A pointer from Paid Content sent me to a Smart Money article that quantified the success of Craigslist as an alternative venue for classified advertising. I will reprint excerpts below and ask whether the spread of Craigslist is a positive, a negative or a neutral to local websites that offer editorial content.

Smart Money writer writer Will Swarts ( other pieces by him) organized his article around the question of whether the’ List is kryptonite to newspapers, which derive 40 percent of their advertising revenues from classifieds, he reports. Here are the excerpts (which I have run together as a block):

“Craigslist, founded in 1999 by Craig Newmark, operates in 113 cities in the U.S. and 34 countries and attracts more than 10 million viewers a month. It runs as an online community forum, rather than a traditional ad-driven business, and that sets it apart: It charges only for job ads in New York, San Francisco and Los Angeles. Everything else — real-estate ads, merchandise ads, personals, and on and on — is free … According to Classified Intelligence, an advertising consultancy and newsletter publisher in Altamonte Springs, Fla., Craigslist’s monthly unique visitors total of 10 million nearly doubled in the last year, during which it has added about 65 U.S. cities and regions and expanded into Asia, Europe, Africa, Australia and South America … Craigslist’s revenues are estimated at around $10 million a year, exclusively from job ads.”

Elsewhere the Smart Money piece talked about an 18-person staff. Is that a $2 million a year labor cost? Add hosting, rent and other expenses and that still comes in well south of the $10 million revenue estimate. Which may explain why Craig Newmark, who is a nice and unassuming guy, generally walks around with a smile on his face. He seems to have done well with a modest business plan.

So what do we learn from Craigslist? How about this — providing people a forum in which they can exchange goods and services seems to work. And not just with Craigslist. It’s the raison d’etre of eBay and other auction sites. MySpace also seems to fit this bill as a venue for social intercourse. So the Web may be entirely about connections. Yes, it can be an information conduit but that is not its core function. The novelty of the Web is that people can do things amongst themselves.

This may seem a silly and obvious point but I needed to remind myself. As a writer I tend to think in terms of what I can bring to you. But maybe that is ancillary to this medium. Maybe I have to reorient my thinking about what you and you and you can bring to each other. II’m sure there is still a role for editorial “voice.” The Smart Money piece talked about site stickiness, i.e. the extent to which people come back and hang out at a site. Editorial may have a role there. Or maybe people come to a Craigslist in a browsy “gee-I-wonder-what’s-for-sale” sort of way. I’ll have to ask my dedicated Craigslist friends.

Meanwhile, I had originally sat down to think about whether Craigslist, by taking classifieds away from newspapers, would also prevent local media startups from getting those revenues. But I don’t know the answer and in any event the foregoing question, which popped into my head as I sat down to write, seems the more interesting.

Tom Abate
MiniMediaGuy
‘Cause if you ain’t Mass Media, you’re Mini Media