Craigslist: a most unusual near-monopoly

August 31, 2009 | By | 6 Replies More

Wired’s Gary Wolf gives a detailed look at Craiglist. This is truly a remarkable story of a business that is not in it to gouge consumers. Quite the opposite. Consider the eccentricities of the founder, Craig Newmark:

Newmark’s claim of almost total disinterest in wealth dovetails with the way craigslist does business. Besides offering nearly all of its features for free, it scorns advertising, refuses investment, ignores design, and does not innovate. Ordinarily, a company that showed such complete disdain for the normal rules of business would be vulnerable to competition, but craigslist has no serious rivals. The glory of the site is its size and its price. But seen from another angle, craigslist is one of the strangest monopolies in history, where customers are locked in by fees set at zero and where the ambiance of neglect is not a way to extract more profit but the expression of a worldview.

The axioms of this worldview are easy to state. “People are good and trustworthy and generally just concerned with getting through the day,” Newmark says. If most people are good and their needs are simple, all you have to do to serve them well is build a minimal infrastructure allowing them to get together and work things out for themselves. Any additional features are almost certainly superfluous and could even be damaging.

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Category: advertising, Community, Internet

About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (6)

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  1. Jay Fraz says:

    Reminds me of this classic article.

    http://dealbook.blogs.nytimes.com/2006/12/08/crai

    Newmark actually wants his service to be about HELPING people and not making money. I've heard libertarians say that greed creates the best outcome for consumers, thus I challenge the greedy believers of this philosophy to do better a better version of craigslist that maximizes profit, won't happen. Period.

    Proof that the most dangerous businessman is the one that doesn't believe in greed.

  2. Erika Price says:

    Fascinating. Craiglist really is vexing because it is so annoyingly good enough. The site has no frills and looks like it was made by Geocities in 1995 or something. Yet it works.

    The one realm that craiglist constantly innovates and alters is the adult/escort/casual encounters/whatever-prostitution-is-called-now section. Craigslist has changed its policies, verifications and safety measures a variety of times within this section. I suppose that's necessary- and it does reflect some genuine interest in the consumers. It sure keeps a lady or gent trying to make an illicit buck on their toes, though.

  3. Sam B. says:

    Craigslist is perfect proof of why capitalism is necessary. This weird anti-customer mentality has created a bizarre capricious unresponsive bureaucracy.

    They have created a free service which has displaced most other forms of classified advertising and now they are in control. While their inefficiency allows frequent spam and even ads for illegal activity, they maintain a mysterious and secret set of standards.

    Just as frequently, one can accidentally violate some unwritten rule: posting from the IP of a mobile device, using a VoIP number for verification, posting an ad they perceive as similar in two nearby cities when one is between them, posting an ad that offends anyone and gets flagged, etc. When this happens they don't tell you something was wrong, they blacklist you, your address, your computer, and your IP address so that posting anything is unlikely. But they don't reveal this or allow an explanation, they "ghost" the person making it look like ads will post but they don't.

    I am hoping a group of people who have had these problems can create a create a class-action lawsuit to to destroy this monopoly and let multiple forums thrive.

    • Erich Vieth says:

      Sam B. I haven't had any of these problems using Craigslist. Is there any sort of forum where people congregate to express these sorts of problems that you've raised?

      In my experience, Craigslist is wildly successful and the price is right. I talked with dozens of people who have used Craigslist (I have used it too) and no one has ever before expressed any problem of the type you've described. Not that I haven't seen complaints (like here http://www.associatedcontent.com/article/1194724/… ) but nothing that concerned me.

  4. mark says:

    The author fails to mention the fact of neglect of the customer they captured by putting all other forms of advertiser out of business. The site is ruled by wolves with there software controlling and and stamping out all competition.

  5. mark says:

    Craigslist is a CIA front to close down the "free market" and capitalism. What a joke! Who can give "free" advertisement to the world? The site is run by the worst scam artist users, using software to shut out any competition. F. them!

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