Yes, Craigslist does take billions from US newspapers
A new study quantifies how the classified ad site has drained them of once-reliable revenue.
For some time now Craig Newmark, founder of the online classified ad site Craigslist, has disputed claims his website has helped to kill off newspapers by diverting essential classified advertising dollars away from them.
"I’m still waiting to see any hard evidence for cause-and-effect," Newmark said on the subject, according to The New York Times on Sunday. "I’ve been paying attention for a long time."
But Newmark may now have to rethink his stance, after a new study estimates Craigslist has indeed drained billions of dollars from local U.S. newspapers.
The study, by business professors at New York University and Harvard, estimates classified ad buyers saved $5 billion between 2000 and 2007 -- during the time when Craigslist, originally a San Francisco-centric website, entered the Internet marketplace on a national and international basis.
Craigslist's numbers are impressive. The site says it gets more than 50 billion page views each month and that more than 60 million people in the U.S. alone use the site.
It's also available in 13 languages, with more than 700 local sites in 70 countries, and posts over 100 million classified ads each month (counting reposts and renewals). It claims to have more 2 million job listings available monthly as well.
The researchers also looked at the ripple effect Craigslist causes across the newspaper industry, especially newspapers that rely (or relied) heavily on revenue from their classified ads. They found a 20.7% drop in classified-ad rates overall, along with a significant increase (3.3%) in newspaper subscription prices.
Newspapers losing classified ad revenue also experienced an overall decrease of 4.4% in their circulation and a 3.1% drop in display ad rates. Those papers were also less likely to provide online content.
"Our study demonstrates how media companies respond to shocks from technologically disruptive entrants in different industries," Robert Seamans, assistant professor of management and organizations at the NYU Stern School of Business and the study's co-author, said in a press statement.
Seamans also noted that advertisers can now reach consumers across a variety of media platforms, thanks to new technologies, while the lines between different media industries are being redrawn.
With that in mind, he said, the study should provide "some insights to media moguls who will face future industry shocks and are pushed to re-evaluate their business models."
Many have not turned only to CL (just one of the many Interweb no cost options), but weekly 'hard copy' publications like the Thrifty Nickel / Penny Saver type papers found free at the grocer or gas station as viable alternatives. The local buy/sell/trade paper is thicker than ever in our area, and a great resource that is largely free of scammers and nuisance marketers.
And Henry Ford drove a stake in the horse and buggy makers too.
Newspapers sat on their hands the whole time craigslist was ramping up. Instead of adapting to a new competitor, the newpapers continued charging exhorbitant ad rates with their near monopoly product.
The newspapers got exactly what they deserved. And consumers saved billions of dollars that they could use to spend elsewhere.
Definition of building a better mousetrap in my eyes. No reason to stand still and become stagnant - where would we be if we did not have new ideas?
I advertised a used car Tuesday at 4pm on CL
Wednesday it was sold and gone by 8PM
Over ten people contacted me in one day...
All for free..... Do the math.... Zero plus zero is still zero and thats what it cost me on CL
Newspapers practiced arrogance and stupidity, a killer combination. They once were the only game in town. They got competition they thought wouldn't last. They raised their prices and reduced the size of their product. On-line advertising was free or low-cost and more effective. Tough decision who to go with?
In the early days when motor cars would break down, the horse industry would say, "Get a horse!" We know who won that battle. Innovation and technology eventually do prevail Farewell to the newspapers we have known and loved.
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