Niches will be filled

When people talk about what’s ailing the newspaper business, there’s one little company whose name comes up again and again: Craigslist. With Craigslist offering free classified ads in cities all over the world, how can newspapers compete? In an interview in the New York Times, however, Craigslist founder Craig Newmark questions that idea:

In the face of this expansion, Mr. Newmark is becoming more of a public figure, capitalizing on his success to promote causes that include supporting the Barack Obama campaign and financing investigative journalism — not, he insists, to compensate for any damage Craigslist has done to the newspaper business, which he calls “an urban myth.”

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Mr. Buckmaster responds, saying that Craigslist has no sales force and has not sought to win over newspaper advertisers, in contrast to companies like the job-listing site Monster. “That to me is a direct attack on newspapers,” he said. “We put a service out there.”

“There are bigger things that have been more problematic for newspapers,” he added, including circulation losses and basic mismanagement. “Newspapers have an enormous amount of debt. That is not something that can be laid at our doorstep.”

Clayton Frink is the publisher of The Capital Times in Madison, Wis., where Craigslist arrived in 2005. The newspaper late last month stopped printing daily, adopting a Web strategy and printing weekly.

“They have ads we would have had once upon a time,” he said, but added that his staff did not consider it “No. 1 or No. 2 or 3 of Web sites that hurt our business.” The bigger enemy, he said, is the changing marketplace, noting that large employers used to buy a page and a half for job listings and “now they put in a small ad saying to see their Web site.”

Certainly, some ads that would have appeared in newspapers have wound up on Craigslist instead, resulting in a direct revenue loss to papers. But Craigslist didn’t invent the idea of using the web to lower costs. That’s what’s happened in market after market. It’s just been faster in some than others, and Craigslist has done particularly well because it was ahead of another trend - the appeal of community and social networking online.

Craiglist is filling a market niche. Craig Newmark obviously identified that niche early (even if he wasn’t thinking about it in those terms). If he hadn’t decided to start Craiglist, somebody else would be filling that niche (or someone would be about to make a lot of money by finally addressing it).

Perhaps somebody like Kijiji, operated by Craigslist minority shareholder eBay. (Interestingly, eBay seems to understand the appeal of Craigslist’s community-oriented approach; the Kijii site does an excellent job of hiding the eBay link.)

As soon as people started using the web, it was inevitable that newspaper classified ad revenue was at risk. The prize goes to those who recognize these situations and figure out how to thrive in changing markets. But those niches will be filled.

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