Craigslist’s business model may not seem aggressive — most of the classifieds site’s content is posted free — but its community-based model is on track to rake in revenue this year. Craigslist.org is projected to earn $100 million in revenue according to a study by the AIM Group.
And part of the secret sauce is in the Craigslist community. Instead of focusing on generating revenue, Craigslist says it relies on
“local communities to suggest ways to make money without compromising
craigslist” And that appears to be working, and CEO Craig Newmark says that he is “constantly engaged in community service,” and the site is heavily focused on engaging its community of users.
Most postings on the site are free, but the company charges recruiters
and real estate brokers in major cities between $10 and $75 to post job
and property listings. 80% of the projected revenue is expected to come
from the more than 1 million job listings Craigslist posts a month,
with real estate making up the remainder.
In contrast, newspaper ad revenues are down 29%, according to the
Newspaper Association of America.
Craigslist CEO Craig Newmark doesn’t
buy into the theory that Craigslist has been a major contributer to the
demise of newspapers, however. Speaking in New York last week, he said that the biggest threat to publishing is that
people rarely look at advertising on those sites.
But on Craigslist, people only look at ads. That fact, combined with its trusted reputation, has helped the site navigate some difficult territory. Newmark says
that the current battle Craigslist is fighting about its “adult
services” ads on the site has generated increased amounts of community
support. And while battling for its rights to post such ads on the
site, Craigslist says it had donated money made from that category to
Despite its increasing revenues, Craigslist is still a .org domain, and
the site boasts of the “relatively noncommercial nature of craigslist,
as well as our service mission and non-corporate culture.”
As Craigslist continues to generate revenue, it will be interesting to
see where else it puts its earnings. The company incorporated in 1999,
and with only 30 employees, revenues upwards of $100 million seem to
fit squarely into the commercial category.