Greg's Corner

Why is Craigslist failing?

By Greg Collier

Since Craigslist is a privately owned company, they do not have to disclose their finances. However, the AIM Group recently asserted that Craigslist has lost close to 50% of their revenue in just two years. The AIM Group is a sort of watchdog organization that keeps tabs on the online marketplace space. They once famously referred to Craigslist as a cesspool of crime.

Using what the AIM Group calls their proprietary methodology, Craigslist’s revenue dropped from $1 billion in 2018 to $565 million in 2020. Again, that’s an almost 50% drop in just two years. Part of the drop can absolutely be attributed to the COVID-19 pandemic, but the decline started long before lockdown. Part of the drop can also be attributed to the number of competitors that have recently started occupying the marketplace space. Other niche sites like Airbnb have also taken a chunk out of Craigslist’s userbase. However, we think it’s because of poor business decisions Craigslist has been making for the past 20 years.

For a large majority of Craigslist’s history, it was long rumored that they received the majority of their traffic from their erotic services section. Due to mounting legal pressure over human trafficking concerns, erotic/adult services was shuttered in 2010. Craigslist’s revenues took a slight dip in 2011 but continued to climb until 2018. So, what happened in 2018 to cause such a downward spiral? That’s when Craigslist shuttered their personals section over fears of the anti-sex trafficking laws FOSTA/SESTA. After Craigslist closed their erotic services section, traffickers would instead just post their ads selling women and girls to the personals section. By closing the personals after FOSTA/SESTA was signed into law, Craigslist virtually admitted that their platform had a sex trafficking problem.

Craigslist’s problem is that in their 26 years, they’ve refused to moderate any section of their site to keep out criminals and scammers. Craigslist only seems to moderate content on their platform when threatened with legal action. Except moderation costs money and Craigslist has a reputation of maximizing profits above all else, even at the expense of the safety of their userbase. Geebo.com and several other platforms moderate their content and still manage to be profitable. The only security measures Craigslist has is a list of safety tips and unless they change their tune, they will continue to decline.