Craigslist costs US newspapers billions: study

Aug 14, 2013
A man walks past the office of online site Craigslist 10 March 2006 in San Francisco, California. The online classified service Craigslist has cost US newspapers at least $5 billion in revenue since 2000, researchers say.

The online classified service Craigslist has cost US newspapers at least $5 billion in revenue since 2000, researchers say.

The study, to be published in the journal Management Science covering the period 2000 to 2007, found Craigslist has had a huge impact on local US newspapers, which have in the past relied heavily on classifieds.

The $5 billion over the 2000 to 2007 period is a conservative figure, "and if we extended the study to 2012 it would probably be a lot higher," said Robert Seamans of New York University's Stern School of Business, and a co-author of the study.

Over that period the researchers noted a 20.7 percent drop in classified ad rates, a 3.3 percent increase in subscription prices and a 4.4 percent decrease in , according to a summary of the research released this week by New York University.

"We ascribe this impact to Craigslist," Seamans told AFP.

"When Craigslist enters a market, the effect on a newspaper's classified ads is almost immediate," he added.

While sites like Craigslist have long been blamed for declining newspaper revenues, there has been little data on this impact.

Seamans and Feng Zhu at Harvard Business School estimated that classified ad buyers saved $5 billion from 2000-2007 as a result of Craigslist entering the market, savings which directly impacted newspaper revenues.

The study focused only on the mostly free service Craigslist, so the impact could be even greater when other online sites are included, Seamans noted. The study excluded three mostly national newspapers—The New York Times, Wall Street Journal and USA Today.

Seamans said Craigslist is one of a number of things hurting US newspapers, but has had a major impact.

"Your average newspaper in the past received around 40 percent of its revenue from classified and that has basically disappeared due to Craigslist and other online ad sites," Seamans said.

"But we don't believe newspapers are dying or that Craigslist is leading to the death of newspapers. Newspapers are changing their business models."

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User comments : 9

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Humpty
1.6 / 5 (7) Aug 14, 2013
I can't see the need to have buying and selling intertwined with war mongering, profiteering, lying and corporate moron social manipulation.

Who was that guy - in on Halliburton, the boards of all the news papers, and starting to kill millions in Iraq, Afghanistan, Syria etc. to steal their oil, minerals, heroin etc..?

Dick Cheney!!!!
antialias_physorg
5 / 5 (3) Aug 14, 2013
"When Craigslist enters a market, the effect on a newspaper's classified ads is almost immediate," he added.

While sites like Craigslist have long been blamed for declining newspaper revenues, there has been little data on this impact.
...
Seamans said Craigslist is one of a number of things hurting US newspapers,

Isn't that the whole POINT of having a MARKET? To have competition which leads to someone providing a better service for a lower price (which is Craigslist most certainly does)

They shouldn't be complaining but start taking a good look at their business model.
jds013
5 / 5 (8) Aug 14, 2013
This article should have been titled, "craigslist has saved consumers $5 billion in advertising costs, while making it easier for them to buy things they need, and sell things they don't."
kochevnik
1 / 5 (2) Aug 14, 2013
Our Russian equivalent simply has a free online version of the paper which is ubiquitous in Russia. So the paper has grown by embracing the web, instead of denying inevitability which seems to be an American habit
rwinners
not rated yet Aug 14, 2013
Newspaper advertising costs, those that we consumers are confronted with, have become enormously expensive. I mean, I might as well just haul that good old refrigerator down to the local newspaper's office rather than buy a ad to sell it.
Craig's List is not a good alternative to many... particularly those in rural areas, but it is at least cost effective.
Frankly, I don't see a big future for newspapers... including those of the size of the NY Times.
And I'm going to miss them, as I do the Denver Post, which is no longer delivered to those of us who live in/on the Western slope of the Rockies.
Duglarri
5 / 5 (1) Aug 14, 2013
It's not so much as a complaint, but as an exploration of something that is not well understood in our modern civilization- the way fundamental pillars of our system can turn out to be almost entirely accidental in nature, and subject to removal. Classified ad sales paid for news bureaus around the world, along with investigative journalism that dwarfs anything we have left. All those great journalists, all those stories, paid for by classified ads- and all of that now shown to have been ephemeral.

Take political cartooning: it is vanishing. Why? The salaries of those cartoonists were paid for by classified ads.

The "founders" said democracy requires a free press. For a hundred years, classified ads massively subsidized that free press. Now that the subsidy is gone, transferred back into the pockets of consumers in what economists call consumer surplus, the question becomes this: if a free press is in fact necessary for democracy, how do we fund it now?

antialias_physorg
4 / 5 (3) Aug 15, 2013
All those great journalists, all those stories, paid for by classified ads- and all of that now shown to have been ephemeral.

To be fair: the amount of 'great journalism' (i.e. really good researched articles) has been in sharp decline for quite some time.

if a free press is in fact necessary for democracy, how do we fund it now?

Press may not need to mean 'printing press'. They didn't mean that democracy requires "an opinion shaping organ on paper". What they meant was democracy requires free/easy access to unbiased information (i.e. exactly the opposite of what is currently happening). The internet could, conceivably provide that.

In East bloc countries they called that a "politically educated person" is necessary for democracy to work (which is correct - although their idea of what 'democracy' means was somewhat weird)
Humpty
1.7 / 5 (6) Aug 17, 2013
Australian news papers, are 90% adds, 8% recycled and updated news, and most of that is "Oh the US is doing this, the US is doing that" arse licking 53rd state of the USA bullshit, and the other 2% is profiteering for assorted vices like whores, drugs, pseudo medical drivel, the gambling and legal drug industries, sports - and sports stars on drugs, and whores, and the usual bankster share market scamming crap.
Gmr
not rated yet Aug 17, 2013
I'm thinking this same kind of panic enveloped horse breeders and wheelwrights at one time as well. But, hey, they could take their cue from the auto and oil industry, and buy up and shut down Craig's List like the aforementioned shut down public rail transit.

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