This article analyzes the cost of Craigslist to local newspapers, how the online marketplace has affected newspaper readership, and the effect of Craigslist on classified-ad rates. We will also examine the power of Craigslist users. The results are compelling. Craigslist users are more than just consumers. They have the power to influence newspaper classified-ad rates in many ways, including increasing the number of ads on newspapers.
Costs to local newspapers
A new study shows that online classifieds site Craigslist is costing local newspapers about $5 billion a year in lost classified advertising revenue. Although the study covers only the years 2000-2007, it is a conservative estimate. If the study were extended to 2012, it would show an even higher loss. It is important to note that this study did not include major newspapers and therefore is not an accurate representation of the effects of Craigslist on local newspapers.
While newspapers have made some changes in their pricing models, most have remained the same. The introduction of Craigslist has cut newspaper ad rates by 30 percent. Since newspaper subscribers have fewer ads to fill, the reduction in ad prices has forced newspapers to raise newsstand prices and subscription prices. In addition, Craigslist has helped them increase their revenue because newspapers now get a higher return on advertising.
A recent study indicates that the internet classified site Craigslist has cost the US newspaper industry $5 billion since 2000. The study covers the period between 2000 and 2007. Local newspapers in the US have relied heavily on classifieds in the past. It is possible that the loss would have been even greater if the study had been extended to 2012.
The entry of Craigslist has also decreased the newspaper’s appeal to classified advertisers. Since classified advertisers have an alternative way to reach newspaper subscribers, the newspaper loses the incentive to subsidize the subscriber side. The decreased circulation makes newspapers less attractive to display advertisers. This is what is at stake. In this case, Craigslist’s entry has caused the decline in newspaper readership. But, it has also been linked to an increase in sexually transmitted diseases and lower real estate vacancy rates.
coverage of politics
Craigslist’s entry into the US newspaper industry prompted local newspapers to reduce staff and curtail their coverage of politics. In addition to the decline in readership, the entry of Craigslist has had political and electoral consequences, favoring partisan voting and ideologically extreme candidates. And, this is only the tip of the iceberg. Craigslist’s entry has made newspaper readership decline in the US.
Power of Craigslist users
The power of Craigslist users on local newspapers has been studied, but it is unclear whether it is impacting subscription prices or readership. The number of ads posted is the average of all Craigslist posts over a calendar year. In addition, studies that use yearly data show that the number of advertisements does not affect newspaper sales. Moreover, many newspapers are owned by the same parent company. If these newspapers are better prepared to react to the arrival of Craigslist, they may reduce their classified-ad rates.
A new study from Stanford University has shown that users read more than five million newspaper ads each month. In fact, Craigslist users consume more local newspapers than any other demographic. This trend shows that the Internet is increasingly consuming local newspapers and online classified ads. Local newspapers have no choice but to follow the trend. Craigslist users are destroying local classified revenues, and local newspapers are struggling to keep up.
newspaper classified-ad rates
The entry of Craigslist in the newspaper classified ad market has reduced the attractiveness of newspaper classified advertisers. This is because classified advertisers have an alternate channel for reaching newspaper subscribers, which decreases the newspaper’s incentive to subsidize the subscriber side of the business. In turn, this decreases the newspaper’s circulation, which in turn makes it less attractive to display advertisers. However, there are several reasons for the increased attraction of Craigslist to newspaper classified-ad rates.
A study by NYU Stern School of Business found that the competition of Craigslist sucked more than $5 billion from the newspaper classified ad market. This forced newspapers to raise their subscription prices and enact paywalls. However, this study looked at Craigslist alone and did not look at the other classified ad sites. The results of this study should be interpreted with caution, because the findings from one study may not apply to other classified ad sites.