UPDATE: well... thekaran's link still works but the LIME link (referred to in one of my comments on thekaran's blog... doesn't seem to work anymore: now it asks people to register even to *view* stuff and I don't want you to have to do that... so here is my comment to what was a podcast interview done by somebody called "Chris" something -- community manager at LIME, if I remember right -- Craig Newmark was being interviewed in the context of craigslist being a "good company" (weirder still, I can't find the podcast and my comment to it when *logged in* to their site -- I had to register to post that comment so I can search now).
Oh well... here you go:
Hi Chris! Interesting interview… doesn’t seem to square off very well with the facts, though…..
The cold basic facts re: CL seem to be that it started as a NON-PROFIT (and people donated a whole lot resources – time, expertise, word of mouth etc.) under the assumption that it was going to stay that way… Then it asked people what they could charge for to *pay for the bills* (it had previously had sponsored ads) and turned FOR profit (meaning that profits, big or small, were no longer going to stay within the company and pay for things like improvements, as it would have happened if it had stayed a non-profit – from now on, all profits were going to go straight into the pockets of the shareholders).
They refuse to disclose how much they make in *pure profit* but by all accounts is has been a WHOLE lot more that what they asked the community for (to *pay for the bills*). Meanwhile, the places and things they charge for are increasing…
Yes, they could charge for a lot more things (or at least *attempt* to do so) but that doesn’t seem to make financial sense *for the long run* (because the list propagates organically by NOT charging…). So the trick seems to be to figure out what is the “critical mass” (level of usage for a particular category in a particular place) where even if you charge a “modest fee” (at least, *initially* modest) you wouldn’t lose much of the potential growth. As far as I can see, the pattern of charging in new cities follows this strategy: San Francisco, Los Angeles, New York, Boston, Seattle, San Diego… etc.