Craigslist a ‘negative-editorial product’
Don Day November 19th, 2007
The Seattle Times’ James Vesely turned in a must-read editorial Sunday.
So far, for newspapers, the Internet has not been monetized enough to carry the capital and human financials of the newspaper city room. The three-legged stool of newspaper profits — classified advertising, big circulation and low-cost paper — has been replaced by “Star Trek” Scotty’s single transporter beam of information, a single beam of narrow interests, now you see it, now you don’t. It can make a story appear out of thin air…. I see Craigslist as a negative-editorial product. Why? Because it claims the profits normally shifted to the newsroom…. Media companies, especially newspapers, are by default nearly the lone agents of the democratic form of government.
This is the burden of the newspaper model. People generally buy the paper for the news, but that news is made possible by the cash put off by the classifieds. The news product is subsidized by an unrelated part of the paper. TV hasn’t felt the same crunch (yet) because the ads in the 11pm news pay for the creation of the broadcast.
Vesely says papers don’t know “when profits are going to return, or how.” I’ll submit that the profits are probably gone for good. While a free media is essential - whether it be on TV, the Internet or on a printed piece of paper - organizations that hold onto an old model are destined for the trash bin along with the very paper they put words too. Those newspapers that are looking at other ways forward have a future - but with much smaller staff sizes and fewer layers of management and non-essential people, and probably by “printing” their content to something other than newsprint.
Adds Devin, in comments: “For all their complaints about craigslist eating their lunch, you would think that they would take a few moments to analyze what makes that site so popular and then copy it.”
12 Comments Add your own
1. My Name | November 20th, 2007 at 12:03 am
“We don’t know when profits are going to return, or how.”
Please. Newspapers are hugely profitable. One of the most profitable industries around.
“A typical newspaper with a 100,000 circulation makes a 15.6 percent annual pre-tax profit margin, according to Inland Daily Press Association and the International Newspaper Financial Executives. The Tribune Company, which owns the Los Angeles Times, Chicago Tribune and other media outlets, for example, operates on an 18.3 percent pre-tax profit margin. Gannett, which owns 90 newspapers in the U.S., including USA Today, operates on a 21.4 percent pre-tax profit margin. By comparison, Walmart Stores Inc. operates on a 5.4 percent pre-tax profit margin, while Exxon Mobil Corporation operates on a 17.9 percent pre-tax profit margin.”
Click my name for the link.
Newspapers may be in a negative growth period, but they can’t claim poverty. When will the profits return? They never left.
2. Devin | November 20th, 2007 at 1:43 am
Perhaps if the newspaper industry as a whole had any idea how to approach classified ads in the 21st century, they wouldn’t be in such dire financial straits. For all their complaints about craigslist eating their lunch, you would think that they would take a few moments to analyze what makes that site so popular and then copy it.
Instead, they insist on making numerous mistakes on their own classifieds sites; almost every newspaper site I’ve seen has horrible classifieds. Why? The pages are complicated and busy. They are slow to load, making browsing a chore. They insist on making the users do some sort of search before they can start browsing through ads. They want to charge a fee to post an ad; some of the worst sites even want to keep charging per word.
The battle over classified ads isn’t lost and craigslist isn’t the nirvana of online ads. Newspapers have historically been known for providing classified ads, and they can reclaim that title if they would just put some more thought into their sites.
3. Jack Lail | November 20th, 2007 at 5:04 am
If your going forward model is villainizing competitors who have figured out how to do something better than you, then it won’t be long before you collapse under your own hubris.
4. echy | November 20th, 2007 at 6:18 am
I’ve placed ads in both the classifieds and Craigslist. These were for my service business. The classified cost me $300 a month for for a business card sized ad in our local weekly paper. Craigslist cost me nothing. Over the 13 weeks that the ad ran in the paper I received 4 responses (I ask every caller how they found us). Craigslist generated hundreds of calls. Do you think I renewed my newspaper ad?
5. David Johnson | November 20th, 2007 at 8:34 am
yeah, this one rolled in over my alert stream too and i opted not to blog it because on first blush it seemed to more of the same grumpy gripe we\’ve been seeing on newspaper editorial pages for a long time. the san fran papers have been villianizing craig for years, and he even responded here when we blogged them before. but, i\’m glad you posted it.
i posted an excellent forbes analysis of the washington post online vs. print economy a few months ago that spells out the digital/print advertising divide better than anywhere else i\’ve ever seen, but it deals primarily with display and image oriented advertising and addresses the key economic issue facing the online medium - bottomless advertising inventory and exponential increase in competition suppresses value where cost barriers to entry in publishing and broadcasting previously enabled higher pricing. still, the majority of local market advertisers still perceive a higher value in the print product and audience than they do in nebulous and intangible online space.
the issue is in monetizing audience and finding rates that work and deliver value to advertisers. craig has built his brand and is on an even keel in terms of the audience in each market. google created the market for search advertising and adwords, which is another direct competitor to text liner advertising and never existed prior to the medium. the technology marries the ad message to an interested audience in a micro transactional format, providing a turnkey service that offers a lower pricepoint and higher value in the online space than the account executive footsoldier model print and broadcast are accustomed to.
as print and broadcast move online, the money is better spent developing turnkey advertiser services and also focusing in on aggregating advertising content in the local market. as a customer who may be seeking to buy something like a car or a matress or find a job, i used to be able to go to one or two sources to hunt down the bargain buy. now, with the many competitors in the online space, that search is challenged and frustrating. a newspaper could offer tremendous value in aggregating all those widespread ads and delivering them along with their own listings, making my search easier and protecting their own standing as the top market dog by being the one stop shop for all things local.
the boat was missed when major companies didn\’t create their own adwords programs and text ad aggregator services for their local properties. larry and sergey recognized the opportunity and capitalized on it, and the door was open for craig to reveal that the value in classifieds had been overinflated for years due to a monopoly on the format.
6. David Johnson | November 20th, 2007 at 10:10 am
@Devin: right on.
what i have always wondered is why don’t classified-driven sites build bots to post stubs of their own ads into craigslist and other such sites for added value and marketing that would drive traffic back to the full ad.
same thing for creating a youtube channel to share short bits of your video traffic to drive traffic back to the full version.
7. Howard Owens | November 20th, 2007 at 12:06 pm
The typical online newspaper site generates 5 to 10 percent of the newspaper’s revenue.
That same site probably reached 2 to 4 percent of the DMA audience on any given day.
In other words, the newspaper.com is OUTPERFORMING the newspaper in revenue, but falling way short in audience reach.
Newspapers don’t have a revenue problem. They have an audience problem.
The only place you can put the blame for that is on the newspaper, not on Craig Newmark.
8. tdc | November 20th, 2007 at 12:44 pm
timely post considering the yahoo consort just announced 555 newspapers are now onboard.
how about a little math lesson?
say the consort takes in $1 in rev.-
on a 50/50 split yahoo gets .50 and the consort splits .50 between 555 papers
yahoo wins by 555X over each and every paper!!!
all you icons of broadcast feel free to jump me at any time and say that the icons of print would never agree to a 50/50 split.
i’ll save you the bother and illustrate it in another way;
the consort takes in $1 in rev.-
the consort of 555 newspapers gets .99 of every dollar (in your dreams) and little old yahoo gets .01.
yahoo still wins by 5.55X over each and every paper.
making deals with ags as your salvation is a loser.
but they’ll probably add more newspapers next week.
9. Devin | November 20th, 2007 at 2:04 pm
@David: they don’t cross-post to craigslist because having a bot post stubs would be against the terms of use for craigslist.com.
I think a perfect illustration of the problem with classifieds on local paper sites is Alexa’s “Page Views per User” statistic. Go to the traffic rankings for your local paper’s site and look at that stat: it likely hovers in the 2-4 range. Now look at craigslist’s: it hovers around 22. That tells me that the papers are either outsourcing their classifieds or else have a bad classifieds site.
For those who want an example of a classifieds site that is holding its own against craigslist, click on my name. The site is run by a local TV station (KSL in Salt Lake City, Utah), and Alexa shows it as getting ~12 Page Views per User. (Disclaimer: I work for the station.)
10. Cory | November 20th, 2007 at 2:47 pm
Devin, that’s very cool, who powers that for you?
11. Devin | November 20th, 2007 at 4:57 pm
It’s home-brewed. We started off with a purchased system several years ago, but dropped it a while ago when we found it couldn’t keep up with the traffic. We also tried outsourcing parts of it, but discovered that it made more sense to build our own asset instead of someone else’s.
You can see it on a couple of other sister station sites: KTAR in Phoenix and WTOP in Washington, D.C. Neither of them have the volume that KSL does yet, due to the relative ages (KSL has been doing it since ~2000, the others for just a few months).
12. Don Day | November 20th, 2007 at 6:17 pm
I’ve looked at Devin’s work at KSL for quite a while (nice to put a name with the website) - and like what they do. We (KTVB) do an off-brand classifieds site called ZIdaho.com that is WILDY successful… competes with Craig, and is causing problems for the local (McClatchy) paper. As Devin notes - it can be done, but you have to BELIEVE, have a decent product and put the GRPs needed toward making it work.
We just started a jobs vertical to join the other categories.
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