WASHINGTON (CBS DC) – A new study has found that local newspapers have lost billions of dollars in advertisement revenue to Craigslist, a website providing classified-advertising services.
The study, conducted by Robert Seamans, assistant professor of management and organizations at NYU, and Feng Zhu at Harvard Business School, examined the impact of Craigslist on local newspapers during the 2000s.
From 2000 to 2007, the researchers estimate classified-ad buyers saved roughly $5 billion as a result of Craigslist entering the market. As readers who routinely posted their ads in local newspapers began using Craigslist, the papers lost out on billions in potential revenue.
“Our study demonstrates how media companies respond to shocks from technologically disruptive entrants in different industries,” Seamans said in a press release.
The newspaper industry experienced several “ripple effects” that researchers also identified.
Newspapers that relied heavily on classified-ad revenue saw a 20.7 percent drop in classified ad rates, 4.4 percent decrease in circulation, and a 3.3 percent increase in subscription prices.
“This study provides some insights to media moguls who will face future industry shocks and are pushed to re-evaluate their business models,” Seamans added.