So how exactly does Craigslist make money?
By charging $25 for job postings in six of its largest U.S. markets and $75 for job listings in San Francisco and by assessing a $10 fee for brokered apartment listings in New York City, Buckmaster replied.
Period. End of story. All other listings in those markets are free, as are all listings in the more than 100 other markets the company serves in the U.S. and overseas.
"Is maximizing profit not part of the equation?'' Schachter asked.
"That's definitely not part of the equation,'' Buckmaster said. "That's never been a goal ... We have been fortunate to do well by doing good, whatever phrase you want to use, by focusing only on improving the service for users.''
How, then, does Craigslist determine how much to charge for the few listings that carry a fee?
"Like a lot of things, we mostly look to user input for making decisions like pricing,'' he said, noting that before the company started charging for brokered apartment listings in New York, "we put up a public discussion board I think almost two and a half years before we started charging to discuss the idea of charging, whether we should charge and if so, how we should charge, etc. So the pricing decision in large part came out of that."
Given the size of the site, Schacther asked, does Craigslist have technology partners that help deliver the service?
Nope. Craigslist runs almost entirely on open-source software which, Buckmaster noted, is "free and progressively better every month." Other expenses include running its servers, housing those servers, covering the monthly electric bill and paying for bandwidth, the cost of which had fallen for years before stabilizing and then rising recently.
Then how much is Craigslist's annual operating budget? "We don't really go into financials much," Buckmaster demurred, adding that staff payroll is the company's single largest expense.
Craigslist only has about two dozen employees. "So you can kind of extrapolate a little bit from there,'' Buckmaster added helpfully.
Schachter observed that by simply running text ads on Craigslist as a
Google (nasdaq:
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people ) AdSense partner, "clearly the site could be monetized to an incredible extent'' due to the massive amount of traffic it draws.
"We certainly have been approached about putting text ads on the site quite a few times,'' Buckmaster said, adding that, "The numbers are quite staggering, the amount of revenue that could be added.''
So why not add them to the site?
"No users have been requesting that we run text ads,'' he replied, as if that were a perfectly sensible answer.
OK, so Craigslist boasts a huge potential to make money, but isn't really interested in generating big profits. Given that combination, why not raise funds through equity investments or advertising and then give the money away to charity, Schachter asked.
"I think it's a valid argument and one that we don't necessarily have a persuasive answer for,'' Buckmaster said. "That is a proven model for doing good in the world. It just doesn't happen to be our model. Ours is to try to be as philanthropic in our core business as we can be and leave all the money out there in the hands of users.''