Friday, July 29, 2005

Haggis and publishers for lunch

With newspaper publishers fuming helplessly over predictions that online competitors could take a $4 billion bite out of their profitable want-ad revenues, Craig’s List has quietly increased its market share to a stunning degree across the country.

The market share of total U.S. Internet visits to Craig’s List increased by 73% in the last year, according to new statistics released by Hitwise, an independent market research firm.

The biggest advance was 2,345% in the San Francisco area, where the list was established in 1995 by Craig Newmark, an unassuming computer engineer who wanted to help his friends locate apartments or jobs. Today, the list will help you find everything from used moving boxes to true love.

Craig’s share is up by more than 400% in Fresno and Providence, up by more than 300% in Dallas and New Orleans, and up by more than 200% in Atlanta, Austin, Denver, Las Vegas, Minneapolis, Phoenix and Seattle. More details in the table below, though you may need your reading glasses to navigate the fine print.

Craig’s compendium of free online ads (he does charge for help-wanted ads in a few markets to pay his modest-size staff) cost Bay Area publishers some $50 million to $65 million in want-ad revenues as of the end of last year, according to knowledgeable estimates.

But the story in San Fran is nothing compared to what may lie in store for newspaper industry as a whole. Some 8.6% of newspaper revenues could vanish within two years as $4 billion in classified-ad revenues flow to eBay, Monster and free online sites like Craig’s List, according to McKinsey & Co.

Although the loss of auto, real estate and employment ads would blow a major hole in the top line of the industry’s $46.6 billion in annual sales, the impact on the bottom line would be even more devastating. That’s because classified ads are, by far, the most lucrative segment of the business.

The newspaper industry’s response to the threat has gone from denial to anger to dismay and, finally, angry denial of its dismay. Only the Tribune Co. has articulated a bold, if dubious, strategy to fight back by launching its own free-ad sites in 12 cities.

Meantime, Craig and his business partner, eBay, continue to colonize not only this world but the galaxies beyond by beaming used-car ads into space. The only thing that might slow down Craig is the haggis he ate a few days ago in London. His blog features this picture of a sausage filled with an intimidating mix of oatmeal and unpsecified animal innards.

Even if Craig is eating the lunch of newspaper publishers, it’s safe to assume they wouldn’t have wanted to eat his on that day.


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