Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Craigslist Et Al Take $13.6 Billion Out Of Classified Ads Sector

Posted by Tom Foremski - February 2, 2010

Rick Edmonds, over on Poynter Online, notes that the classified ads sector dropped to $6 billion in 2009. This compares with $10 billion in 2008, and $19.6 billion in 2000.

Much of that drop can be attributed to Craigslist, which doesn't charge any money for most of its classified ads listings. With about 30 staff, Craigslist has managed to usurp a huge amount of newspaper ad revenues.

You can't compete against an organization that charges nothing. And Craigslist charge nothing for most of its classified ads because it can. It doesn't want to make money on its ads.

Craigslist founder Craig Newmark is very rich, but these are 'accidental' riches, it is an embarrassing position for him. Same for Jim Buckmaster, the CEO. Jim spent ten years at a commune in Ann Arbor, Michigan.

From Answers.com:

"We try to maximize social capital rather than financial capital," explained Jim Buckmaster in a 2006 Daily Telegraph article of the philosophy that held sway at craigslist from the start. "We get a lot of personal satisfaction from all the thank-you notes we get from people. We have it pretty darn good. We just don't see any reason to try and put a bunch of zeros at the end of bank balances that are perfectly adequate."

"We're not so much anti-capitalist," said Buckmaster, who lived in a rented house and had never owned a car. "We're fortunate enough to have built a very healthy business, even though we haven't attempted to." Newmark, who owned a modest home in San Francisco and drove a Toyota Prius, explained it thus in the San Francisco Chronicle in 2001. "I have no objections to being rich, and I'm sure not anti-commercial, but we made a conscious decision about what craigslist was all about. And it's not about making money."

How can newspaper's compete when their competitor doesn't want to make money?

Craigslist execs often say that the newspapers are profit hungry corporations.

But, classified ads revenues put a lot of dinners on a lot of tables in a lot of communities. People employed in taking classified ads were regular working people.

And the ad money supported tens of thousands of hard working journalists, earning fairly low salaries. The ad money subsidized news gathering operations that are essential to local communities.

That represents a hell of a lot of 'social capital.'

It remains to be seen if "citizen" journalism can fill an expanding hole in quality news coverage.

I'm not criticizing Craigslist specifically, because if it wasn't them, it would be someone else exploiting this opportunity. But it shows how the Internet enables a team of just 30 people to replace the work of ten of thousands, more likely hundreds of thousands of people.

If you extrapolate from Craigslist, to many other industries that are being disrupted by Internet economics, you have to question how will people earn a living?

In the past, we have managed to create new kinds of jobs. And to some extent, new jobs are being created, such as in search engine optimization, or social media experts. But these are hardly mainstream jobs.

It seems to me that all this progress in creating ever more efficient industries will require a restructuring of society. And that's never a pleasant prospect.

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Please see: A Saturday Post: The Internet Devalues Everything It Touches, Anything That Can Be Digitized - SVW


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