Brian Carney’s Wall Street Journal piece about Craigslist wants to know why Craigslist isn’t maximizing its revenue:
|One industry analyst has estimated that Craigslist could generate 20 times that $25 million just by posting a couple of ads on each of its pages. If the estimate is to be believed, that’s half a billion dollars a year being left on the table… Google has turned unobtrusive text ads into a multibillion-dollar revenue stream. And posting a Google-type ad or two next to its search results wouldn’t cost Craigslist users one thin dime. So why not cash in?… If Craigslist does what its users ask of it, and Craigslist doesn’t need or seem to want all the ad revenue it declines to collect, maybe we, as end-users, should ask them to post some banner ads and give us the money instead.|
Carney is either failing to see or deliberately ignoring a simple element in the equation here: The absence of ads is one of the key factors behind Craigslist’s phenomenal success. No barriers, no annoying popups, no distractions, none of the gaming and manipulation that Google text ads increasingly invite. Instead, simplicity and effectiveness — and trust.
Of course Craig Newmark and Jim Buckmaster could turn on the ads and rake in some cash, short-term, but they would undermine what they’ve built and compromise the principles that have served them so well to date. They’ve clung tightly to those principles, against the conventional wisdom, and doing so has served them too well to stop now.