A new study from research operation Classified Intelligence Report shows that Craigslist revenue will be over $100 million this year, according to an exclusive report in The New York Times. In 2004, that number was probably closer to $9 million.
Since most of the classified ads on the internet service are free because of a decision by the company's founder, the Craigslist revenue could be much, much larger.
It is ironic that a company that brings in so little money has helped ruin the newspaper industry and cut billions of dollars out of the market caps of companies in the sector. Companies including The Journal Register and MediaHouse are virtually bankrupt. McClatchy (MNI) is in very deep financial trouble. Even industry leader Gannett (GCI) has watched its stock go from a 52-week high of over $27 to just above $4.
Newspapers could never have done much to battle Craigslist even if they had been quicker to offer online classifieds. Putting up a fight against a good service that is usually free to customers is nearly impossible.
Craigslist is a fine example of what is known in the business world as an "irrational" competitor, one that will do something that does not appear to be in its own financial interests, which can often undermine the prospects of its rivals. Put another way, newspapers never had a chance.
Douglas A., McIntyre is an editor at 24/7 Wall St.