Craig's Revolution
- or how Craig's List & MySpace changed the world
(and modelling)

The rise of Craig's List

Craig’s List openly reflects the unpretentious nature and social concerns of its founder. What started life as a San Francisco-based community bulletin board for goods and services with no venture capital funding to speak of now claims around 1% of all daily visitors to the Internet, and still to this day still accepts no revenues from advertisers. Despite breaking all the cardinal rules of capitalism and marketing (i.e. investment capital, incorporating the latest technology, advertising campaigns, monetarising traffic, etc), Craig’s List has grown and grown since its earliest inception in 1995. The concept started, as so many good ideas on the web do, as a hobby. Craig Newmark, then a programmer living in San Francisco, passed the long hours of boredom at work e-mailing his friends about interesting job opportunities and parties in the Bay Area. His list soon became so popular that Craig was obliged to publish it on a website. A good idea had met a ready market, at a time and in a place where it was all happening on the web. Employers in Silicon Valley could use Craig’s List to hire locally thereby slashing costs, people at a loose end on a warm summer’s evening could hook up at a party, and dog owners could find someone to walk their dog when they were away. Craig’s List made the World Wide Web truly local, and more importantly brought the Internet and advertising into ‘real’ time, serving as a gigantic bulletin board where an idea or ad could be posted in the morning, and local goods or services could be realised that same afternoon.

Artists, photographers, and the modelling industry quickly fell in love with Craig. Any impulses, creative desires or unexpected free time could be instantly turned into a party, an audition or even casual employment. It was free, fast and efficient, serving a no-nonsense community of employers and service providers with a market of opportunities. Life had suddenly become a whole lot easier, a whole lot quicker and considerably cheaper than posting an ad in the local paper. We are however forgetting the secret ingredient in Craig’s recipe for success - anonymity. In an ever decreasing world of spy cams and electronic surveillance, Craig’s List restored the twin privileges of confidentiality and privacy to both the poster and respondent, rare commodities on today’s Internet. As a result, Craig's List has outperformed other multi-million dollar employment services like Careerbuilder.com and Monster.com as the most efficient and cost-effective means of hiring local talent. Cheap, unassuming and confidential, Craig's List costs employers only a pittance ($45-75 per month) to advertise an available position, slashing costs and speeding up the recruitment process considerably.

Today, Craig’s List employs only 22 people to achieve revenues estimated at between $10 and $20 million a year, giving the List a value of some $100m. Not bad for a man who vowed that it was never his intention to make money from his List. In 1997 Craig received an approach from Microsoft Sidewalk about running banner ads on his site. To this day the answer remains no. All his staff and his website are funded exclusively through token fees he charges to employers. All other listings, including personal ads, classifieds, and gigs are free, much to the consternation of local newspapers. The List’s biggest single category is New York apartments, catering for over half a million listings a month. In fact security concerns over his rampant apartment listings have reluctantly forced Craig to consider a $10 levy per ad, just to stop the traffic from overheating, although this action alone would generate a staggering income.

Craig’s heart and soul still faithfully serve his community, and the community loves Craig in return. It is a love affair which no capitalist or law enforcement agency has been able to break and, due to unforeseen profits, no corporation has been able to buy out or take over. Free of ads, graphics, animations or sound, Craig’s List is a purist’s delight and, judging from his immense traffic ranking (ranked 37 on the Internet with over ten million users a month), there are a great number of purists at large in the community. Zany, cranky, cliquey, and catering for every niche in the market, Craig’s List embodies the soul of the community on the Internet.

But then again Craig’s List so much more than this. It has become the place where young urban metrosexuals conduct much of their daily lives, whether this is attending to personal business or seeking social opportunities, catering for every whim from renting apartments to finding casual sexual partners in the middle of the afternoon. As a consequence of such variety, privacy, reach, ease of use and immediacy (and because it is virtually free), Craig’s List has collapsed traditional newspaper revenues. The already ailing local newspaper industry is losing an estimated $50 million a year to the List, some 50% of their traditional income. As the unwitting executioner of the conventional print media industry, Craig’s List has become a cult icon of the IT revolution. Startling as it may seem, Craig’s List was in effect built upon the classical foundation stones of marketing - no, not big budget media campaigns, but on quality of service and word of mouth. With three million page views a month and an infrastructure so ingeniously light and simple that it requires fewer than two dozen employees to run, it can only be a matter of time before Craig’s List (or a clone) successfully invades the shores of Europe and Asia (it’s already taken off in Australia). Shocks that rocked the global economic community such as 9/11 and Katrina in contrast only served to strengthen the draw of Craig’s List. In the aftermath of Katrina, his listings and the computers he donated to the New Orleans Super Dome became a vital message board for those needing and offering assistance.

The lives of many in the modelling community have come to revolve around Craig’s List. From hunting for apartments to dating, from gigs to casual work, the List has become an instant online mall for community services. For those people to whom time is everything, Craig’s List is their one port of call to make things happen in a day. Casting calls for auditions can be made and filled the same day, replacements for sick performers may be found in the nick of time, and photographers and videographers with an unexpected afternoon to fill can tap into a steady stream of available models. Every industry, from the shows of Las Vegas, to the adult industry and fashion world have turned to Craig’s List to make things happen. It seems that there are few too proud to make use of Mr. Newmark’s cheap and cheerful version of the ‘commons’, a public forum for notices which dates back to Roman times. Despite being an essentially free platform, the revenues from the tiny portion of ads that the List does charge for are so appreciable that corporate titans Microsoft, Google and eBay are all in the process of launching rival services. However, Craig’s CEO Jim Buckmaster doubts the reasoning behind both their initiatives and their motives, claiming that, ‘If [they] try to run something similar to us and subtract the sincere mission and philosophy or, worse, try to fake it, I’m sure that’s not going to work’. It is difficult to doubt these views any more than the clarity of Craig’s vision. After all, his List is already up and running and is simply everywhere. You simply can’t undercut Craig’s List and, even if Big Brother does create a clone or rival free version, it may well share the same fate as Friendster. No online community likes Big Brother, and many refuse even to volunteer their personal details when subscribing to a free online service...

When anonymity is offered and served up in the form of a giant network boasting millions of users (in every city), people revert to being their natural selves. It is in this domain that Craig’s List excels, serving as a forum for a freedom of movement, self-expression and social activity unseen since the sixties. When Craig’s List first started in London it triggered a media frenzy over its casual encounters list, which offered city dwellers unbridled opportunities for adultery. Craig has liberated prostitutes from their pimps, actresses from their agents, and models from their ‘owners’. All are free to trade goods and services without intervention or interference. One woman posted a free ad (W4M) for a male partner who wanted safe sex with ‘no strings attached’ and was surprised when she received over two hundred responses within ten minutes, from which she dated four and slept with three...

Such liberalism isn’t all good news of course, and there are many users and abusers on the Internet, as there are in any walk of life. Women have been lured and raped, men have been mugged by prostitutes, and sex traffickers have advertised the services of underage girls picked up from malls, and so on. However, Craig is happy to assist the police with any and all such enquiries, just as he is when asked to help to crack down on scams.

Big business is however simply unable to comprehend the mindset of a giant community site which seeks to help its users to find jobs, cars, apartments and dates without any apparent focus upon turning these services into revenues. So, is the secret of Craig’s success ‘paying it forward’, that is to say making money only through good will and chance? Well perhaps the truth is more rational than this. The secret of Craig’s success is in staying true to his market, avoiding R&D costs and costly gimmicks, respecting his consumers, and above all listening to what his community needs and wants. After all, Craig’s skeletal staff is unlikely to out-program anyone, trail the market in information technology, and are as frugal in their costs as their website suggests. Yet for all of this backward thinking, consumer confidence still makes Craig the ‘Aslan’ of the IT market. Besides, his content is consumer-generated, market-driven and audience-edited. Craig’s List is a pure model of a consumer-orientated business, apparently unconcerned about revenue streams or their maximisation. With a flagging system to mark out offensive posts for automatic removal, his community is even self-policing, further cutting costs.

It is in its very humanity that Craig’s List is marked out for distinction. For those lost in the maze of city life, Craig offers an instant alternative to hanging out in dive bars, cruising the mall, or thumbing through the endless back pages of the local paper with a mobile phone. Craig’s List is at the epicentre of a social and sexual revolution, replacing pornographic contact magazines and ‘dating’ websites as the hub of the new wave of sexual self-expression. After all, it may be convenient to peruse Adult Friend Finder or Match.com, but everyone knows your profile is on the Internet and, in today’s ultra-connected world, electronic news travels fast to the attentions of judgemental friends, relatives and sexual partners. No system or service is perfect however, and there are numerous cases of men being mugged by women posing as prostitutes with guns under their beds, and even of sex traffickers using Craig’s List to advertise and distribute their wares. Perhaps this is the price of a free-spirited and faceless Internet community.

The MySpace phenomenon

The reasons underlying the success of Craig’s List is the very reason News Corp. is so anxious to avoid tampering with their newly acquired online community MySpace. Over the past three years MySpace has evolved to become the English speaking world's fifth most popular website. Currently boasting a social network exceeding 150 million registered users, MySpace attracts some 30 million visitors a month and is still adding several million new users a week.

Founded in July 2003 by Tom Anderson & Chris DeWolfe with a small team of programmers, MySpace was co-owned by Intermix Media until they were bought in July 2005 by News Corp. for an estimated $580 million. Through 2007 MySpace is expected to generate advertising revenues of over $200 million. In fact, MySpace is already earning in excess of $15.5 million a month, up from the $2.5 million it was making before the take over. Whilst the revenues projected for Craig’s List and MySpace are dwarfed by the 2006 incomes of Google ($10.5 billion), eBay ($7.7 billion) and Yahoo! ($6 billion), there is no doubt that the real economic muscle of these two social networking giants lies in the form of their immense number of users.

One of the features that makes MySpace so successful is that its users aren't forced to use any commercial services on their pages if they don't want to. Moreover, MySpace, unlike other commercial forums, does not prevent its users from posting links on its pages to competitors such as Google’s ‘YouTube’ or Yahoo’s ‘Flickr’. Perhaps it is in maintaining the true spirit of an open access community where the real gemstone of MySpace’s ideology lies. MySpace grants every individual user a free personal profile, complete with their very own domain name for reference on the search engines. This represents a highly effective tool for self-marketing, especially within the world of modelling, and if privacy is not an issue, then most of MySpace’s community features, from the personal pages to the user forums and groups, have a privacy option.

According to Reid’s Law of networking, the effective power of a network grows exponentially as its number of users increases. This is to say that if you double the number of users in an online community, then the effective power (i.e. usefulness & connectivity) of the network will increase 4-fold, 8-fold or even 16-fold depending upon its function, market focus, and the common interest of its users. For instance, a dating network populated by enthusiastic singles would likely have a higher ‘order’ of gain than a network of casual investors.

As far as the fashionistas, models and members of the adult industry are concerned, MySpace serves as a highly visual medium, one which is tailor made for busy lifestyles which demand extensive networking, rapid information exchange, and cost-effective self-promotion. Vast numbers of models currently enjoy the freedom of expression that MySpace offers, and millions more young teenagers are online actively experimenting with their looks and developing their social options. MySpace affords social movers and shakers the option of posting bulletins, job opportunities and of making commercial approaches to a broad and personally selected network, not to mention the power of informing select and private social networks about upcoming events and parties.

Contrary to mainstream corporate doctrine, MySpace has also become a favourite haunt of the adult industry. This is perhaps unsurprising, given that most of its 150 million or so members are young, single, sexually active and somewhere between their teens and mid-thirties. One impactive gauge of an individual’s popularity or social ranking is the number of friends (or accepted contacts) which are listed on their personal page. It is doubtful that models correspond directly with all of their tens of thousands of ‘friends’, but MySpace does afford admirers unprecedented access to their icons (as well as a superlative marketing interface through which models may contact them). Whilst many established movie stars and fashion supermodels surprisingly prefer to use MySpace for genuine friendships and personal communications, aspiring models and adult film stars amass vast numbers of admirers to reinforce their ‘market’ presence.

In fact, MySpace has been ‘exploding’ with adult stars and models as it provides the perfect interface for adult performers to interact with their friends and fans. Presently MySpace hosts more than a hundred groups dedicated to adult film stars and their admirers. This rare combination of corporate liberalism, ease of use, multi-media format and open access makes MySpace a tough contender to beat, even within the ‘industry’ itself. Perhaps such a liberal attitude is not as strange as it might at first appear, given that Rupert Murdoch, owner of News Corp. believes that ‘all media are [essentially] one’. As many believe that Mr. Murdoch's taste in news favours political scandal, sex and crime over moral and social issues, his liberal attitude towards MySpace and its resulting success are more easily explained. Mr.Murdoch has simply, inadvertently or otherwise, bought himself a sizeable stake in an expanding adult Internet industry.

As for Craig’s List, such a combination of open access and liberalism has brought its share of problems. Several families have sued News Corp after their underage daughters were sexually abused by adults they had met on MySpace, alleging corporate negligence, recklessness, fraud and misrepresentation on the part of the companies. So herein lies the dilemma. MySpace represents an entire galaxy within a galaxy of web sites, and it would require inconceivable time and resources to police 155 million MySpace users, let alone the entire Internet. Even moderation of chat rooms and group discussions is not commercially viable, and any given online community can and will only govern itself so far. As a result of these problems, MySpace has upgraded its security features in order to protect minors, and has since released Zephyr, a software suite designed to allow parents to spy upon changes in their children's MySpace accounts. Big Brother it seems is never far away.

In 2001 Florida's Supreme Court rejected a negligence suit in which a mother alleged that AOL failed to close the account of a subscriber who used an Internet chat room to sell indecent photos of her minor. The court found that AOL could not be held liable for failing to police its own chat rooms. Despite this ruling, some lawyers are arguing that plaintiffs could make a ‘premises liability’ argument, alleging that MySpace and AOL fail in their duty to take reasonable care to prevent foreseeable criminal acts. However, arguing that MySpace has a responsibility to prevent people from meeting in the physical world remains ‘implausible’, or at best an ‘unreasonable duty’. In fact it is virtually impossible, legally or practically, to prevent the exchange of personal details online through social networking sites.

The upshot of all of this social upheaval is that even if MySpace is not legally responsible for the nature of its published content, an army of worried voters could successfully pressure legislators, anxious for their votes, to end the era of the unregulated open access Internet community. Once Big Brother gets in on the show and MySpace profiles and communications are open to censorship and prosecution rather than just to removal, then MySpace users will desert in their droves and return to the underworld of cyberspace.

So where next?

Many observers believe that the growth of social networks will continue to surge through 2007, driven by advances in the use and availability of multi-media. YouTube.com has demonstrated staggering growth in recent months, outstripping MySpace and other rivals in its number of users to become valued at $1.5 billion. However there is a foreseeable problem which suggests that such growth is overly optimistic. Sites such as YouTube, which are based upon the sharing of user-produced videos, depend upon content which is freely provided and which consumes vast bandwidths. Given the recent explosion of ‘viral marketing’ methods, in which a free and entertaining video clip is used to promote goods or services, it seems that sites such as YouTube create too much ‘white noise’ for advertisers to effectively compete for attention. It will not take long for them to realise that the vast traffic and advertising spend will not translate into sales, and the dollar value of YouTube may plummet. Thus, whilst many features of YouTube may be widely adopted elsewhere, the site itself will become the victim of its own vastness and turn out to be just a transient port of call for a youth culture constantly on the look out for the latest buzz of excitement.

Now that the available supply of multi-media is almost unlimited on the Internet, the biggest growth market will come in filtering out the gold particles from the white water torrent of content which is continuously generated for download. Speciality networking sites will become increasingly popular once the legislators have passed the heat onto MySpace and Craig’s List to ‘clean up their act’. This will increase the duty of care and quality control costs of MySpace, YouTube and Craig’s List, forcing them to police their content and to require a more extensive user registration process. This will in turn cause a reduction in user numbers and an increase in their costs of provision, a burden which will have to be passed on to the consumer. A vicious cycle of declining traffic, decreasing numbers of users, and increasing costs will ensue, ultimately threatening to restrict the popularity of such sites. This will deter the roaming hordes of users who love such community websites for their unrestricted freedoms.

Such an imminent decline is no real surprise. Times change quickly on the web. Barely eight years ago, when search engines were considered to be the newest and greatest of commodities, many early Internet pioneers were forced to move out into software or IT services, whilst other neophytes like Yahoo, AltaVista or Netscape quickly transformed into portals or became assimilated or buried. The advertising dollars quickly moved towards the portals and search engines, with online search engines such as Lycos, Excite and AltaVista attaining top Internet site rankings in 2000. Google presently makes over $7.3 billion a year in revenues through advertising, much of which is now obtained by presenting ads on sites like YouTube and MySpace. In fact, such social networking sites currently attract around half a billion dollars from an online advertising market of $15.9 bn (which only represents some 2% of total US online advertising revenues). Although Facebook will be receiving a guaranteed $200 million in advertising from Microsoft over the next few years, and MySpace will receive a further $900 million over the next four years from Google, they will ultimately be overtaken by fresh ideas and competitors, as Netscape and Friendster found before them.

The dilemma is that the Internet market will soon saturate. There are only so many people who can and will go online, and only so many Internet leisure hours which users may consume. Inevitably the attention of the mass market cannot be stretched beyond a finite number of websites. This means that the portals will continue to lose traffic and revenues to social networking sites, which in turn will become ever more niche-market orientated. One successful example of such a niche networking site is Linkedin, catering for urban business professionals, which already claims to have over eight million registered users. Others are thinking along similar lines. Male model Jesper Lannung, frustrated by what he felt was the poor quality of traffic and the number of model ‘wannabes’ on MySpace, is now launching his rival service modelshotel.com. Jesper’s upmarket social-networking site for models reportedly requires representation with a reputed ‘top 50’ modelling agency to join. Combining internal dating services for models with community news about rooms to rent, Jesper is pitching at a quality niche sector of the market using the twin tools of traffic filtering and content quality control to maintain the integrity and quality of his network. A little elitist perhaps, but Jesper’s definitely headed in the general direction of the market.