A new study by two business school professors (one from NYU and one from Harvard) reveals that when Craigslist hit the world wide web, it cut local newspapers out of billions of potential revenue from classified advertisements. The duo’s report also found that as a result of Craigslist, papers that relied on classifieds were unable to charge as much as they could before, and therefore saw a 20 percent drop in ad rates.
The findings support what many have said before: That Craigslist hurt small newspapers the most, and they never recovered from the damage inflicted. On the flip side, while papers were losing out, consumers were saving. The report found that because Craigslist offered such a cheap alternative to papers’ classifieds, consumers saved about $5 billion between 2000 and 2007.
Craig Newmark, the founder of Craigslist, just recently told The New York Times that his site had no impact on newspapers classified advertising. “I’m still waiting to see any hard evidence for cause-and-effect,” Newmark said. “I’ve been paying attention for a long time.”
It appears that wait is over.