File this under “completely clueless”.
Shirky points out, as many have, that the real collapse of the financial model of newspapers came from the widespread availability of free classified ads. Which is true. But like many, he talks as if it matter of factly the case that Craigslist et al. are significantly profitable. That’s not actually certain, as best I can gather, and Craigslist plays it very close to the vest with its profit numbers. I certainly don’t think Craigslist and its competitors are making close to the aggregate amount of profit the nation’s newspapers did with their classified sections in boom times. So I can’t understand lauding the brilliance of Craigslist when they have in essense taken an established business model and rendered its profitability a tiny fraction of what it once was.
(The emphasis is mine.)
Boy does this guy ever have things backwards! The fact that Craigslist does not make the same profit as did newspapers is pretty much irrelevant. What is relevant is the service offered to customers. Craigslist offers a better service - to both buyers and sellers - at a lower cost. Classified ads in newspapers are expensive to buy, and tedious to use - and are simply not competitive.
Customers do not exist to serve newspapers. Newspapers exist to serve customers. For most customers, newspapers are no longer competitive.
Newspapers provided two services to customers. First, they offered collection and reporting of news. Second, they offered advertising, some of which might be interesting to the reader. Newspapers are in trouble now due to losing a large part of the advertising revenue, The loss of revenue is due to more efficient competitors (like Craigslist). For newspapers other main service - collection and reporting of news - the web already offers a better and more efficient alternative in RSS feeds and feed readers (like Google Reader). Feed readers are still on the early part of the adoption curve - lots of folk do not use then yet. Eventually the general population will realize that newspapers are not the best source of news.
With the web providing better and more efficient services, that leaves very few customers for newspapers.
Its the future. Get used to it.