Wired: Craigslist and Simplicity
Two great articles in the most recent Wired Magazine - the first is titled The Tragedy of Craigslist and the second is titled The Good Enough Revolution" (it's about the popularity of simple-to-use technology). There is some parallel logic in the two articles that I find interesting.
Subscribe to:
Post Comments (Atom)
I found both of these pieces very interesting. There is definitely similar logic behind the success of Craigslist and the success of the simple devices in the second article... ease of use and an obsessive focus on eliminating extraneous features is a big factor in both.
ReplyDeleteI actually agree with most of the following comments by user 'artjohnston' below the Craigslist article:
"It's been a long time since I read such a whiney, trite, pretentious, and misguided article.
Mr. Wolf repeats the "killers, hookers, death" irrelevancy that is only repeated by the tabloids. Then he totally glosses over the point that Craig's List IS the most popular and used website--Oh My God--how could that be without all the hucksters of Wallstreet and the marketeers of the all too many trite, empty websites. Mr. Wolf should read the following Wired article on the huge success of the "Good Enough Revolution".
Craigslist is a hugely useful tool that actually does something, which is why it is such a hugely successful website. Wolf doesn't yet know that spam and advertising rarely are a useful tools. The last website I want to be on is a website which does nothing and looks like the magazine "Wired"--grotesque layout and such heavy marketeering that no one can tell the difference between spam (advertising) and real article that are supposed to inform and be useful.
Craigslist is 100% useful--which is why I support it over the hucksterism of Mr. Wolf."
In the words of another commenter, "I don't see much tragedy in Craigslist - just a business owner running his business exactly the way he wants to." That seems pretty simple to me.
Also, the article on Craigslist asserts that the company isn't wringing maximum profit out of its product - how does the author know this? Craigslist doesn't release its financials. Maybe growing a huge user base by NOT forcing advertising and data tracking onto the site is actually maximizing revenue? Why does the author assume that an Amazon.com or eBay interface is the true way to maximize this business model?
ReplyDeleteI think the article was more about economics than even the author may have realized.
ReplyDeleteI agree with artjohnston (and Royce's first point) that Mr. Wolf missed the goal of craigslist, to act as a virtual version of a giant corkboard on a college campus. People keep walking up and stapling new ads on top of old ads. It is up to the viewer to rip off the phone number or ignore it.
However, I disagree with your second comment. Craigslist is not following a traditional business model. Mr. Wolf seems to be closer that Craig Newmark and Jim Buckmaster are eschewing traditional business models and economics and may be developing a new "Good Enough" economic structure. This could be as revolutionary to economics as that Beautiful Mind guy was.
If you tried to fit craigslist into a traditional business model, you would argue that they are opting for lower margins on greater volume, a la Diddy Riese or Wal-Mart. But I think it is one revolutionary step beyond that.
It almost seems like they are opting for 0% profit margin on infinite volume. They have become so popular that people are giving them money, like fans giving drugs to rock stars.
I think you and I are actually arguing the same point. I didn't say that Craigslist is a traditional business model. Rather, I'd agree with you that Craigslist is basically hitting a home run with an alternative Good Enough model for publishing online content.
ReplyDeleteHowever, why do you assume they have a lower profit margin? Or even the 0% margin that you assert may be possible? If profit margin means your net of revenues minus expenses, then I can envision Craigslist having a big margin. Mr. Wolf says in the article that Craigslist has a staff of 30 vs. 1,600 for Amazon... with costs conceivably as low as can be, doesn't that mean their margin could potentially be VERY big? Unless you are defining margin as value-per-user, in which case your low-margin, high-volume analogy is accurate.
I love your analogy of the "giant corkboard on a college campus." That works perfectly for Craigslist.
Did you read the Good Enough article as well? I love how the article shows how the Good Enough model scales from very simple products (Craigslist, MP3s) to very complex products (military combat planes, health care networks) and everything in between. I think Good Enough is a defining trend in products... is Wikipedia an example of Good Enough? Not a lot of in-depth expert detail on subjects, but it's enough information to educate you on something you knew nothing about previously.
I did read the Good Enough article, and I appreciate the insight by the writer. However, I don't think Good Enough is going to be THE trend. I think that there will continue to be a gradual correlation between value and quality and the price the market will bear for different levels of quality. Good Enough really took off in the last two year's economy. Also, there may be times where a technology simply cannot be produced for the price the market will bear. There will always be a market for a better, feature-filled product, just as there will always be a market for a cost-effective version. Honda Civics and Accords will always sell well. BMW and Mercedes-Benz will also do well. They may not do well at the same time, but as long as you're offering a product where the increase in quality corresponds with any increase in price, the market will bear the price increase.
ReplyDeleteAs for the profit margin... I have no idea how craigslist makes money, other than the fees that employers pay to post job ads and New York apartment brokers. I believe profit margin is a term that is usually applied to individual items, so for every (non-NY) apartment listing and sporting goods ad, there is no revenue at all. Did you catch something I didn't as to how they generate $100Million in revenue?
ReplyDeleteI agree with on the Good Enough article, Aaron, and I feel that the one thing the article didn't address was improving quality. By that I mean that I think there is a base level of quality for a product that has become VERY high with technological improvements. Ten years ago no video cameras were as good as what the Flip is now, and that base level of video is actually awesome when you look at it in a historical context.
ReplyDeleteSo I would say that the big revolution is actually the whole Moore's Law effect - everything is getting cheaper and more awesome all the time. The article kind of touches on this with the MP3 effect, but doesn't go far enough. It's not that MP3s are a "lower sound quality" than high-fidelity files, it's that MP3s sound really fucking good and nobody can tell the difference.
On the Craigslist point, I thought profit margin was usually how many cents on every dollar was net profit. So in a good commercial real estate venture maybe you're making $0.70 on every $1.00 earned in profit, before taking into account loan payments. Am I off base on that definition?