Unintended consequences of Craigslist and other Web classifieds

Newspapers, which used to earn millions, now have less money for journalism

By John McManus
Posted Sept. 23, 2005
Craig Newmark

Technology’s unintended consequences are often more powerful than the intended ones. The telephone, for example, was intended to enable people to listen to concerts from their homes. But it changed the world by linking individuals.

Craig Newmark is a Bay Area institution with his phenomenally successful Craigslist. It’s an ingenious use of the Internet to aid commerce among ordinary people and businesses as well. It cuts out the traditional classified ad middleman -- the newspaper.

Craigslist has saved advertisers a fortune and made it both easier and cheaper to convert your junk into another’s treasure.

By demolishing a commercial toll booth, it might be seen as a real public service.

But that tollbooth collected a kind of journalism tax.

The unintended consequence of so much classified advertising moving to Craigslist and other places on the Web has been layoffs in newsrooms. Classified ads were a major source of newspaper revenues. In fact, the classifieds brought in more dollars per square inch than any other kind of advertising.

John McManus

Without those revenues, thinner staffs are more often choosing the easy, sensational story over the one that would take more time or money to cover.

Classified advertising is not the only newspaper revenue stream losing flow, but it's a significant one. According to its former ad director, the San Jose Mercury News is losing millions of dollars a year in classifieds to the Web. The San Francisco Chronicle has estimated its classified ad losses in the tens of millions annually. The same is true of newspapers across the country.

Even after profit-taking and sales expenses, a million dollars pays the wages and benefits of 10 or more journalists.

The migration of classified ads to the Web has also hurt newspaper circulation. Classifieds ads attracted readers looking for cars, jobs, apartments, houses and stuff. Now there's one less reason to subscribe.

Classifieds often introduced young readers and those new a region to the newspaper as they searched for a job or apartment. Those readers helped replace subscribers who moved or passed away.

I’m not trashing Craig. If he hadn’t done it, someone else would have. And almost certainly kept more of the profits.

But given the civic importance of good journalism, the blow to newspapers may have a much longer and more deleterious impact than the benefit you derive from saving a few bucks on advertising.