By Dan Kennedy • The press, politics, technology, culture and other passions

What Craig hath wrought

I’ve been catching up on some new-media blogs this afternoon, and have run across a couple of favorable references to this post by Ryan Sholin, titled “10 obvious things about the future of newspapers you need to get through your head.”

I agree with a lot of it, despite a tone that stands out for snottiness even in the generally snotty world of blogging. But I want to take serious issue with this:

It’s not Craig’s fault. Newspaper classifieds suck and they have for years. Either develop simple database applications with photos and maps to let your users actually find what they’re looking for, or partner with a good third-party vertical who can. Anything less is a waste of your time.

Uh, actually, it is Craig’s fault. Not in the sense that Craig Newmark did anything anything wrong or evil when he created Craigslist. Rather, I’m talking about a simple reality — he and newspapers are in two different businesses, and his business has caused serious damage to the news business.

A large daily newspaper is an enormously expensive undertaking, and, traditionally, about a third of its revenues came from classified ads. Many newspapers actually made a pretty decent transition to the online world. As I recall, the Globe had a searchable help-wanted database on its Web site 10 or 12 years ago, and the Herald wasn’t that far behind.

But they still needed to charge money — lots of it — in order to pay for their journalism. When Monster.com and Craigslist came along, offering free and nearly free classifieds, there was no way that newspapers could compete. I recall reading a couple of years ago that help-wanted revenue at the San Jose Mercury News dropped from something like $115 million to $15 million in just a few years. (Note: Since I first posted this item, I found the article describing this.) Not surprisingly, the Mercury has been cut to the bone, with rumors of more cuts in the offing.

Could online newspaper classifieds be improved? Sure. But you have to wonder what the incentive is. The Globe is now partnering with Monster.com, which makes a lot of sense. No way, though, can this be as lucrative as the days when the Globe had a near-monopoly on the local classified market, and the Sunday paper was as popular for all those job listings as it was for the news it contained.

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31 Comments

  1. MeTheSheeple

    I was told by a Merc employee a year and a half ago that the paper had been completely clobbered when Silicon Valley went Tango Uniform in the crash. Local community layoffs presumably would’ve led to newspaper layoffs, with a less vibrant local economy. That might not be a legitimate example.

  2. Dan Kennedy

    I’m trying to find the story where I got those numbers, but no luck so far. Obviously San Jose would be an extreme example because of the dot-com bust. Still, a lot of it was due to help-wanteds’ moving to Monster.

  3. Dan Kennedy

    OK, here we go. The story about the Mercury News was in the New York Times of March 20, 2006. Here are some relevant excerpts:[T]he paper had missed an important innovation, one that would rock the entire newspaper industry. As the dot-coms collapsed, Silicon Valley companies were doing decidedly less hiring. When they did need to fill a job, they posted the opening free on their own Web sites or on Craigslist.com and on the new nationwide Web job listings, like Monster.com.”Craigslist has disemboweled us in many ways,” said Scott Herhold, another of the paper’s columnists. Jay T. Harris, the paper’s publisher from 1994 to 2001 and now a teacher at the Annenberg Center for the Study of Journalism and Democracy at the University of Southern California, Los Angeles, added that “when you start to lose very high-margin revenue dollars, you can’t make that up with cost-cutting.”…At its peak in 2000, The Mercury News had a Sunday circulation of 326,839 subscribers, according to the newspaper. Last September, the company counted 278,470 Sunday subscribers, a drop of about 15 percent. Revenue from the company’s help-wanted ads fell to $18 million a year from more than $118 million, according to the paper. The newsroom was whittled to 280 people from 404, a 30 percent decline.So, yes, I concede to having picked an extreme example, but Craigslist and Monster.com were clearly factors in the Mercury’s demise.

  4. Anonymous

    Are you aware that one of Gov. Patrick’s proposals for local aid is to allow towns to post legal ads and bids on web sites instead of requiring publication?THAT should finish off some small weeklies!

  5. man who's a craigslist fan

    Possibly, but at the same time, this is sort of like the RIAA blaming music piracy for the drop in CD sales. It’s a factor, sure, but it’s not the only factor, and the organization being hit did little to adapt to the new reality staring them in the face.I don’t know if there’s a solution to even really begin to make up for lost classified revenue…but I can (and will) fault the newspapers for clinging to a doomed revenue model and sticking with to a cash cow instead of diversifying their revenue sources long before Craiglist came along.

  6. Dan Kennedy

    Man Who: Well, maybe one reason that newspapers have clung to a doomed revenue model is that there is absolutely no new, alternative revenue model that makes sense. A print reader is worth somewhere between 10 and 100 Web readers, which means, at least in theory, that the Globe would need 5 million to 50 million online readers every day if it got rid of its print edition. Microtransactions? Possibly. But who’s going to take the first step? Online subscriptions? Eh, probably not. There are always going to be too many sources of free information, even if the quality isn’t as good.Anon 4:52: You just give Gov. Patrick a chance, OK? All he needs is a 20 percent state income tax and bliss will descend upon us.

  7. Anonymous

    I think we should tax blogs to subsidize newspapers! (OK we’re getting silly). (Not Anon 4:52).

  8. Harry

    You wrote:“No way, though, can this be as lucrative as the days when the Globe had a near-monopoly on the local classified market…”I am most unmoved by the loss of any lucrative monopoly position. Consumers benefit from this competition, though the monopolist does not. Why make an exception for the newspaper business? I don’t believe that a monopolist in the newspaper business provides any greater degree of public service than than monopolists in any other business. Why should they?

  9. Anonymous

    Craig’s list makes tons of money, and could make even more — much more — if they were greedy capitalist hogs like everyone else. They have done nothing that newspapers could not have done 5-7 years ago. Hell, they could still do it today. They choose not to — they’d rather whine. Newspapers have been very slow to realize that they’re not in the news business, they’re in the information business. They sat on their ass for years when the most prolific media distribution in the history of the planet came along. In other words, they blew it by not thinking ahead, by not being smart, and now they are whining about it. It’s too late. They had their chance. The world belongs to those who seize it. Why couldn’t thousands of publishers being paid $100K/yr seize it in 1998??

  10. Ryan Sholin

    Hey there – Great take on what’s going on in the classifieds business. I’m not saying craigslist isn’t a huge disruptive revenue-sucking force, I’m saying that standing around complaining about isn’t the answer; figuring out why craigslist is so popular (hint: uncomplicated searchable database) can help newspapers get an idea of what’s working online.Newspaper companies have taken a can’t-beat-em-join-em approach lately, partnering with the Monsters and Googles and Yahoos of the world to sell classified and display inventory. Seems like a good step, but it’s still hard to find an online newspaper classifieds site as clean as Craig.

  11. Amusedbutinformedobserver

    Excellent points re: Classified ads. It is also worth noting that the reason the Globe came out on top in the newspaper wars that shook down the Boston newspaper scene from seven dailies in 1956 to four in 1967, three in 1972 and two in 1979 was the Globe’s domination of the classified market when the Herald and Traveler were too upscale for such pedestrian matters and the Record and American were too lurid to be seen in middle class homes.Letting cities and towns post bidding ads on-line would damage weeklies, but not as much as if court-ordered publication was allowed on-line. That’s a while away, though, because court’s are still addicted to the existence of hard copies of things — even where electronic filing is allowed, there are often requirements for certification of the existence of paper copies and for retaining them for a certain period.

  12. Dan Kennedy

    Ryan and Anon 11:40: Thanks for checking in. I’m hardly a defender of traditional media, but you are asking the impossible. What’s truly compelling about Craigslist is that it’s mainly free, totally aside from its “uncomplicated searchable database.” There’s no point in newspapers’ going free, unless it’s just to suck in more and more unpaying customers.Also — and I don’t have time to get good citation for this, so I’m going to try to wing it — I think you’ll find that Craigslist does not bring in “tons of money.” Newmark makes just enough to pay himself and a stunningly small staff. That’s all he’s interested in doing, and that’s his right, but that hardly offers any lessons for the newspaper business.Finally, Harry, I’m not saying that newspapers are entitled to a monopoly in the classified business, I’m simply describing what the effect was when they did have such a monopoly. It wasn’t good for classified customers, but it was good for journalism.

  13. Anonymous

    The problem that American newspapers have is that they got the people who buy their newspapers (notice I did not write “their customers”) used to paying relatively low prices for each copy, the copies being heavily subsidized by advertising. One of Germany’s largest (by way of circulation) newspapers, the Sueddetsche Zeitung, has never carried much advertising. But it costs Euro1.60 Monday-Thursday, Euro1.80 Friday and Saturday. But people snap it up.Even the tabloids, such as Das Bild, costs more than the Globe.–raj

  14. Ryan Sholin

    Dan – Somehow I knew that would come back up — I’m not saying craig is making money, I’m saying all that revenue was pulled out of the grasp of newspapers because of a disruptive — and yes, free — technology.Free online basic classifieds with upsells for things like photos and video should be a no-brainer for newspapers. Realtors and car dealerships and such will gladly pay, and they’ll pay more to put up video because they might not be savvy enough themselves to just start up a blog site with embedded youtube videos of their apartments for rent and used Volvos.But that day might come.

  15. Dan Kennedy

    Ryan: But then you get into the whole question of why realtors and car dealers need to advertise on a news site. They just might develop alternatives, too.

  16. man who's a craigslist fan

    Man Who: Well, maybe one reason that newspapers have clung to a doomed revenue model is that there is absolutely no new, alternative revenue model that makes sense.No offense, Dan…but you’re thinking like a journalist. What you just said is a load of crap – the newspapers long ago could have pursued partnerships in other media, and in totally different businesses, to diversify their holdings and provide long-term revenue.And I’m not just saying that newspapers should’ve bought radio and/or TV stations. Besides the fact that the FCC has substantial restrictions on that, that’s still thinking too much “inside the box” (I hate that term, but it fits here).The problem here is that newspapers have always felt that as journalists they could not own any commercial business because they might have to report on it, and that’s a conflict of interest. While there certainly are legitimate concerns, this prevailing attitude has backed journalists into a real ugly corner…instead of embracing it and setting up the proper internal safeguards a long time ago to build up public trust today.

  17. Dan Kennedy

    Man Who: The New York Times Co. owns a good chunk of the Red Sox. The Globe reports on the Sox. And yes, you’re damn right it’s a conflict of interest.

  18. man who's a craigslist fan

    And it appears that Craig is getting a taste of his own medicine. You can’t prevent other people from innovating better than you!http://consumerist.com/consumer/blocked/craigslist-blocks-listpic-tool-for-viewing-craiglist-pictures-267218.php

  19. Anonymous

    This is a great discussion, and posters who say papers should quit whining and start innovating are absolutely correct. Is there a reason why boston.com couldn’t host real estate ads with pics and easily searchable classifieds ala Craiglist?I picked up the Globe last Sunday in hard copy and actually read the classified ads. Talk about retro! It’s terrible! The print is tiny, hard to read and formats haven’t changed since I applied for my first job back in 1970’s. And they still charge a bundle for a tiny Sunday ad…

  20. Anonymous

    Sorry Dan, the newspaper business is getting what it deservs. It behaved like a monopoly, and is getting treated no differently than any other business that had a monopoly and got caught with pants down when someone else came along with a better model. Oh, and let’s keep in mind that most newspapers are still turning profits that would make your average corner grocer do cartwheels. So they’re making 20 percent profits instead of 30? Cry me a river.Craigslist owes the newspaper business nothing, and I don’t owe newspapers my business. Why don’t I buy a telegraph while I’m at it? Of course, the telegraph companies that had the vision to branch out into telephones stayed in business and thrived, as did the record player makers who started churning out CD players and the VHS makers who swtiched to DVDs, etc. Newspapers are owed no favors and deserve no sympathy for their self-created mess.

  21. Dan Kennedy

    Anon 2:29: What you say hits the usual buzz points, but there is no content. Let me ask you this: Craigslist obviously offers a better model for classified ads. But are you saying that someone else has come along with a better model for news? Who? Reveal all, please!The Globe is not earning 20 percent, or even 10 percent. It lost money last year.

  22. Tony

    First, could whoever posted this anon comment site a news source, bill number, Deval Podcast, or anything else which would legitimize the post? Thanks: At 4:52 PM, Anonymous said… Are you aware that one of Gov. Patrick’s proposals for local aid is to allow towns to post legal ads and bids on web sites instead of requiring publication? THAT should finish off some small weeklies!Second, I can go on and on about why the Globe is losing money and circulation: A perception of arrogance and elitism, a refusal to report on things readers want to read about and yet spending scads of money and resources on things no one cares about, no perceived minimum story requirements for reporters which would guarantee that they are out there hustling for stories, a refusal to hire some gritty newspaper people to work the hustings and, instead, picking up reporters from good colleges who probably haven’t worked a hard day in their lives and therefore have no concept of what the rest of us are going through out here, and a failure to post corrections and clarifications when something is inaccurately published in the newspaper – see aforementioned “perception of …” [I can cite a number of inaccurate things which have published about me which never received corrections. I can just imagine how many others there are out there …]

  23. Dan Kennedy

    Tony: I know I’m going to sound like a broken record here, but I’ll risk it. Let’s concede for the sake of argument that everything you say about the Globe’s shortcomings is true. What is your evidence that those shortcomings have anything to do with the Globe’s business problems?The only way readers can demonstrate that they’re dissatisfied with a newspaper is by ceasing to read it. That simply isn’t happening with the Globe. Yes, we all know about declining print circulation. But here are the most recent Nielsen ratings for newspaper Web sites. As you’ll see, Boston.com is ranked #8 nationally, with nearly 3.2 million unique users per month. It’s also the #3 local site, as everything else in the top eight is a national site.So why is the Globe having business trouble? As we’ve said before, it’s because the classified-ad market has shifted to free and nearly free services such as Craigslist and Monster.com, and because the retail market isn’t what it used to be — no more Filene’s, just a couple of big banks, and the like.Regardless, the Globe and newspapers in general are not losing readers — or at least they’re not losing readers at anywhere near the rate suggested by looking only at their print-circulation figures.

  24. Dan Kennedy

    P.S. — I’ve also heard that Gov. Patrick has proposed shifting legal notices from print to the Web, but I can’t find anything about it online. I don’t know if there’s anything to it, but elected officials have been using legal notices as a political perk/weapon since Colonial times.

  25. man who's a craigslist fan

    But are you saying that someone else has come along with a better model for news? Who? Reveal all, please!Take a look in the mirror, Dan! 🙂 This blog is living proof of a “better” model for news.Admittedly, I don’t know about calling blogs a “better” way of doing news, but it is most definitely an “evolution” of news. Completely with the connotation that it has “evolved” into something better, which I’d argue it is. Not always perfectly better, but better on average.

  26. Mark Conley

    Dan, I’m coming late to this party, but I’ve read this blog for a while. I remember some guy posted that newspapers should seek partnerships with major universities in exchange for an apprenticeship program integrated into all levels of the paper. I remember thinking that was a smart idea, and that’s an “new, alternative revenue model that makes sense”.Even if that idea doesn’t work, I find it hard to believe there’s NO alternative that wouldn’t work. I think it’s more that there’s a certain arrogance on newspaper owner’s part who feel that everything HAS to fit into a certain conceptual model…one that just doesn’t work anymore.

  27. Dan Kennedy

    Man Who: I’m flattered, but I’m not exactly breaking any news here on Media Nation. It’s hard to think of more than a handful of bloggers who do … Josh Marshall comes to mind, obviously. Reporting the news is expensive, and an army of unpaid bloggers can’t make up for that, no matter how good they are.

  28. Peter Porcupine

    For Tony and Dan – Section 3 of the Governor’s bill, AN ACT ESTABLISHING THE MUNICIPAL PARTNERSHIP ACT, reads as follows:SECTION 3. Section 5 of chapter 30B of the General Laws, as so appearing, is hereby amended by inserting after the word “body”, in line 32, the following words:- or on a public internet website of either the governmental body or the commonwealth.Here is the relevant section of the MGL referred to:5) be published at least once, not less than two weeks prior to the time specified for the receipt of bids, in a newspaper of general circulation within the area served by the governmental body. So – the Municipal Partnership Act, if passed, would allow towns to bypass the legal notices section of newspapers when putting out notices for competitive bidding – those ads you see with the tiny print and the Mass. Shield on them. And while it’s not good for the Glob or HErald, it’s worse for MPG papers or small regional papers like the Falmouth Enterprise.

  29. Tony

    Dan: Not to belabor a point, but I said “money and circulation,” meaning subscription fees and actual, physical print circ, not “readership” or Web stuff … I still read the Globe occasionally via its Web site just like everyone. But that doesn’t mean they are going to get one red cent out of me ever again by way of subscriptions or newsstand sales – despite their semi-annual beg call they still make even though I haven’t subscribed in years and years. That was my point. No matter what we say about the Web – and I’m totally into those things – the lifeblood of the newspaper business is still the physical print edition and the display ads. And that is why newspaper are losing a fortune and that is why we’re all worried.

  30. Dan Kennedy

    Tony: So you think people are protesting the Globe’s shortcomings by reading it on the Web so they won’t have to give any of their hard-earned money to the paper? Sorry, I don’t buy it. (Pun intended; actually, I do buy it.)

  31. Tim Allik

    Dan, there isn’t any doubt that web-only news can be a successful business model. That’s because the costs of production and distribution in a web-only outlet are so much lower than with print. The albatross around the necks of papers like the Globe is the cost of printing paper, production, and distribution. One day, a print paper of major stature will announce a move to online only. When? Who knows. But it will happen. You can rest assured.

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