Ever wondered how does Craigslist make money? They don't have any kind of ads, be it text or banner, appearing in any of the listings. Here we give you the ways in which Craigslist makes money. Read on...
It was Craig Newark who first started this online network of communities which featured classified advertisements. There are several ads which are devoted to sales and services, personals, discussion forums, community services, housing, jobs, home supplies, pets, cars, and a whole lot of other choices. Started in 1995, the organization, in just over a decade has become one of the most sought after websites wherein, sellers can post their ads and buyers can search for products and services under different categories. Today, the website covers more than 450 cities throughout the world. Even though there has been no disclosure of its financial information, experts believe that it's more than US $10 million in worth.
Ways in Which Craigslist Makes Money
Craigslist offers free Internet advertising for people posting or reading advertisements. The revenue for the company comes from people who post jobs at the website. The rates differ according to the places.
To post a job in one category in cities like Austin, Atlanta, Boston, Chicago, Denver, Dallas, Houston, New York, Los Angeles, Orange County, Portland, Phoenix, Philadelphia, Seattle, San Diego, Sacramento, South Florida, and Washington DC, Craigslist charges US $25.
As you can see, at US $25, the rate for posting a job in Craigslist is much low as compared to other traditional forms of classified ads. To post a job in one category in San Francisco Bay Area the rate is $75.
Moreover, revenue also comes from brokered apartment listings, besides donations. This website make money by charging $10 for posting a brokered apartment rental in the city of New York and by charging $10 (for USA) for an ad that comes under therapeutic services category. Craigslist charges $5 for re-posting an ad that is live. Other than these the organization don't have any other means of earning money.
For most of the companies offering classified ads, Craigslist has become a so-called 'thorn in the flesh', as most of the ads posted in Craigslist are free of cost. Because they are free, people prefer posting their ads in Craigslist rather than traditional companies who charge people for the ads, thereby eating into the profits of these large companies.
The most affected are newspapers and they have criticized Craigslist on several occasions. Craigslist ads were misinterpreted and efforts were made to connect the organization to allegedly illegal activities. For example, there were adds in Craigslist to sell puppies. The San Francisco Chronicle filed a lawsuit against Craigslist; the newspaper charged that Craigslist supports people who illegally bred puppies of outlawed breeds. However, this lawsuit was not entertained by the court of law.
From the above example we see that Craigslist seriously undercuts the competitiveness of newspapers publishing classified ads. Say, if you want to rent your house (surly, not in New York) or sell your car, in the past, you had to buy classified space in leading newspapers, but today, you can as well post it for free and that too, covering a wider audience compared to newspapers.
The business model of the company is such that it's neither a commercial company nor a nonprofit organization. It's something in between, even though it is registered as a profit organization.
If you are thinking of how they determine the price to be charged, you are in for another surprise. Unlike other service providers which determine the prices of their own service, Craigslist asks for input from the users to make a final decision. Before they started charging for brokered apartment listings, they started a public discussion board, where common people like you and me, discussed whether there should be any charge for the services provided by the website.
With more than 20 billion page views per a month, the website can easily generate a lot of revenue, but according to the founders of the company they want to run the company as a no profit no gain company. They can easily earn a lot of money by advertising and equity investment, but that's simply not their model. All in all, Craigslist is an excellent option if someone wants to post ads for free.
By Madhurjya Bhattacharyya
