The Craigslist vaccine: Why newspaper classifieds aren’t effed

I’m Joe Consumer.

Joe Consumer wants to sell his old computer monitor because he got a shiny new one. What does Joe do? He thinks first about his options. Here are the obvious ways to sell his monitor:

1. Ask his friends and family if they want to buy it.
2. Put an ad in the newspaper
3. List it as an auction on eBay
4. List it for sale on Craigslist

I’m sure there are hundreds of ways Joe could sell his monitor. But those are the ones that occur to me quickly and without much effort, and it’s pretty likely that at least one of them will work. Of those four options, only one costs Joe money.

Listing it in the newspaper.

The funny thing is that when I talk to people at newspapers, they all know this already. I get the “duh, we’re effed, shut up about it Jason” response.

But newspapers are not completely effed when it comes to classifieds, and here’s why.

Step one: Freemium

Maybe you’ve heard the term, maybe you haven’t, but you are undoubtedly familiar with the Freemium business model. A good example is FlickR, the online photo service that lets people upload, tag, and share their photos with friends, family, or the world.

Using the basic features costs no money. Anyone can sign up and upload up to 200 pictures (although there is a limit on how much bandwidth you can use per month), and share them with the world.

But, if you fork over a mere $24 per year, you get unlimited photos, unlimited bandwidth, and a few other advanced features that I’ve never actually used. But it’s a steal.

The concept is simple: providing the services they do to free customers is so cheap that it might as well be a non-cost, so they don’t charge for it.

Providing the pro features only costs a little bit more than the free features, but they can charge enough money that it covers the cost of both sides of the service.

Guess how Craigslist works? Yep, same way. 99% of what Craigslist offers is free. The only thing they charge for is job listings in certain cities. And because it’s an internet operation, their overhead is so low that the paid listings cover the free listings many times over.

OK, so this is all stuff you know.

And to be fair, many newspapers are doing the first thing right: offering free listings.

What’s step two?

Step two: up-sell your listings

I live in Seattle, so the nwsource classifieds site is a good example for me to use. And luckily for us, they’re already offering a number of listings for free.

Here’s a screencap of the page where you enter a new merchandise listing:

This is an awesome, user-friendly page. What’s missing? The opportunity to spend money.

There is a big difference between charging people for something that, they believe, should be provided for free (selling a monitor online), and offering them a list of services that they can opt to include for a fee.

Here are a few examples of premium services that I would consider paying for, if I were prompted while listing something on nwsource:

1. Inclusion in the paper classifieds
2. Buyer verification (offer some method for vetting people who offer to buy the item)
3. Inclusion in promotional space on seattlepi.com or seattletimes.com
4. Transaction handling (do what paypal does so I don’t have to worry about money)¹
5. Advanced statistics on my postings (who looks at them, where they go when they leave, where they come from, etc.)

It seems to me like anything that you can offer for free on a basic level can be adapted at a premium level, and with good enough premium offerings. If you factor in the reduced cost of providing services online, you ought to be able to gather enough premium users to support both your free and paid offerings.

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¹ I’m well aware that “cash only” is a wonderful side effect of classified listings. But I can think of cases where I might want a paypal-style intermediary. And besides, I’m just throwing out ideas here. ↩

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