While Murdock and his boys stumble around the Internet, blaming everyone except themselves for their failings, Craigslist seems to be doing very well. If estimates are correct, Craigslist will take in over 100 million big ones this year. Impossible, you say! We are in a recession! The newspapers are failing and it is all the fault of the Internet, they say. Hogwash!
So how does Craigslist earn so much money from a site that is basically free? According to one article they do it this way:
Craigslist only charges for its job listings in 18 major cities in U.S. (usually $25, but $75 in San Fransisco; the rest of the 570 total cities it operates sites in are free), and for its real-estate ads ($10 per ad) in New York City only. It also charges for its controversial adult-ads section. According to the study, New York City is its biggest market, with an estimated $17.7 million projection in 2009, and San Francisco, its hometown, is the second-biggest with $14.4 million in revenues. Recruitment ads are projected to account for $85 million of the total revs, with housing ads accounting for about $9 million, and adult ads about $4 million, according to the report.
But is that estimated $100 million in revenue for Craigslist responsible for the steep decline in newspaper classified revenue—the newspaper industry saw a falloff of 29 percent in classified revenue in 2008, according to NAA—the worst in history. It’s tough to quantify the impact its non-help-wanted ads have on newspapers since the company doesn’t charge for those ads, but one can draw conclusions from the help-wanted ads, which it does charge for. For example, Glennco Consulting Group estimates 2009 newspaper help-wanted advertising will decline about 50 percent to roughly $1 billion, which is in line with many analyst forecasts. That would mean that even if Craigslist went from $0 in 2008 revenue to $100 million in 2009 revenue on the strength of its paid job listings, it would only account for about 10 percent of the decline in newspaper help-wanted advertising during that period. What is also contributing to the erosion? A weak job environment likely has something to do with it, but other online classified sites like Monster.com, Hotjobs.com, and smaller sites like ilist.com and Kijiji.com are also likely taking a large chunk of help-wanted advertising that used to be the domain of the newspapers.
What is also amazing about the company is that they do all of this with only 28 employees. But there is something else that is amazing. Here is where Craigslist calls home:
How can they claim success without a big glass building housing thousands of folks? LOL