" in economics. "Opportunity Cost" in economics is roughly, "I did this instead of that". Think of it this way: In 1965 I invested $2K in a Ford Mustang, instead of investing it in Berkshire Hathaway stock. The Ford Mustang probably has a street value of $50K as a collectible (you should discuss the maintience and storage costs at which point a Mustang is probably a big loss, especially once inflation is accounted for). My guess is that Berkshire Hathaway stock would be worth $~10M. So purchasing the Ford Mustang cost you $(~10M - $50K). If you feel that owning the Ford Mustang over the years had more value to you then having the ~10M dollars in assests today, then purchasing the '65 Mustang was smart. If not, then purchasing the Mustang was a bad investment relative to the Berkshire stock. One important not is their is an opportunity cost either way: one is "I didn't own a really cool car for the last 39 years", the other is "I don't have a 10M assest", the trick is figuring out which one is more valueable to you. Normally, your opportunity cost will involve some type of risk.

      You use opportunity cost, and marginal cost (marginal cost is essentially: what is the difference between making Y widgets and Y + 1 widgets) analysis when attempting to come up with the optimal allocation of capital to earn the largest profit. Somewhere along the way, you should include risk in there, but I'm already explaining way too much basic economics in this post. (You use marginal cost to at some point decide when you'd just take $2K to buy the Mustang even if it costs you $10M in assests in 40 years, if I had $200K to invest in 1965, I wouldn't be too upset if I made billions and had a cool car instead of having slightly more billions and walking).

      So in that context Craigslist has an opportunity cost on the order of ~65M to various newspapers (it would have been profitable for them to do something that costs less then ~65M to get the business they lost to Craigslist). However, in this case, I'm guessing that the opportunity cost, the marginal cost and the risk probably dictate that the economically smart thing to do was take the ~65M "loss". It would have cost too much money, and tied up too much capital to earn the ~65M in revenue.

      This is similar in concept to the advertising agency I read about once. They cut in half their customer base, and doubled their profits (they used to have $30M in revenue, and made $1.5M in profit, they "fired" half of their customers and brought in $12M in revenue, and made $2.5M in profit). Essentially, some revenue "costs" more then others to earn (in this case the marginal benefit of bringing on the additional $18M in revenue, cost the $1M in profit. Ouch!). This is an example of the type of thinking you have to do from an economic perspective to maximize profitability.

      I'm not saying the newspaper should make it show up on their P and L, but I am saying, it is the proper frame of reference when discussing what to do about it. If they have a plan that costs ~1M and would get them back ~5M of that, they should consider it (however, if they have an alternative plan for ~1M that would earn them ~7M, they should do that, as not doing it has an opportunity cost of ~2M). If it would cost them ~50M to get ~30M of that revenue back, they shouldn't do it. It's all about revenue, and how much capital it took to generate that revenue (more commonly known as the profit margin). It was probably wrong to call it a loss, but you can't expect the average 8th grader to understand the headline a more accurate headline.

      Kirby

  9. Bah by 44BSD · · Score: 5, Funny

    Any paper seriously threatened by Craigslist would have gone out of business thanks to the invention of toilet paper.

  10. Good - the print media moguls need competition by waterwheel · · Score: 5, Informative

    This is all good news. It costs me like $400+ to put a tiny job classifieds ad in the local daily paper. What a ripoff - more than many small shops can afford. Craigslist is what - $75? It's called competition, and the print papers need a healthy dose of it.

    The other other reason Craiglist does well is they produce results. I've used other online services to source out staff and contractors and gotten nothing but garbage. The two postings I've put on Craigslist in the past month have netted me numerous qualifed and experienced candidates.

    --
    Life Insurance in Canada
  11. this always happens by Anonymous Coward · · Score: 5, Interesting

    The Internet pure play always beats the hybrid bricks + e-business because it has a clear strategy. The newspapers can't figure out how to continue to make money on their print editions if they give away the store online, so the on-line content and classifieds are almost never as complete, attractive, or interactive as they could be.

    The WP had the right idea, by buying an existing Internet brand (Slate). I think the newspapers are better off buying into fledgeling Internet content sites than trying to start their own. And they need to provide at least nationwide coverage for classified ads.

  12. Check out the comics... by __aaclcg7560 · · Score: 5, Funny

    No wonder the newspapers are losing money... have you seen how small the comic stripe panels are? Sheesh...

  13. Hm... by kaitou · · Score: 5, Insightful

    Thats rather sad really. They are claiming lost profit as if it is the fault of craiglist, not just them loosing out in competition.

    When have you seen "LA Times blames NY Times for a 30 Million dollar revenue loss"? It makes no sense. It's a (mostly) free market, and Craigslist is in competition with the papers for it. Their model works better, so they get the traffic, and the newspapers dont.

    They really have no place to whine here at all.

  14. Next, How Movies cost Vaudeville Money by istartedi · · Score: 4, Funny

    Next, How Movies cost Vaudeville Money. 'nuff said.

    --
    For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
  15. Re:Here's a newsflash for all you dipshit MBAs by BrynM · · Score: 5, Interesting
    The "cost of piracy" and "cost of hacking" claims which all /. readers are probably familiar with are just as bad, and are being used to put people in jail now.
    You know, last week I was mugged. I was beaten about the head pretty good and had a $300+ item stolen from me at a gas station near my home. According to the Sheriff, "strong-armed robbery" is a misdemeanor. They didn't even want the security camera footage. Now if that same asshole had "stolen" a song, game or movie via file sharing he would have gotten an investigation, time, fines... hell - even a C&D would have been better! Such is the law in this free country.
    --
    US Democracy:The best person for the job (among These pre-selected choices...)
  16. Newsflash: by Valar · · Score: 4, Insightful

    You do not have a right to profits! Seriously, this is what an economist would call "competition." In capitalism, it is supposed to happen.

    --

    ====
    Crudely Drawn Games
  17. Misconception... by WhiteBandit · · Score: 4, Informative

    The article seems to imply that because of Craigslist's free nature, that the papers are losing money and can't compete with Craigslist persay. However, that isn't entirely correct.

    I used to work at Trader Joe's in SOMA (SF) and had the fortune of having a Craigslist employee come through my line (he was wearing a CL shirt, which I inquired about). We got to the topic of Craigslist and its plethora of free boards/posting for all sorts of items. I asked how much bandwidth they were using (something like 20 MB per second at the time) and how they got their revenue since there weren't any advertisements on the site. The solution: They charge companies to post employment listings... and evidentially only for the San Francisco section of Craigslist. All the other cities sections were still completely free. (At least this was the case at the time I talked to this employee)

    So while the newspapers are claiming they are losing that money to Craigslist (which is true), it's more of a fact that these companies are simply switching to a service that they feel produces better results, not neccesarily the fact that Craigslist is a (mostly) free service for them.

    (Of course, it also helps that you can search job postings by location, money, job types, and other criteria... which isn't all that easy in a hard copy newspaper. It's simply a better medium)

    (Offtopic - I've also had someone from Yahoo come through my line, who was also wearing a company shirt. After talking for a bit, she asked if I used Yahoo at all. I told her I used Google. She didn't say another word to me while she was in the store!)

  18. So what, newspapers are on deathwatch anyway by Ars-Fartsica · · Score: 5, Insightful

    Read your local lately? You'll find maybe ten percent new local content put alongside 90% of yesterday's wire service stories. This is just a transport mechanism for the dozens of advert flyers that are the real purpose of the paper. LET THEM DIE.

  19. The new mega-corporate business model by Anonymous Coward · · Score: 4, Insightful

    What we're seeing now is the manifestation of the new mega-corporate business model.

    At some point, if a company becomes large enough, it apparently is granted some form of "seniority" in the marketplace and is no longer required to be competitive. When these companies find themselves in such positions, in lieu of being innovative or fiscally responsible, many whine and complain that their right to profit (or as Noam Chomsky says it's spelled "jobs") should be protected. From airlines to car companies, this has been happening for decades. Taxpayers subsidize the slow death of badly run businesses.

    The amount of "corporate welfare" in the form of various tax incentives and trade protection to mega-corporations is exponentially greater than all other entitlements combined, almost all of which are designed to give corporations advantages in lieu of being more competitive in the marketplace.

    The funny thing is that if it were a smaller company complaining about waning competitiveness, people would be unsympathetic. However, larger entities seem to not have to play by the same rules.

    Let this be a lesson to would-be entrepeneurs: If at some point you employ X amount of people and purchase Y amount of political clout, you no longer have to be that concerned with the viability of your products and services.

  20. I love this new corporate math. by aussersterne · · Score: 5, Funny

    Every American who doesn't give me a dollar right now is costing me the dollar that I'd have if only they'd given it to me.

    Thus, Americans' selfishness is currently costing me over $250 million a year, and that lost revenue has a real economic impact; it's money that would otherwise be flowing into the economy when I spent it on myself.

    I think it's time that congress got involved.

    --
    STOP . AMERICA . NOW
  21. Re:My expiriences by gwoodrow · · Score: 4, Funny

    Plus you can get free sex through their "casual encounters" section. That's really cut into my pimpin' revenue, so I'm with the newspapers on that one.

  22. real irony is the failure of Craig's philosophy by SuperBanana · · Score: 5, Informative

    The real irony is that Craigslist tends to be, like Ebay (which was responsible for 3/4 of ALL internet fraud complaints), something you have to approach EXTREMELY carefully.

    People on Craigslist tend to be really flaky- we're talking the stoned kind of flaky, or the "I'm going to try and cheat you because I think I'm clever" kind of flaky; I'm not sure which is worse. Then there are all the wierdos posting in the various personals section- if you want a great laugh (no matter your gender), read those sections; makes you think of someone walking into McDonalds with $2 and expecting a rare Filet Mignon with sauteed mushrooms. Or the ever popular "I'm hot. Send a picture. Sexiest one wins." I laughed for about 5 minutes so hard I couldn't breathe, and resolved never to look in w4m again because it was dangerous to my health, even if it was a fantastic laugh.

    Top problem though, is that people are complete IDIOTS when it comes to listing their items. "Printer. Best offer." Inkjet? Laser? Dot matrix? Made this decade? God forbid they tell us what company made it. I also love it when useless, worthless stuff is offered up- like cheapo computer speakers. People, I'm all for the recycling bit, but take that shit to the RECYCLING CENTER, don't waste anyone's time putting it up for sale for $5. Round trip subway fare costs at least half that...

    The hysterical bit is that Craiglist supposedly has an "advisory committee" that handles how the site is presented to users. When I complained that even basic instructions were never shown to users as part of the posting procedure and it was clear there was a problem, Craig just replied, "thanks, the committee will think about it".

    Then there are the people who post the "free" iPod/plasma/whatever emails (which are usually flagged by the community)...the problem is that there's nothing to keep them from posting over and over, because (to my knowledge) there is no automatic blacklist after X number of posts flagged...so spamming is pretty easy.

    Then there are the ripoffs. Go read your city's /sys/ for a few minutes, and see how many times you say "WHAT?!"...like people asking $500 for a Pentium 3 system. Go read /ele/ and see how many times you see "Theater Research" speakers being offered for $500; the more honest (or naive) ones admit to buying it from some guys in a white van...the others just think "oh well, I'll get some other sucker to buy 'em".

    Classic example of the try-to-sucker-you-by-omission-and-feined-ignorance approach was a Phaser printer being offered for sale for a few hundred $ with no mention of WHY nobody uses wax printers anymore. In short- you MUST cover your ass like crazy. If it's too good to be true, it most certainly is someone trying to sucker you.

    Typical, but when you consider it against Craig's motivations (community building and other crunchy-granola-ness), Craigslist has ultimately been a pretty spectacular failure. I used to report at least 5-6 posts a day to the abuse department for various reasons (all were accepted, and the abuse group IS very nice; they ALWAYS write you back! To the CL abuse staff, you have my sympathies and admiration), and I just got tired of it...it was like throwing a sandbag into a levee break and watching it disappear.

    I also have a policy now, which I inform sellers of upfront. If the item is different from how it was represented in the post or follow-up emails, both of which I will have with me, I walk out the door- this is after several sellers presented something that was nothing like what they described (like a PC missing half its ram, being sold by a software programmer who played dumb. Riight).

    --
    Please help metamoderate.
    1. Re:real irony is the failure of Craig's philosophy by eclectro · · Score: 5, Informative

      like cheapo computer speakers. People, I'm all for the recycling bit, but take that shit to the RECYCLING CENTER, don't waste anyone's time putting it up for sale for $5. Round trip subway fare costs at least half that...

      I think that freecycle deserves a mention to help people dispose of stuff that has too little monetary value to hassle a price with it, but yet want to keep it out of the dumpster. Also, it is helping people out.

      --
      Take the cheese to sickbay, the doctor should see it as soon as possible - B'Elanna Torres, "Learning Curve"
  23. Actually, that's true by cnewmark · · Score: 5, Informative

    At least, it's what it says on my drivers license, or last week's Newsweek.

    Craig

  24. Sorry, not the case by cnewmark · · Score: 5, Interesting

    We have problems, all right, but we find that the vast majority of folks are trustworthy, and solid.

    We get a lot of feedback everyday, to that effect.

    Also, we have no "advisory committee". I do have a real good customer service team, of which I'm a part. (I demoted myself from management some time ago.)

    Feel free to consider what we're doing a failure, however, I'd guess there's about twenty million others who have a different opinion.

    Craig

    1. Re:Sorry, not the case by ruprechtjones · · Score: 4, Informative

      Craig, here is my personal thanks.

      I've scored two long-term job contracts. I've made two new female friends (no w4m stuff, don't trust it). Sold my keyboard, and my Mac laptop, bought 120 DVDs, bought a freezer, sold my Gameboy SP, and made new friends in West Seattle. Bought an Aerostar van, hooked up with a new film agency, and argued with people in L.A. about the film industry in general.

      So I say to the Seattle Times and the Seattle P.I.: goodbye. Good riddance.

      --
      Kip Hawley is an idiot.
  25. thanks! and promoting citizen journalism by cnewmark · · Score: 5, Interesting

    I appreciate the kind words.

    We do want to promote the kind of citizen journalism you're allude to in your parenthetical comment. I don't know what that means yet, but I've chatted a little with the ohmynews guys and Dan Gillmor, and will figure out something.

    Craig

  26. Sorry, for brevity, tired... by cnewmark · · Score: 5, Interesting

    I didn't enjoy someone misrepresenting what I said.

    The deal is that we work on continuous improvement, and obsess about customer service. That's what I'm focusing on at the moment, trying to shut down a coupla spammers targeting our posters; also, dealing with some bickering in our discussion boards, and working with badly behaving apartment brokers in NY. (That's my biggest single project, and it looks like we've had some luck getting them to avoid sleazy behavior... but this will take me personally another year or two.)

    I'm tired, and want to get back to Quicksilver, and wondering if I'm smart to try out Xandros.

    Craig

  27. On Groups... by samael · · Score: 4, Interesting

    Craig, if anyone ought to read about dealing with groups on a large scale, it's you. Have you read:
    http://www.shirky.com/writings/group_enemy. html
    "A group is its own worst Enemy"?

    --
    My Journal
  28. Re:Here's a newsflash for all you dipshit MBAs by z80kid · · Score: 4, Insightful
    Let me add one to your seried of events: #0 Asshole lops you on the head and takes your gun instead of your PDA. #0.1 Asshole sees you put up a fight and shoots you. The first rule of being street-smart is realizing that carrying a weapon merely puts a weapon into play.

    Moronic. I've heard this a dozen times from people who are against gun use, but never once from anyone who actually knows anything about guns (or street fighting, for that matter). I wouldn't take any "rules of being street smart" from someone who takes this scenario seriously. He gets his street-smarts from the movies.

    In a robbery type situation, the "asshole" is just looking to get some easy money. If he sees you pull out a gun, he's not going to fight you for it Bruce Lee style - he's going to cut and run. Even armed assailants normally don't hang around and play gunfight.

    As soon as the gun comes into play, everyone gets a reality check and instinctively tries to get away from the situation alive.

    I've carried (legally licensed) for 10 years. Thankfully, I've never had to shoot. But I have diffused two situations by drawing the weapon. And I can tell you that neither of the men who came after me had any notion of "lopping" me on the head and taking my gun. The gun came out, everyone scattered, end of problem.

    Let me add one more thing - It's not "fun" like the movies. It's a absolute last resort.