How Craigslist Costs Newspapers Money 480
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."
Re:Well that's too bad.... (Score:5, Interesting)
this always happens (Score:5, Interesting)
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.
As someone in the business... (Score:3, Interesting)
I'll talk to them about craigslist or autotrader and they just look at me like I'm an alien. Most classified departments are run by old men without a clue.
As far as requiring registration, I absolutely hate it. It's got to be the most annoying thing we ever came up with. I voiced my opinion and we did it anyways. We're still seeing positive growth in our traffic, so they just aren't going to budge. The sad part is, all my paper is interested in is seeing that immediate buck from our website. It's just depressing because there are soo many free news sites out there that it's almost impossible to break even.
I don't plan on working there for long though, they just don't pay and could care less about your opinion unless your an editor. Screw the newspapers!
Re:Are the papers the next - (Score:2, Interesting)
In otherwords, traditional major newspapers pretty much go out of their way to chase away online business to more online-friendly sites.
Its not suprising they're losing business, and good, they've done a rotten job of adapting to the net, making an online version that is inferior, to the printed paper, when there is no reason it shouldn't/couldn't be the other way around.
Re:Here's a newsflash for all you dipshit MBAs (Score:5, Interesting)
Has the curriculum changed in the last decade? (Score:1, Interesting)
Owners/managers/paperboys have learned from the likes of RIAA and MPAA that you make up losses (though they won't claim them on tax returns) and get away with it. Newspapers have been printing the results of such made up math for years now, why shouldn't they use it themself?
We will probably see legislation before the end of the year like: DMAPA (Digital Millenium Advertising Protection Act), CANTAD, APPA (Advertising Property Protection Act) and PERSUADE. If some industrys can get away with it, why not the newspaper industry aswell?
I'd hazard to predict that we will see a new term being used by the newspaper industry in 2005, "Advertising Property", and a new organization called WAPO (World Advertising Property Organization) and a new presidential office of czar of Advertising Property.
Re:and in other news... (Score:5, Interesting)
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.
Re:Well that's too bad.... (Score:3, Interesting)
Re:Irony is more than proper clothes care (Score:3, Interesting)
" Anyone else find it ironic that this is being reported by Internet Week [internetweek.com] - an online magazine that has no print version?"
Actually, it's very appropriate, which is almost to say it's the opposite of ironic. A story about the New Media taking over is reported by the New Media. Not ironic at all.
Sorry, not the case (Score:5, Interesting)
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
Re:Cost the Newspapers? (Score:5, Interesting)
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
thanks! and promoting citizen journalism (Score:5, Interesting)
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
Re:Here's a newsflash for all you dipshit MBAs (Score:1, Interesting)
#1, you would have kept your $300 gadget, and
#2, the asshole would have received his well deserved punishment on the spot. Preferably in a permanent fashion, as in dead.
Nothin' says lovin' like 2 rounds of
Man, this is why I love slashdot. (Score:4, Interesting)
Founder of said website responds. Responds! In a day and age when most companies' sites don't have a feedback mechanism of any kind, Craig is lurking around Slashdot. Of course, his response is a bland corporate "well, we still have customers left, so we can't be doing anything wrong" (spent a little too much time in management before 'demoting yourself', eh?), but he responded.
I think I may have a warm fuzzy.
--grendel drago
Sorry, for brevity, tired... (Score:5, Interesting)
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
Screw the newspapers! (Score:3, Interesting)
In my city, whenever the cops shoot somebody for no reason at all, the newspaper is always 100% behind the police regardless of the circumstances or evidence. When there was an anti-war demonstration and people brought their children, the police blocked off all street exits and went in spraying everyone (including little children) with Mace and pepper spray. The newspaper was behind the police 100% and demanded in an editorial that parents who brought their children to a legal anti-war demonstration be arrested for child abuse and have the kids put into foster homes. Nor did they change when all the video tapes of police macing and beating people resulted in a judgement against the police totaling hundreds of thousands of dollars. The local newspaper kept secret their own investigation into the story that the governor had a long sexual affair with a 14-year-old girl.
The newspaper is the most backward, 'cement-head' knee-jerk, mean and stupid institution in any city. They deserve to be tossed into the ash-can of history. If this happens through the classified ads, then fine.
Re:This is getting old... (Score:2, Interesting)
typical enron staff.... (Score:3, Interesting)
It may be a general experession, but its not a legal or accounting fact.
In that case, the govt costs me 5-8% yearly in inflation, yet I cannot claim that in my tax can I?
close (Score:3, Interesting)
so once the readership gets to its peak for its area, there profitsd level off.
But they still need to make MORE then last year, so they start cutting things and trying to drive sales by putting in 'cathcy' stories.
People who are investers need to relize that there our market caps, and once you are selling to everybody who is going to buy your revenue growth may flatten off.
TO me, if a compnay profit 10,ooo,ooo one year, and profit 10,000,000 the next, it's a profitable company.
But investers pull out, stock prices fall, and the board panics.
It is happening to Microsoft right now. People aren't buying there products i9n the numbers they are used to because there OS and Office suites are 'good enough' abd doin't warrent
San Francisco Chronicle and Craig's List (Score:4, Interesting)
It has gotten so bad that the Chronicle will run many types of classified ads indefinitely once the ad is placed.
CL is the first place the majority of bay area folks look to buy and sell their stuff or find an apartment.
From what I've read Craig is true stand up guy. He passed up multi-millions during the dot.com heyday to keep Craig's List free from corporate control and undesired influences.
To give you an idea of the amount of money Craig passed on, a former partner sold his 25% stake in CL for $10+ million after the dot.com crash to eBay.
Re:Newsflash: (Score:2, Interesting)
The same serious economist would also say that, unfortunately, perfect competition works on paper and even second best optimums are currently a consumer wet dream because..guess what, it is not true that companies don't give a damn about consumer.
They care a lot, so much that they want to rip them off of any surplus and possibily have them live at survival wage so that they employee-consumer is constantly in dire need of doing what the master said.
three cheers for Craig (Score:2, Interesting)
On Groups... (Score:5, Interesting)
http://www.shirky.com/writings/group_enemy
"A group is its own worst Enemy"?
Re:Sorry, for brevity, tired... (Score:3, Interesting)
Is is that much work to reclassify an ad? Or implement a lameness filter to nip the allcaps/extraneous ascii headline artists?
Re:Here's a newsflash for all you dipshit MBAs (Score:3, Interesting)
As for the "weapon in play" argument, I see your point but have seen situations where people (usually a crackhead) get really out of hand - completely ignoring their own self preservation. The tactic of being armed may work well where you live, but not well where I live. I'm not saying that you're wrong - in fact I've been giving the idea of different types of tactics for different types of areas a lot of thought due to you. I guess the only real rule is to grasp what comes along as soon as you can and react the best way you have available. Thanks for the thought provoking comment!