December 11, 2013
In a new study, Robert Seamans, assistant professor of management and organizations at the NYU Stern School of Business, and Feng Zhu at Harvard Business School examine the impact of Craigslist, a website providing classified-advertising services, on local U.S. newspapers during the 2000s.
They estimate that classified-ad buyers saved $5 billion from 2000 to 2007 as a result of Craigslist entering the market. On the flip side, local newspapers lost out on billions in potential revenue as readers who historically posted their classified ads in the paper opted to post their ads on Craigslist.
“Our study demonstrates how media companies respond to shocks from technologically disruptive entrants in different industries—an important issue as the boundaries between media industries are blurred and advertisers are able to reach relevant consumers through a variety of platforms such as TV, the Internet, and mobile devices,” explains Seamans. “This study provides some insights to media moguls who will face future industry shocks and are pushed to re-evaluate their business models.”
The paper, titled “Responses to Entry in Multi-Sided Markets: The Impact of Craigslist on Local Newspapers,” is forthcoming in Management Science.