Newspapers Brace for Ad Battle as Craigslist Grows

Craigslist, the free online classified ads site, is moving to small cities and towns across the country. Now, the newspapers in those places will have to compete with Craigslist for classified ads, and that has some of them worried.

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If you're looking for a job or an apartment or a date or just about anything else, you can find it on Craigslist. The online classified ad site is an essential tool for people who mostly live in the nation's big cities. Now Craigslist is extending its reach into smaller towns, and that's got some small newspapers worried.

From Modesto, California, Cyrus Farivar reports.

CYRUS FARIVAR: Modesto is a hot, dusty city of 200,000 people in California's Central Valley. Trains used to run through the city much more often than they do today.

(Soundbite of train)

FARIVAR: Across the street from the train tracks is Salty's Record Attic. This independent music store has been operating here for nearly 30 years. For many of those years, owner Ramona Saben has advertised in the local paper, the Modesto Bee.

Like any small business, she's always trying to get new customers in the door. For the last few months she's been happy to advertise on the Craigslist Modesto page.

Ms. RAMONA SABEN (Owner, Salty's Record Attic): Oh, yeah. Anything that you can get free is a great thing.

FARIVAR: She's taking advantage of the fact that Craigslist has a national reach and sometimes draws in out of town customers.

Ms. SABEN: A couple of people from back east who apparently just go through different sites, and they did come up with us.

FARIVAR: Eric Johnston says he's not concerned. Johnston is in charge of online advertising at the Modesto Bee. He acknowledges Craigslist ads are free, but says paying for ads in his paper offers more.

Mr. ERIC JOHNSTON (Modesto Bee): It's kind of you get what you pay for. We do hear occasionally from customers who say to us, you know, I did put my ad on Craigslist or it appeared on other sites that were free sites and it was right next to an ad that I would hope my children would never see.

FARIVAR: Johnston doesn't seem too concerned about competition from Craigslist, but maybe he should be. Charlene Lee, a technology analyst at Forrester Research, says there's a looming showdown between smaller papers and Craigslist. It's taking place all over the country. There are now Craigslist pages for cities like Hickory, North Carolina and Fargo, North Dakota.

Lee says that despite the best efforts of the Modesto Bee and other newspapers, they may simply be too late to the online classifieds game unless they can figure out an alternative to charging for ads.

Ms. CHARLENE LEE (Forrester Research): Now, in a place where you had controlled distribution, like a print product, where the only way to get in was to pay, that'd make sense. But this is the Web. Anybody can start up a discussion board or a site, a listing site, overnight for free.

FARIVAR: In Redding, California, for instance, before Craigslist came to town in 2005, the local paper - the Record Searchlight - used to have 16 pages of job ads, while today it's down to just four. For now, the Record Searchlight and other papers like it are just trying to hold on to what they have left.

Many small town newspapers see themselves as victims in the battle over classified ad dollars. But Craigslist CEO Jim Buckmaster says his company is not to blame.

Mr. JIM BUCKMASTER (CEO, Craigslist): Craigslist is a minor factor, but we make a convenient boogeyman to distract people from a less palatable reality.

FARIVAR: That less palatable reality, he says, is the fact that newspapers themselves are not moving fast enough to compete with online media.

Craigslist also has a bigger battle to wage. It's fighting with one of its corporate owners, eBay, which holds around 25 percent in the company. Even though eBay has a stake in Craigslist, it started a copycat site called Kijiji last year. In recent weeks, the companies have sued each other. It's a sign of how high the stakes are getting in the world of online classifieds.

For NPR News, I'm Cyrus Farivar.

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