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May 14, 2008

The Incorruptible Steward of the Craigslist Commons

In 1995, when Craig Newmark started a scruffy website for free classified ads, few would have guessed that it would become one of the preeminent commons of the Internet. Thirteen years later, Craigslist.org has become a revered institution. It is a symbol of the power of online communities in meeting people’s needs in a convenient, socially satisfying way. No need to endure the hucksterism and manipulations of a profit-maximizing business. Craigslist offers a genuine sense of community.

If you’re looking for an apartment, want to swap an exercise bicycle for a garden hoe, or have a job to offer, craigslist is one of the best places to post your ad. Because the site is community-moderated and largely free, it has a different feel than most commercial sites for job and apartment listings. Perhaps for that reason, craigslist – with some 10 billion page-views and 40 million visitors per month – is consistently among the top ten most-visited websites on the Internet.


p(photo-credits). cc license by charlois from Flickr http://www.flickr.com/photos/charliellewellin/112297949/

Craigslist now has a presence in more than 567 cities and over 50 countries. Yet it remains a simple, no-frills website. Remarkably, the entire enterprise is run by a staff of 25, including Newmark.

Craigslist is an iconic example of how online commons can out-compete conventional markets. The site offers a service that is efficient, highly trusted and responsive to users. And yet it does not depend on banner ads, pop-up ads or visitor registration requirements. It doesn’t try to steer you to business partners or try to dazzle you into making a purchase.

The success of craigslist owes a lot to the incorruptible Craig Newmark, whose passion is maintaining the integrity of the enterprise. As he once told a reporter, “We’re trying to figure out how to run the site as a commons, yet avoid the tragedy of the commons. We still have a way to go. There’s always going to be something. But we’re pretty proud of this.”

Newmark doesn’t care that much about money. He seems to get the greatest satisfaction from providing a solid public service. Much of his time is spent as a customer-service representative, dealing with user complaints and other community issues. His friend and colleague, Jim Buckmaster, is the CEO.

Because the law provides few tools for managing the commons, craigslist has had to adopt a business structure to manage itself. It incorporated as a privately owned business in 1999. Yet there is little confusion about the site’s primary goal – to act as a conscientious steward of a classified-ad commons. The business structure is a means to that end.

To pay for its operating costs, craigslist charges $25 for job ads in ten cities, well below the $475 charged by Monster, a competitor. It also charges for brokered apartment listings in New York City. From this modest base, craigslist earns enough to pay the bills, and presumably more. In 2005, one analyst estimated that the site pulled in at least $20 million a year, a sum that is surely much higher today. On its FAQ, craigslist asks a question, “Why doesn’t craigslist focus more on raising revenue?” Its answer: “We rely on local communities to suggest ways to make money without compromising craigsist.”

Craigslist has become the newspaper industry’s favorite whipping boy, mostly from envy, it would seem. Even as craigslist expands, newspaper classified advertising revenues have significantly declined over the past ten years. In 2007, ad revenue declined 16 percent over the previous year, taking it to levels not seen since 1996.

Newmark rejects the idea that craigslist is responsible for the newspaper industry’s woes. He points out that craigslist doesn’t even have a sales force (unlike Monster and Hotjobs), and that newspapers are suffering from the enormous debt that their owners have assumed. In addition, companies no longer buy big display ads for job listings, but instead buy small ads that refer applicants to their corporate website.

Newmark could make a huge amount of money if he were to sell craigslist to a conventional, profit-hungry company. And there have been many suitors. But Newmark steadfastly refuses to sell, so the suitors have stopped asking. Newmark notes, “We know these guys in Google and the eBay guys, and they are not any happier than anyone else. A lot of money is a burden.”

Newmark has been in the news lately because of litigation launched by eBay, which acquired a 25 percent stake in the company in 2004 from a former craigslist shareholder. The litigation is prompted by eBay’s introduction of its own classified ad website, Kijii, that competes with craigslist. eBay claims that Newmark and Buckmaster are trying to dilute eBay’s influence over craigslist and oust it from the board. A countersuit accuses eBay of using its board seat to acquire confidential information that could be used for anti-competitive purposes. It also accused eBay of diverting craigslist traffic to its own site, Kijii.

If the law offers few protections for the commons, Craig Newmark has stepped up to provide his personal commitment to the task. Besides managing craigslist with absolute integrity, he uses his prominence to support websites that are trying to improve journalism and government performance. These include sites like factcheck.org, sunlightfoundation, com, and PRWatch.org. Newmark also supports micro-lending and blogs in support of Barack Obama. For more on Newmark, see his “Wikipedia entry.”:http://en.wikipedia.org/wiki/Craig_Newmark

While the business press casts Newmark as some kind of strange aberrant – an entrepreneur unwilling to cash out, an overly principled business executive – we at OntheCommons.org recognize him as one of our own, a champion of the commons.