Another Blow To Newspapers: Facebook Classifieds

It’s sure rough trying to charge for a service that other businesses are offering for free. Just ask any newspaper exec. With 20/20 hindsight, it seems inevitable that the web would be the perfect platform for free classified ads, but no newspaper exec in their worst nightmare could have imagined Craiglist, which has done huge damage to newspapers’ classified ad business. Now there’s a new disruptor in the classified ad market — Facebook.

Again with perfect hindsight it seems inevitable that Facebook would offer free classified ads, given the huge advantage that the closed network offers to establishing trust between prospective buyers and sellers. Ebay demonstrated long ago how important trust is to online transactions. Facebook users can post classified ads to their trusted networks based on friends or affiliations, most notably schools, but increasingly companies and other groups as well.

Imagine the impact this could have on housing ads, such as searching for a roommate. Neither Craigslist nor newspapers can compete with prospective roommates being able to size each other up based on their Facebook profiles.

Facebook could also achieve a Google-like disruption by offering the ads for free to increase Facebook usage and monetizing that usage in other ways. According to Facebook’s Zuckerberg:

“We don’t try to lock people up or take more of their time, but we try to provide them with easier ways to do the things they want to do on the Internet,” said Mark Zuckerberg, Facebook’s founder, who noted that more than 60 percent of the site’s active users log in each day. “If we can provide people with efficient tools, they will use the site more.”

It also seems inevitable now that social networks are the perfect platform for all online transactions that involved connecting individuals, and even transactions that involve connecting companies.

If I were a newspaper exec, I’d thinking long and hard about how to create a social network around the one element that newspapers still have claim to — locality. People who live in a city or town have an instant connection. Newspapers should focus on how the help people in their communities leverage that connection.

Comments

[Mark Van Patten]

"Imagine the impact this could have on housing ads, such as searching for a roommate."
Now that's a huge market!
"If I were a newspaper exec, I’d thinking long and hard about how to create a social network around the one element that newspapers still have claim to — locality."
It's being done. Stop looking at the Top 25 and making generalizations about the whole newspaper biz.

[David Jackson]

Student rentals aren't a huge market. But the Web 2.0 wave is about <b>fragmentation into niche markets</b>, each of which aren't necessarily huge, but which in aggregate chip away at large, non-segmented markets. For example, look at how highly focused blogs on topics like gadgets, cell phones, startups and telecom/internet are chipping away at the broad audiences previously dominated by mainstream tech journalism.

So you're right about the market size, but this is part of a broader trend that is highly significant. And I think Scott is right that social networking is a good platform for consumer to consumer transactions due to the trust issue.

[Frank Li]

One other quick point: isn't this really a much bigger threat to the newspapers via their investment in CareerBuilder.com, because graduating students form a large jobs market? And for that reason, isn't this also incrementally negative for Monster.com?