eBay launches classified ad service - Newspapers take another hit - Craigslist yawns

C/Net reports that eBay has launched a classified ad service called Kijiji. Craigslist, the leading online classified service, is unconcerned. It is the newspapers in the USA that should really be concerned. Classified ads are the most profitable revenue producer for most newspapers. Over the years they have felt the losses to craigslist, now they have eBay to worry about.

Kijiji, a site eBay has operated overseas for two years, is now available in about 220 cities across the United States, said eBay spokesman Hani Durzy. Kijiji will be free "for now". It is likely eBay/Kijiji will start charging for classifieds, display ads, or premium services once they have built up a significant user base. eBay's PayPal could also pick up some additional revenue from Kijiji ads.

Will Kijiji adversely impact eBay listings? Apparently eBay doesn't think so, but it seems to me that the only difference between eBay and a classified ad is that eBay is an auction and a classified ad is fixed price.

Who wins and who loses? It will take several years for this to shake out but here are my guesses. Newspapers lose, eBay is a wash (they pick up some classifieds and lose some auction listings), and craigslist is unaffected.

Craigslist has a dedicated community of users, is run profitably by about 25 people, and is led by Craig Newmark and Jim Buckmaster. I have interviewed both Craig and Jim several times and they are the most remarkable leaders I have ever met. They don't follow conventional business wisdom, and perhaps as a result, they have become very successful.

Much has been made of the fact that eBay owns a 25% stake in craigslist, and has a seat on the 3 member board of directors. eBay got the 25% stake by purchasing the stock of a former craigslist employee. Greg Sandoval at C/Net suggests that eBay has had several years of inside knowledge and access at craigslist that will help them make Kijiji successful. In my opinion it is a non issue. This isn't rocket science...there are no secrets.

Conceptually, classified ads is a simple business. Craigslist's secret is to not run it like a business, but more like a community. Sounds simple enough but most business people have a hard time rationalizing the approach and all that it means. That is why I think newspapers and Kijiji will have a hard time taking market share away from craigslist.

Footnote: Craig insists on spelling craigslist with a small c. It is his way of minimizing his own importance and staying focused on the community. I have done so except where craigslist is the first word in a sentence. I can't bring myself to not capitalize the c at the beginning of a sentence. :-(

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Comments

[Rob Di Marco]

I think you are too quick to dismiss the challenges that craigslist will be facing.

The notion that the craigslist community is perpetual seems foolhardy to me. Both Ebay and Facebook, which also started its own classified section, have shown the ability to build out their own extremely active communities.

The stubborn decision by craigslist to not change anything in their user experience for the sake of community will eventually result in someone, maybe E-Bay, maybe Facebook, maybe some startup, to erode their lead on classified ads.

[Abhijit]

This might sound like a selfish plug, but just wanted to let you know that we are building classified platform, which is a bit different than what kijiji is doing (and what craigslist does). eg. We are not building it around cities and Catagories/Sub catagories and so on, but more along tag based classifieds adverisements. Would certainly appreciate feedback.( http://paahijen.com/tagwise ) Since it is based in India, we are supporting major Indian languages over here.

[Walter Lounsbery]

Don,
I would be interested in anything you can say about Microsoft Live Expo in the classified marketplace. If I remember correctly, it's been nearly a year since it was released outside Microsoft. And it has ties to the large number of Microsoft Spaces users. What's up with that now?

Thanks,
Walt

[Don Dodge]

Walter, great question. I just checked out Windows Live Expo at http://expo.live.com

There were over 400,000 listings when I checked. The biggest categories were; Jobs (355,000), Events (20,000), and Merchandise for sale (15,000). Real estate had 4K listings and Autos a little over 2K.

[Listie]

I agree with Rob's note about the notion of craigslist being perpetual. Although craigs gets the traffic and can be effective sometimes (more of the time if you are offering something free), I find the spam and the navigation issues frustrating.

Not to also do a shameless plug, but I was actually a craigs user who was inspired to try to do it better...for exactly the reason Rob stated--craigs refuses to change anything in the user experience. Also I believe there is room for a little competition.

So I launched a little website called Listasaurus.com, where we're trying to do things a bit differently. For one, we're the first online classifieds site to PAY people simply to list their ads (in eligible categories of course).

And we are starting to gain some momentum, so I do think, like Rob said about Facebook and Live Expo, it's possible to build the community.

In any case, would also love some feedback from folks out there...we'll be offering auctions soon and a few other goodies that neither ebay nor craigs or anyone else is doing. So maybe there is still room for the little guy out there...