Craigslist

So i decided to look into Craigslist's business model this week and get an understanding as to who they target and how they have been making $80 million+ and a worth of $5 billion (and these numbers are from 2008).

From what I've found, Craigslist started out as a free service in '95 allowing users to to post jobs availabilities and real estate in the San Fransisco, CA area for over 5 years without expanding. In June 2000, it then expanded to Boston, MA. and only 2 months later to Chicago, Los Angeles, New York, Portland, San Diego, Seattle and Washington DC. Craigslist has continued to expand to all 50 states and over 50 countries, with over 450 sites total. It is currently ranked 9th visited site in the US and 31st in the world.

Although posting began free, it has evolved into a service that is still free but does have a fee for specific areas. This information is taken directly from Craigslist.com.

All craigslist postings are free, except for:

1. Job posts in the San Francisco Bay Area

• The fee for posting a job in the SF Bay Area is $75. This fee pays for one job in one category.
  (One job posted in two different categories would cost $150.)

2. Job posts in Atlanta, Austin, Boston, Chicago, Dallas, Denver, Houston, Los Angeles, New York, Orange County, Philadelphia, Phoenix, Portland, Sacramento, San Diego, Seattle, South Florida, and Washington DC

• The fee for posting a job in these cities is $25. This fee pays for one job in one category.
  (One job posted in two different categories would cost $50.)

3. Brokered apartment rental listings in New York

• The fee for posting a brokered apartment rental in New York City is $10.

4. Posts in adult services and therapeutic services on craigslist sites in the United States.

• The fee for posting ads in these categories is $10. Live approved ads can be re-posted for $5.

With just these relatively low fees they have been making their revenue of $80 million.

The interesting thing about Craigslist though is that it hasn't evolved in it's interface and user experience. Because it has no competition, it seems those at craigslist feel little need to update or innovate their platform. Gary Wolf at Wired Magazine stated this in his "Why CraigsList is such a mess." article in August:

"On this site, contrary to every principle of usability and common sense, you can't easily browse pictures of the apartments for rent. Customer support? Visit the help desk if you enjoy being insulted. How much market share does this housing site have? In many cities, a huge percentage. It isn't worth trying to compare its traffic to competitors', because at this scale there are no competitors."

It will be interesting to see if Craigslist will remain a popular source for nearly 1/3 of all adults in the United States. It seems it will be difficult for any competition to arise with the popularity of Craigslist, and the very nature of how much it charges. Why go to another site when the one your on is already free? I think it's going to rely on a competitor to reinvent, or perhaps merely a face lift, of how users interact with the site.