Craigslist Et Al Take $13.6 Billion Out Of Classified Ads Sector
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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Comments (5)
community problems that emerge from changes in technology and business models are social issues that need to be dealt with by governments or unemployment insurance.
pity the blacksmith. or not.
Posted: February 2, 2010 2:17 PM
YES! Sure, jobs - that's all what REALLY matters.
We shouldn't kill the illegal drugs industry - it creates so many jobs: starting from regular poor Afgans, going to taliban, drug dealers, cops chasing drug dealers, doctors trying to cure drug addicts and funeral firms helping to burry those drug addicts too.
Most of them are really good, regular people. They will all lose their jobs, that's SO unfair.
Let's not cure cancer and AIDS - all those exceptionally smart guys from research labs will get instantly fired if cure is found.
And let's not stop the war - regular people will lose so many jobs.
Let's keep building nuclear missiles and tanks, keep cutting trees to print junk newspapers, keep producing the stuff we don't really need, just to keep the ball rolling.
Those people will never find, or even look for meaningful alternatives. They need to stay where they are now, change is bad, we have a perfect beautiful world, let's keep it as is.
And after all - it's SO economically reasonable.
Right.
Posted: February 3, 2010 6:40 AM
Vlad: I agree with you. Change happens and is happening. Stopping change would be ridiculous. I'm pointing out that we will have to come up with some answers to some hard questions. It's better to be prepared than to be surprised.
Posted: February 3, 2010 9:54 AM
One man's pain is another man's gain. $13.6 billion is a lot of freed up money that people spent on other things. If people spent that $13.6 billion on goods made overseas, then Craigslist has done a lot of damage to this country. But if they spent it on other local services and goods, no harm done really.
But since Craigslist costs nothing, people are selling/buying/trading far more used-goods than 15 years ago. From resource conservation perspective, that's a good thing.
For a country that depends heavily on consumer consumption, it's not a good thing. Bad for GDP. It's also bad for gov't because cragistlist is basically an bartering exchange: GoodsGoods OR GoodsCashGoods. None of the transactions result in tax revenue.
Posted: February 4, 2010 7:34 PM
Craigslist enables a lot of value to be created and so do other types of Internet enabled services. A lot of the value is 'off the books' in that it isn't easily measurable in terms of dollars...
Posted: February 5, 2010 11:25 AM