The Volokh Conspiracy - "Taking Millions from Bay Area Newspapers and Causing Layoffs That Adversely Affect Coverage":

That's how a San Francisco Weekly article describe Craigslist.com. It's a funny locution — "taking millions." The problem, of course, is that online classified advertising is proving to be more convenient than newspaper advertisers both for advertisers and for buyers. Therefore, advertisers are going to sites like Craiglist.com; therefore, newspapers are getting less money; therefore, Craiglist is "taking millions" from the newspapers.

Now I should say that there is an underlying problem here; before the Internet, classified advertising funded newspapers' news departments, and the news departments in turn increased circulation and thus helped the advertisers. As advertising shifts to the Internet, news departments will have less funding. This, of course, was well-known; I wrote about it my 1995 Cheap Speech article, and I surely wasn't the first to observe it:

[N]ewspapers will lose a vast amount of classified ad revenue. This revenue accounted for forty percent of total newspaper ad revenue in the late 1980's; one commentator projects it will reach sixty percent by 2000. But paper classifieds are far inferior, for both buyers and sellers, to electronic classifieds that are untied to any newspaper.

A database of, say, all apartments for rent in the city would be much easier to search through than a newspaper classified section: . . . [T]he renter could ask for an instant list of all the one-bedroom apartments renting for less than $850 per month within three miles of UCLA, perhaps plus apartments that are a bit cheaper but a bit further, or more expensive but closer. The list should be more complete, because the information will be easier and cheaper to post. And the list should be timelier — the information will become available as soon as the landlord posts it, and can be removed as soon as the apartment is rented. Electronic classifieds are better on all counts than paper ones, and newspapers will have to adjust to a huge revenue loss when the paper classifieds stop coming in. . . .

[Footnote:] Newspapers can, of course, enter the classified market themselves. But the newspapers won't have any substantial edge over other service providers in this field. And even if a newspaper comes up with a fabulously profitable electronic classified service, the stockholders will probably be hesitant to use this service to subsidize a money-losing print operation.

The Internet, of course, makes publishing cheaper, so maybe an all-online non-classified-ad-supported site can fill some of the gaps that are produced as print newspapers have to cut back on their news departments. Nonetheless, it's possible that this business model will be still bring in less money to support news departments than the pre-Internet newspaper model did; worrying about the effect on newsgathering is thus quite legitimate.

But it seems to me much less sensible to cast this in terms of a more customer-pleasing business "taking millions" from you. The reality is that someone else is doing a much better job of serving the public than print classifieds ads are. Deal with that, and don't bellyache about how that someone else is a bad guy because he's outcompeting you and preventing you from making money (even if you hope to use that money for behavior that benefits the public).

Thanks to InstaPundit for the pointer; he collects more comments on the story, including a reaction from the story's author.

UPDATE: Reader Aaron C. points, in the comments, to Frederic Bastiat's Candlemaker's Petition:

A PETITION From the Manufacturers of Candles, Tapers, Lanterns, sticks, Street Lamps, Snuffers, and Extinguishers, and from Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting.

To the Honourable Members of the Chamber of Deputies.

Gentlemen: . . .

We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun, is waging war on us so mercilessly we suspect he is being stirred up against us by perfidious Albion (excellent diplomacy nowadays!), particularly because he has for that haughty island a respect that he does not show for us.

The rest of the Petition is much worth reading, too, and, speaking of the Sun, reminds us that there is nothing new under it.

	[Eugene Volokh, December 2, 2005 at 12:22pm] Trackbacks "Taking Millions from Bay Area Newspapers and Causing Layoffs That Adversely Affect Coverage": That's how a San Francisco Weekly article describe Craigslist.com. It's a funny locution — "taking millions." The problem, of course, is that online classified advertising is proving to be more convenient than newspaper advertisers both for advertisers and for buyers. Therefore, advertisers are going to sites like Craiglist.com; therefore, newspapers are getting less money; therefore, Craiglist is "taking millions" from the newspapers. Now I should say that there is an underlying problem here; before the Internet, classified advertising funded newspapers' news departments, and the news departments in turn increased circulation and thus helped the advertisers. As advertising shifts to the Internet, news departments will have less funding. This, of course, was well-known; I wrote about it my 1995 Cheap Speech article, and I surely wasn't the first to observe it: [N]ewspapers will lose a vast amount of classified ad revenue. This revenue accounted for forty percent of total newspaper ad revenue in the late 1980's; one commentator projects it will reach sixty percent by 2000. But paper classifieds are far inferior, for both buyers and sellers, to electronic classifieds that are untied to any newspaper. A database of, say, all apartments for rent in the city would be much easier to search through than a newspaper classified section: . . . [T]he renter could ask for an instant list of all the one-bedroom apartments renting for less than $850 per month within three miles of UCLA, perhaps plus apartments that are a bit cheaper but a bit further, or more expensive but closer. The list should be more complete, because the information will be easier and cheaper to post. And the list should be timelier — the information will become available as soon as the landlord posts it, and can be removed as soon as the apartment is rented. Electronic classifieds are better on all counts than paper ones, and newspapers will have to adjust to a huge revenue loss when the paper classifieds stop coming in. . . . [Footnote:] Newspapers can, of course, enter the classified market themselves. But the newspapers won't have any substantial edge over other service providers in this field. And even if a newspaper comes up with a fabulously profitable electronic classified service, the stockholders will probably be hesitant to use this service to subsidize a money-losing print operation. The Internet, of course, makes publishing cheaper, so maybe an all-online non-classified-ad-supported site can fill some of the gaps that are produced as print newspapers have to cut back on their news departments. Nonetheless, it's possible that this business model will be still bring in less money to support news departments than the pre-Internet newspaper model did; worrying about the effect on newsgathering is thus quite legitimate. But it seems to me much less sensible to cast this in terms of a more customer-pleasing business "taking millions" from you. The reality is that someone else is doing a much better job of serving the public than print classifieds ads are. Deal with that, and don't bellyache about how that someone else is a bad guy because he's outcompeting you and preventing you from making money (even if you hope to use that money for behavior that benefits the public). Thanks to InstaPundit for the pointer; he collects more comments on the story, including a reaction from the story's author. UPDATE: Reader Aaron C. points, in the comments, to Frederic Bastiat's Candlemaker's Petition: A PETITION From the Manufacturers of Candles, Tapers, Lanterns, sticks, Street Lamps, Snuffers, and Extinguishers, and from Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting. To the Honourable Members of the Chamber of Deputies. Gentlemen: . . . We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun, is waging war on us so mercilessly we suspect he is being stirred up against us by perfidious Albion (excellent diplomacy nowadays!), particularly because he has for that haughty island a respect that he does not show for us. The rest of the Petition is much worth reading, too, and, speaking of the Sun, reminds us that there is nothing new under it.