EBay Takes Stake in Craigslist

  |  August 13, 2004   |  Comments

The move gives the auction giant a window into a parallel local universe.

Online classifieds and community site Craigslist has picked up a very high-profile investor, eBay, which has taken a 25 percent ownership interest in the smaller firm. Ebay bought out an existing shareholder who had once been a Craigslist employee. Financial terms weren't disclosed.

The relationship, the companies said, will allow eBay and Craigslist to "share expertise, resources, and creativity." Specifically, Craigslist, in a posting on its site, said it could learn from eBay about "trust and safety issues, user feedback systems, and operating internationally".

Craigslist, founded by founder and Chairman Craig Newmark in 1995, was an early online pioneer that managed to expand from its San Francisco roots to develop sites for 45 cities around the world. Like eBay, Craigslist has become a replacement for offline classified ads. Craigslist, however, has followed a distinctly local strategy and also encouraged discussion and community to build around its sites.

"Craigslist is an excellent example of how the Internet brings people together," said Meg Whitman, president and CEO of eBay. "Whether it's to trade goods, help neighbors or speak out on important issues, Craigslist has become the online gathering place for local communities."

One other distinguishing factor between Craigslist and eBay is in their communities' culture. EBay, which grew to reach a mass audience seemingly overnight, has taken a fairly family-friendly approach, whereas Craigslist has cultivated an anything-goes counter-cultural ethos. That's reflected in Craiglist's business model. The company allows most listings to be posted for free, but San Francisco Bay Area job posts cost $75 and Craigslist recently began charging $25 for job listings in New York and Los Angeles.

"Although I never figured that part of Craigslist might be owned by a public company, Meg Whitman and Pierre Omidyar showed that they were interested in us for all the right reasons," founder Newmark said in his blog. "Like Craigslist, eBay is about helping folks get everyday stuff done, on a level playing field -- they emphasize trustworthiness and reputation, and try really hard to listen to people. Basically, we're both about building community, and humanizing and democratizing the 'net, and there's gotta be more of that."

Craigslist set up a special discussion forum on its site for users to talk about the eBay investment. Though postings have been light thus far, at least one reaction, posted by someone using the name "wisecrack," was vehemently negative: "It's impressive that even to this day an average citizen can write to Craig and get a personal reply. Unfortunately, that same personal and human touch is sorely missed at eBay."

Recent weeks have seen much media speculation about Craigslist's future. Eric Hellweg, in a CNN/Money column, speculated about the possibility of a Craigslist IPO and compared the firm to Google. A later CBS MarketWatch.com article quoted Newmark and Craigslist President and CEO Jim Buckmaster saying the company wasn't for sale, nor interested in going public.

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Pamela Parker

Pamela Parker is a former managing editor of ClickZ News, Features, and Experts. She's been covering interactive advertising and marketing since the boom days of 1999, chronicling the dot-com crash and the subsequent rise of the medium. Before working at ClickZ, Parker was associate editor at @NY, a pioneering Web site and e-mail newsletter covering New York new media start-ups. Parker received a master's degree in journalism, with a concentration in new media, from Columbia University's Graduate School of Journalism.

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