Saturday, April 21, 2007

Which papers don't rely on ads, Craig? asked Craig Newmark, founder of the San Francisco-based Craiglist, if his Web site is a threat to newspapers.
    His response: "Not in a significant way. We do drain some revenue from some papers that rely on ads. ..."
Newmark didn't say which newspapers don't rely on ads. Of course, people outside of the newspaper business think subscriptions must amount to a lot of money because they're used to paying for a paper, either by writing checks for a subscription or putting coins in a news rack. Truth is, daily newspapers get 70-80 percent of their revenue from advertising. (For instance, here's a link to MediaNews Group's latest financial filings with regulators -- on page 9 it shows that 81 percent ($302 million) of the company's $372 million in revenues for the quarter came from advertising, while just 15 percent ($55 million) was from circulation.)

However, reading Newmark's comment another way, he is admitting that his Web site has hurt papers that do "rely on ads." He's not the first person to jump to that conclusion. In 2004, Bob Cauthorn, former digital media VP at the Chron's, put together a detailed report saying Craigslist had taken $50 million to $65 million in annual revenues from the Bay Area's newspapers. But Cauthorn also said Bay Area newspaper executives can only blame themselves for losing their leadership position, "because they took no action and listened instead to the arguments inspired by fear, lack of vision, and short-sighted greed." (Cauthorn's report is available only for a fee, but here are stories about it from the Merc's Silicon Beat, Tech News World and ClickZ News.)
    Newmark goes on to say that he has talked to unidentified industry analysts who say newspapers face a bigger threat from "niche sites and niche papers. Sites like Monster are more of a threat because they suck away a lot more job ads. An even bigger threat is the pressure from Wall Street to get like 10 or 20 percent profit margins.

    "Maybe papers should focus on better Web sites, delivering the news better through the Net. Paper is just an expensive media. It's expensive to buy the ink, print the paper and deliver it."
(Photo by Everett Bogue, hotlinked from

1 comment:

Anonymous said...

Craig is basically a guy that won the lottery and now thinks he's an expert at picking the winning numbers. Craigslist isn't expanding or diversifying -- in 5 years it will be the next Webvan.