Here is the money sentence from Adam Lashinsky’s useful update on Craiglist’s ongoing low-cost adventure into paying itself nothing while destroying the newspaper classifieds business:
Online disruptors like Monster.com and Yahoo’s HotJobs divert money from papers into their own pockets; Craigslist sucks money out of the system entirely.
Related posts:
Is the title (and,in turn, the post) ironic?
Well, now that it has a new title (you read it mid-edit) I’ll demur on that question
It’s interesting how basic the economics of it are. It’s almost a pure transfer of surplus from producers to consumers, resulting from the transfer of control over the distribution medium.
Lashinsky kind of misses this, as the quoted sentence only refers to the business side of the equation. Money isn’t really being sucked out of “the system”. It’s being sucked into the pockets of millions of consumers who heretofore were paying $35 for a classified ad.
Who was the guy who said (paraphrase) “It’s okay to turn a billion dollar market into a 50 million dollar market, if you’re the one getting the fifty mil.” Or in the case of Craigslist, closer to five mil.
Hail Shiva, destroyer of margins
Paul Kedrosky’s “Craigslist as Shiva” combined with Fred Wilson’s “When Is A Market Really A Market” and my recent reading up on stock exchanges just made something go *click* in my brain.
Intentionally or not, Craiglist succeeded because they under…
Innovation brings lower costs. Craigslist has introduced a new way do classifieds that is cheaper and still profitable. Nothing wrong with that.
Was it this quote by John Roberts, CEO of SugarCRM? “We’re turning a $10 billion market space into a $1 billion market space.” I remember being stunned by that comment when I read it in Businessweek. btw, you may call it craig’s list paying itself nothing because they don’t agressively monetize their website but they’re highly profitable. Their model works for them.
Just for the record, I think what Craigslist is doing is great. Didn’t mean to imply otherwise. There are more ways to get paid than just money; Craig Newmark and friends undoubtedly see great value in giving back to the community, and foregoing extra dollars they didn’t need anyway. An alternative value system with a pleasingly non-materialist touch — as Chris Rock says of cornbread, ain’t nothin’ wrong with that.
p.s. for all we know, an attempt to make bigger bucks might have screwed up the ethos or otherwise brought down the business model. Maybe the founder’s mellow altruism created the existing profit center in the first place.
Not so with that quote. Craigslist makes money. They were for-profit before Ebay bought them. While their primary business is free classifieds, they subsidize the rest of the operation by charging for Help Wanted ads.
For newspapers, their primary business is (theoretically) news, and they subsidize their news operations with classified ads. This does not make them somehow entitled to own this market. Maybe if customers are not willing to pay enough for the newspaper to cover the cost of producing the news, their news is simply not a valuable enough product to be sustained. Many local newspapers do little more than republish AP and UPI articles anyways.
Craigslist is simply leveraging the technology that makes information storage and retrieval remarkably cheap. Such costs have been halving annually for years, and will continue to do so for the forseeable future.
Sucks to own a printing press when printed information is more expensive to produce, and largely obsolete. Bloggers are taking their news and opinion business, Craiglist and Ebay are eating their classifieds, Yahoo and Google are taking their commercial ad business.
This is a fundamental shift in the way that information flows, much like the information revolution that the printing press itself set off hundreds of years ago. Imagine how many scribes and news callers were put out of work then!
Not a true statement. Classic one sided view of economic forces. This site says it all http://www.friesian.com/rent.htm
Newspapers never really started as and still do not exist to disemninate news. They exist to run advertising and generate profits. As an ex-newsman I must quote Lord Roy Thomson – of the former Thomson Newspaper chain (which had 100′s of newspapers in its fold at one time). “These printing presses do not print news – they print … my … money.”
wwe money from the roof .