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How Craigslist killed the newspapers’ golden goose

How Craigslist killed the newspapers’ golden goose

Most people don’t realize that classified ads were the golden goose of the newspaper business.

Now, when the local metro papers have just a few scant pages of classifieds on an average day, it’s hard to remember that not long ago there were thick, daily classified sections. People went there to find jobs, buy used cars or sell furniture and bicycles.

Those little three- and five-line ads were a license to print money. And they didn’t require much of an investment in salesmanship. People actually called to place their ads — all the papers had to do was answer the phone and take the order. At $10, $15 or $20 a pop, multiplied by thousands of ads per day, the money poured in.

And then a computer programmer in San Francisco got lonely. In 1995, Craig Newmark began sending a regular email to friends, listing social events in the Bay Area. Soon, he put it on the Web, and it quickly expanded into a service for people to buy and sell things.

Craigslist, coupled with increasing access to fast, broadband Internet service, delivered a blow to newspaper classified advertising that the industry probably will never recover from. Why pay for an ad in the paper when you can sell for free on Craigslist? The site does charge for ads in about a dozen major (mostly coastal) cities, but for the rest of us, it’s free.

Newspaper classified advertising peaked in 2000 at $19.6 billion. In 2012, the most recent year for which data are available from the Newspaper Association of America, classified advertising was $4.6 billion — a drop of about 77 percent in barely more than a decade.

In 2000, classified ads accounted for about 40 percent of newspaper industry ad revenue. In 2012, classifieds made up about 18 percent of the ad revenue in an industry that was barely half the size it had been a decade earlier.

Craigslist isn’t the only culprit; sites like Monster.com, Realtor.com and Cars.com came along later and helped siphon off even more classified business. Ironically, Cars.com is owned by a consortium of media companies, including the McClatchy Co., former owner of the Star Tribune. But Craigslist was the first website to make free, small-scale advertising widely available to the masses.

Newspapers have been working hard to develop new sources of revenue. Digital advertising, niche publications like the Star Tribune’s Vita.mn and circulation price increases have helped staunch the bleeding to some extent.

But classified ads were the foundation under the entire edifice. The salespeople who sold full-page ads to the department stores and car dealers had the big expense accounts and got the big bonuses. But the telemarketers in cubicles, shunted off in unglamorous corners of the newspaper building, were the ones who kept the lights on.

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Comments (6)

Before the internet

It cost $800-1000 to place a Help Wanted ad in the Strib for a week and it had to be in by Thursday to make the Sunday paper. Now it's free and it's online instantly.

Very interesting, Dennis

I was focused on the small ads from individuals -- that's a great perspective.

Newspapers made it easy for people to quit them

Placing classified ads was an absolutely horrible customer experience. The order takers seemed to be selected based on how inherently angry and unhelpful they were, the customer had to do all the work of selecting the section the ad would run in, and it was very inconvenient to pay. Forget about calling them and asking to have the same ad run again. Craigslist gets the credit for breaking up the monopoly, but someone was bound to.

craig's list

Plus: did you know they have the internet on computers now?

Ha!

I can take that jab, but I think this is a topic that many years after the fact, a lot of people don't know much about, even though they may be loyal newspaper readers.

Terrible

This must be the worst "story" (a stretch) I've read here in ages. Good grief.