Pew: Newspapers Hard Hit By Online Classifieds

As the dominant players in classified advertising in the pre-Internet era, one might reasonably have expected newspapers to establish a dominant position online as well -- but just the opposite occurred, according to an April survey from the Pew Research Center's Internet & American Life Project.

The Pew study, which documents the continuing transition to free online classifieds, foreshadows more online and print losses for newspaper publishers. One caveat: the study comes in the wake of controversy about the role of online classified sites like Craigslist in facilitating violent crime.

Overall, online classifieds are thriving, with the number of patrons more than doubling in the last four years. In 2009, 49% of all Internet users say they have used online classifieds, versus 22% in 2005. This figure is especially compelling because the overall population of Internet users also increased in that period, according to Nielsen/NetRatings, from 203.8 million to over 220 million.



Thus, the number of users of online classifieds increased from under 45 million to about 105 million. On a daily basis, 9% of Internet users (roughly 20 million people) go to an online classifieds site, versus 4% in 2005 (roughly 8 million).

Craigslist is the most popular of the online classifieds services, with 42.2 million unique visitors in March 2009, out of a total 53.8 million unique visitors for online classifieds sites altogether. But recently, the site has also drawn criticism for enabling criminals to seek out victims and lure them into dangerous situations with deceptive postings and solicitations.

The controversy exploded into front-page news in April with the revelation that Philip Markoff, a medical student in Boston, used the Craigslist "erotic services" listings to arrange a meeting with masseuse Julissa Brisman, whom he murdered.

Earlier this month, Craigslist shut down its "erotic services" category, after the attorneys general of various states alleged it had essentially become a marketplace for procuring prostitutes. Craiglist is planning a new adult section that will reject ads for illegal activities, including prostitution. But law enforcement officials warn that illegal solicitations can be easily disguised as legal listings for an unpaid rendezvous.

Such controversies notwithstanding, Craigslist continues to grow in popularity, which spells bad news for newspapers that maintain competing online classifieds sites.

Earlier this decade, newspapers' online revenues posted double-digit percentage increases, thanks to the growth of their online classifieds business. However, most of this increase was due to upsells from print classified listings, in which online listings were offered at a discount to people buying print classified ads.

This practice sustained online classifieds growth initially, but the steep decline in the real estate market -- followed by employment and automobiles -- has gutted both print and online listings. In 2008, total classified revenues decreased 30% to just under $10 billion, while total online revenues slipped 1.8% to $3.1 billion.


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