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Can an Auction replace Newspaper Classifieds? | GrantSpiller.com

Can an Auction replace Newspaper Classifieds?

I was reading an article from MediaPost, today.  Several U.S. newspapers and Broadcast News sites have come together to create Boocoo.com, an auction and listing site.  Their goal is to take back (or at least stop further losses)  the revenues lost to Craig’s List and eBay.   Read the article for yourself here:

MediaPost: Newspapers Unveil Auction Site, Boocoo.com
http://bit.ly/bTHqYB

My first thought on this is one of confusion.  Newspapers and Broadcast News sites are essentially getting into the Auction business.   They are planning to go outside of their core business to start a new business to compete with a business that does auctions as their primary function.  Huh?  Confused?  Me too, a little.  This can’t end well for the newspapers.  While they are using up valuable resources to create and operate this new business, are they turning their backs on better revenue opportunities?  But let’s come back to that point.

To me, there is an interesting paradox here.  The newspapers are trying to compete with the very companies that devalued their classified business to almost no value.  The real trick with Kujiji and Craig’s Lists (and other sites) is that they exploited the low costs of publishing online and created a better product than the newspapers high cost print classified ads.   The newspapers could have responded in kind and created their own free classifieds (some newspapers actually did) sites, but that would have meant immediately sacrificing millions of dollars in existing print classifieds revenue.  Most, however, didn’t and that has led to a fairly fast and painful decline in print classified revenues.   Conversely, the free online classified site gained a much larger new classified audience of buyers and sellers.  Partly, they gained because of the price (free!), but mostly,  believe they created a better product.  Buying and selling “stuff” is a generally great user experience.  The new classified companies innovated and created a better product and gained a sizable market share in a short period of time.

Now back to the plans of the Newspapers and broadcast news sites to create a new auction business to stem the loss of revenues to companies who do classifieds better.  I have read about their plans to introduce competitive pricing.  I have read that all the participating newspapers have agreed to promote the new site.  This is a very common newspaper strategy for bringing a new product to market.  What I am missing is:

  1. What makes this product better than what is already there?
  2. Where is the innovation?
  3. Why will clients want this new product instead of the products that already exist?
  4. And really, how does this stop, or even slow, the migration of classified ad dollars to the online classified companies.  Those sites  are still providing fundamentally better classifieds product that will still be attracting customers in droves.
  5. And finally, I will ask again.  If newspapers jump into the auction business with sufficient resources to compete with full-time auction businesses, what core opportunities will not get explored as a result?

To be clear, I have set-up and run event style auctions for newspapers in the past .  I understand their value proposition and their potential revenue.    But, I see BooCoo.com as a fundamentally different strategy for more obscure reasons.  As one of the commenters at the end of this story said:

Are you sure the name isn’t Boohoo ?”

I guess I’m not the only one still a little confused by this strategy.  How about  you?

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