It wasn’t Craig’s fault. It was the internet’s. Almost $10 billion in annual newspaper classified revenue has disappeared (since its 2000 high, versus 2008) and it was essentially replaced by an estimated, unverified $100 million for craigslist with fewer than 30 employees.
But the bleeding ain’t over yet. The stone still has a few more corpuscles to squeeze out.
Look at the newly enhanced Google real-estate search. It’s awesome: useful, fast, informative, entertaining. Put in an address, browse all the homes for sale around. Who needs a newspaper? Who needs a real-estate agent? Speaking of whose death, see Michael Arrington reporting that disruptive, inexpensive real-estate service Redfin is turning profitable. Now see how classified aggregator Oodle is distributing classified ads on Twitter, which has also become the new distribution channel for news (challenging not just newspapers but also craigslist if you’re in the news biz and in the mood for a little schadenfreude).
Of course, this adds onto the the closing of thousands of advertising car dealers; the death of swaths of retail (e.g., Circuit City; and that is far from over, I think); the consolidation of more retail (and then the consolidator, Macy’s (NYSE:M), cutting ad spending by half).
But that’s just advertising. I think that other arenas of newspapers’ competence could be targets for similarly disruptive attacks.
In content, I’m seeing that it’s possible for someone to come along with relatively little investment and a much smaller staff that operates more collaboratively to compete with the big, expensive traditional newsroom at low cost.
In distribution, it’s not hard to imagine someone – oh, say, News Corp. (NASDAQ:NWS), which already controls coupons in the U.S. – to take over distribution of other FSIs (free-standing inserts – that is, circulars) and undercut the hell out of newspapers and the postal service. Distributing those ads is the main reason papers want to keep printing at least a day a week, for now.
It’s bad in the industry now but it’s going to get worse as audience shrinks and advertising consolidates or migrates. There’s no quick fix: putting up pay or copyright laws or begging for favors from pols. The only solution is to rethink and rebuild the industry – and to do a better job of it than GM has.