THE ad was unashamedly enticing: “Grand Opening Special. Hot models, soft
sensual touch . . . we offer role-play, fetishes, light body-rubs, body
rejuvenation and dominatrix.”
But the police chief in New Rochelle, New York state, who read the posting
last week on the classified-advertising website Craigslist, was unimpressed.
The next day mortgage brokers Robert Werner and his wife, Heather Ann
Mazzenga, were arrested to face charges of promoting prostitution at their
suburban home.
“It’s shocking. It’s such a nice neighbourhood,” a resident told the local
newspaper.
For Jim Buckmaster, chief executive of Craigslist, it was the sort of
publicity he could do without. But after a string of similar cases, they are
headlines he is getting used to: one newspaper dubbed Craigslist the
“red-light site”.
It will be fascinating to see whether the site generates a similar reaction in
Britain, where Buckmaster is preparing to relaunch the English version of
Craigslist.
Buckmaster, a former hippie, retains a laissez-faire attitude towards the
advertising website and how it is used, and indeed towards the unwelcome
media coverage. “Sex sells newspapers,” he said with a shrug.
It is reassuring to hear Buckmaster talking about commerce, because it would
appear that selling stuff and making profits are anathema to both him and
Craig Newmark, the site’s founder and chairman.
Craigslist started life in 1995 when Newmark moved to San Francisco and began
sending friends an e-mail circular listing forthcoming events. Soon he was
asked to mention flats for rent and job opportunities. The newsletter
quickly grew, and the regular e-mail evolved into a website allowing people
to place free ads, whether it was to sell their old junk; find a date; rent
a room or fill a job vacancy.
The site did not incorporate until 1999 but it was already growing fast,
launching community sites in cities across America and abroad. Today, it is
one of the top 10 English-language websites in the world and covers nearly
500 cities.
All the while it has retained the ethos that it was a public service and not
looking to maximise profits. The success of Craigslist has also been blamed
for the decline in ad revenue at many newspapers, providing conspiracy
theorists with another reason why papers may like to write about some of the
seamier aspects of their online nemesis.
Craigslist retains the no-frills look it has always had, and some of the ads
that have been placed have become the stuff of legend. There was the person
trying to organise a nude bible-study group; another offering to trade a
dead raccoon for a DVD set of The Sopranos; and the New Yorker who placed an
ad saying “Found: Penguin”, and warned that he wanted serious responses only.
It continues to be free to place an ad on the site, except for property ads in
New York and job ads in seven American cities. Nobody knows quite how much
money Craigslist makes – it resolutely remains a privately owned business
and does not disclose any financial figures – but the job ads remain the
most popular part of the site and some analysts have estimated that they
generate up to $50m (£25m).
Despite its success in America, Craigslist has yet to make a big impact in
Britain – hence the relaunch plans. The London site started in 2003 but many
other British cities did not have the service until this year.
Buckmaster acknowledges that the business arrived late to the British market
but sees no fundamental reason why it should not work on this side of the
Atlantic – after all, there is a strong tradition of classified advertising
in newspapers and publications such as Loot.
He cites cultural differences as one reason why Britons are not avid
Craigslisters, with the site offering “apartments” rather than flats, for
example. “An American-looking site is not as inviting as it might be to
people in the UK,” he said.
There is also the fact that Britain already has a service very similar to
Craigslist. Gumtree.com was launched in 2000 by entrepreneurs Michael
Pennington and Simon Crookall, who sold their creation to eBay, the online
auction company, two years ago, having expanded into Australia, New Zealand
and South Africa.
To meet this competition, Craigslist is preparing to eradicate the linguistic
anomalies that may have previously deterred British users. It is part of a
concerted effort to produce for the first time local-language sites around
the world and is the single biggest piece of development work undertaken by
the company to improve the service to its 20m regular users.
There is little need for Buckmaster to be too coy about disclosing the
company’s development plans. In a bizarre twist, his biggest rival, eBay,
owns a 25% stake in Craigslist and has a representative on the board.
Since buying into the company, eBay has also created a rival classified
service in America called Kijiji.com and has launched Gumtree in three
American cities. You would think this would make board meetings more than a
little frosty but Buckmaster said such gatherings were held “infrequently”.
“We have not had one in more than a year,” he said.
Quite how eBay acquired its Craigslist stake remains something of a mystery. A
former investor – whose identity Buckmaster declines to divulge – wanted to
sell in the summer of 2004 and eBay was the buyer deemed by the others to be
the most palatable option available.
Buckmaster refuses to reveal who the other shareholders are, although it is a
safe bet that Newmark still has a big holding.
That seems unlikely to change. The Craigslist phone lines were once red hot
with Wall Street bankers wanting to take the business public but those calls
have slowed to a trickle as the advisers got the message that the business
is not for sale.
“What we’re doing doesn’t really compute with Wall Street,” said Buckmaster.
It can be assumed that he and Newmark are doing more than well financially,
though both claim to eschew lavish lifestyles. “I don’t own a car and I live
in a rented house,” said Buckmaster, although when pressed he admitted that
he flew first class on his business trip to London last week.
Craigslist’s executives do not spend a lot of time discussing whether they
could extract more money from the site, but Buckmaster concedes that
charging users a modest fee might improve the site because it could
discourage the more unscrupulous scammers and spammers who exploit its
availability to all.
“If there were a way to charge some token sum, like 10 cents or a quarter, for
a listing, then that could be an improvement. But it would have to be
effortless for people to pay because the time involved in accomplishing a
10-cent payment outweighs the [value of the] payment itself.”
It’s all rather hypothetical; the team is not working on any technology that
would permit such a shift, and as Buckmaster puts it: “One of the things we
don’t do is sit round dreaming up ways to make more money.”
That said, there is one group of users who would be happy to see fees
introduced – jobseekers. Experience from the small number of cities where
Craigslist charges employers to advertise vacancies shows that the quality
of posts on offer improves when advertisers have to start paying.
Whether that would be true for some of the other services that are available
on the site is a moot point.
ONLINE ADVERTISING BOOMS
ONLINE advertising is a booming business. A survey in America suggested that
companies there would spend $7.5 billion targeting their local communities
with internet advertising this year, three times the level of three years
ago.
The growth in internet-based classified advertising has been blamed for
damaging traditional media, such as newspapers. But the world’s biggest
media and technology businesses are queuing up to buy into the online
advertising sector.
Microsoft paid $6 billion for Aquantive. Google’s $3.1 billion acquisition of
Doubleclick is awaiting regulatory approval, and Britain’s WPP has bought
24/7 Real Media.
According to the Interactive Advertising Bureau, online advertising spending
in America reached $16.9 billion in 2006, a 35% rise on 2005.
Hi, Matthew!
Your $50 million estimate seems to be pretty old (craigslist has added a bunch of cities to the "pay list" and keeps doing it in a rapid succession -- that has to dramatically boost profits since they are not using the extra money for things like customer service or improvement (although the profits are getting to be ridiculously large -- given the claim to be "non-commercial" -- craigslist remains severely understaffed and severely underdeveloped).
Delia, US,