The newspaper industry has brought its financial troubles on itself, according to the chief executive of Craigslist, the company that has been accused of decimating the newspaper industry's advertising business.
Jim Buckmaster told weekly technology law podcast OUT-LAW Radio that his business was not responsible for publishers' problems. He said that a focus on money and profits has in fact damaged their business.
"I think it's exaggerated to say that Craigslist has had a devastating impact on classifieds revenue," said Buckmaster. "Newspapers as an industry are still twice as profitable as the average United States industry."
Newspapers had a pre-internet monopoly on readers' attention which meant that classified advertising became an extremely profitable part of their business. Since the advent of classified advertising, online margins have been eroded. Since the almost entirely free Craigslist became utterly dominant across the US, publishers say margins have plummeted.
"Journalism as practiced at newspapers has been hurt by an excess of money over the years as you've seen newspapers bought and sold and consolidated into large chains run by corporate managers to maximise profit, and increasingly over decades have resorted to running wire stories, putting an ever-greater proportion of advertising into their newspapers and shying away from writing hard-hitting stories about corruption in high places," said Buckmaster. "The financial position of newspapers has not declined, it has more plateaued."
Craigslist is run on unique lines. Though it is a company and it does generate profits, the aim of Buckmaster and company founder Craig Newmark is explicitly not to earn money. "Our goal is to maximise utility for users, so we concentrate on doing what users ask us to do and little else. We do want to run a healthy business and we do have a healthy business, but beyond that maximising profits and revenues has never been a primary goal. It's unfathomable to the financial community and Wall Street, it's antithetical to their whole world view, it's sacrilegious."
Buckmaster was in the UK to talk about Silicon Valley culture to the Edinburgh University Entrepreneurship Club. His advice to entrepreneurs was to be patient.
"Patience was something which put us in a subset of one during the initial internet boom when the emphasis was on trying to grow to great size as quickly as possible by any means possible," he said. "The notion of internet time, everything's moving quickly – we found the contrary, we weren't in any hurry at all and we've never done anything to accelerate the growth in terms of advertising or anything like that."
"You don't have to be in a big rush as long as the trend is going in the right direction, and if you keep your costs low it gives you far more flexibility than you otherwise would have," he said. "Once you have outside investors you're not in control of the company and the range of options you'll have will be very circumscribed."
While almost all of the commercially minded dotcom companies of the first internet boom went bust having never made a profit, Craigslist has been profitable for seven years, Buckmaster said.
It is in the top 10 English language websites by traffic, it serves six billion pages a month to 10 million users, yet it only employs 23 staff. It is those low costs which have kept it in business.
"It was fairly ironic, 100 per cent of dotcoms were geared toward trying to achieve an IPO and make a lot of money and 99 per cent or more of those companies went bust without making a nickel," said Buckmaster. "Craigslist was never about money, and yet we were one of the very few that came through the bust and have done well year after year."
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