Craigslist Really Did Have a Problem

A few weeks ago I wrote a post about Craigslist after watching a video interview with Buckmaster and Newmark that perfectly encapsulated why some CEOs should stay away from the TV cameras.

My thesis was that while Craigslist was being unfairly painted as a menace to public safety (we’ve all heard of the “Craigslist Killer”) the fact remained that they had a serious problem brewing in their erotic services ad category. In the process of exposing Craigslist, likely in an effort to humanize them and deflect the mounting criticism, the effect was quite the opposite as Newmark and Buckmaster came across as strangely detached from the human ugliness that was playing out in real time on Craigslist and the news media.

Basically I said that they have a real problem and it needs to be dealt with aggressively rather than relying on tried-and-true “community solutions” strategy that has served the company well over the years.

Craigslist’s defenders, and there are many I learned, rely on three primary arguments: Craigslist) prostitution should not be illegal, 2) Craigslist can’t control what is posted and should not be held legally responsible or legally can’t because of provision protecting online services in federal law and 3) they already are taking all of the reasonable actions available to them to take down advertisements for paid sex services.

On the first argument, well all I can say is that prostitution is illegal so it’s rather silly to argue an affirmative defense on the basis of what one believes as opposed to what is the law. More importantly, human trafficking and exploitation is an affront to any civilized society and worthy of universal condemnation.

Craigslist accepts money for erotic services ads and there is an obvious proliferation of these ads in the erotics services category, therefore it could reasonably be argued that Craigslist was in fact profiting from illegal activity, which is well understood in the eyes of the law to be a aiding and abetting as a consequence of financially benefiting, having knowledge and awareness of the acts in general, and by nature of service they are providing assistance and support. If Craigslist added a section tomorrow titled “stolen property” we would not even be having this debate, and the argument that they can’t control what is posted rings hollow when they have already addressed the issue with a takedown process, so in effect they are acknowledging that they can control what is posted.

As for the third defense, sometimes simple observation is an effective instrument for fact finding and all I can really say is that you would have to be a complete idiot to not figure out that the majority of ads in erotic services are for prostitution. It doesn’t take an NSA code breaker to determine that “200 diamonds an hour, 120 for half” and” $100 donation for each hour” are advertisements for prostitution, especially when accompanied by an appropriately suggestive picture.

After mounting pressure from Attorneys General in Illinois and Connecticut (both Democrats by the way as is the AG in Missouri so don’t even think about trotting out the tired GOP and morals police argument) Craigslist is apparently reversing position on erotic services and taking down the section, replacing it with something that editors will review, apparently more strenuously than erotic services today.

Both Blumenthal (CT) and Madigan (IL) are shameless self promoters, it’s been said of Blumenthal that “the most dangerous place in Connecticut is between Dick Blumenthal and a TV camera,” but that doesn’t detract from the facts in this case nor the apparent culpability of Craigslist, which is apparent if for no other reason than Craigslist abruptly changed course on the issue after weeks of denials that erotic services would be dropped. Newmark and Buckmaster must have believed that there was a reasonable probability for legal action if they stayed the course, a development which could potentially threaten their entire business.

Craigslist issued a statement late this afternoon that was interesting if for no other reason than it contained a hell of a lot more than a simple confirmation of the plan to drop erotic services. What was striking was their assertion that Craigslist is safer than “American society as a whole”.

Unsurprisingly, but completely contrary to some of the sensationalistic journalism we’ve seen these past few weeks, the record is clear that use of craigslist classifieds is associated with far lower rates of violent crime than print classifieds, let alone rates of violent crime pertaining to American society as a whole.  

I guess it would be hard to dispute this because nobody, that I am aware of, has taken on the task of compiling violent crime statistics pertaining to Craigslist (or property crime despite the first recommendation from police when you are a victim of theft is to “check for it on Craigslist”). Having said that, I don’t quite know what to make of this statement… the fact that they are defending the service as having lower rates of crime still associates them with criminal activity, by their own admission!

Last week Newmark gave what can only be described as an emotional address (remember we’re talking about Newmark, “emotional” is relative) at the memorial for Katherine Olson, who was murdered as a result of an ad she responded to on Craigslist, and earned goodwill across the board in the process. Now it sounds like they are trying to say they are being victimized at the hands of a media inspired witch hunt. I don’t know what’s wrong with these guys but they should stop digging… just stop.

Craigslist Has a Problem

200904251643.jpg Like everyone I was saddened at the murder of a young woman advertising massage services on Craigslist. I also recognized that the crimes that make the headlines are but a miniscule percentage of the legitimate ads placed on the service. But then I wondered about all the property and violent crimes that occur and don’t make the headlines…

I watched an interview, a rather lengthy one, that Craig Newmark and Craiglist CEO Jim Buckmaster gave to ABC. Newark comes off as typically quirky but otherwise genuine, however the segment featuring Buckmaster is simply put devastating. His demeanor is matter of fact and that combined with emotionless body language creates a cold and unsympathetic persona.

Buckmaster and Newmark should be outraged, visibly outraged, that Craigslist has become a platform for criminals and they should be offended that Craigslist is being painted as a den of vice. Instead both appear to be rather pollyanish about the notion that Craigslist is serious about combatting sex crimes, violence, fraud, and property crimes on the site, both could be described as Inspector Renault in Casablanca… “I’m shocked, shocked to find that gambling is going on in this establishment”.

Craigslist has a real and serious problem and instead of waiting for a community solution to a problem that will only get worse, Newmark and Buckmaster should be taking a leadership position and driving effective change to combat crime taking place on Craigslist.

Craigslist and Why Contracts Matter

So eBay sues Craigslist for what appears to be a legitimate shareholder rights issue, and Craigslist responds by saying they won’t talk about the specifics except to say this:

Sadly, we have an uncomfortably conflicted shareholder in our midst, one that is obsessed with dominating online classifieds for the purpose of maximizing its own profits.

[From craigslist blog » Blog Archive » Complaint Department]

Kedrosky more or less nailed the narrative on this, as confirmed by the Craigslist blog today. Craigslist is basically saying that it doesn’t matter what agreements they were obligated to, that their only obligation, legal or otherwise, is to their mission.

The seeds for this dispute go back to 2004 when it was a former Craigslist executive who sold his shares to eBay, as opposed to the company itself. This no doubt has been a thorn in their side since then, as Newmark himself said then:

“I made a gift of some equity in craigslist to a guy who was working with me at the time,” Mr. Newmark wrote on his Internet blog (www.cnewmark.com). “I figured it didn’t matter, since everyone agreed that the equity had only symbolic value, not dollar value.”

While no one will ever confuse Newmark for a “greedy rat bastard capitalist” (as I was called the other day in the parking lot at Bucks, well not the rat bastard part but called a capitalist, really), the degree of naiveté that started with the assumption that the stock would never have any value to the circumstances that led up to this lawsuit is kind of shocking.

It may well be that Kijiji is at the heart of the dispute and that the recently launched eBay classifieds service could have violated a section of the shareholder agreement. It may also be that eBay had nefarious objectives when they bought the stake in Craigslist originally. All of these factors may be in Craigslist’s favor, but if it’s true that the Craigslist Board of Directors met in secret and engaged in a sham stock reorganization where the sole purpose was to dilute eBay’s stake in the company and trigger a provision that prevented eBay from electing a Director to the Board, and then inserted a poison pill into the bylaws, well then Craigslist is wrong.

If Craigslist asserted the Kijiji violated their agreement, then they should have disputed that in public and through the appropriate legal channels. While Craigslist will certainly win the PR battle, if the facts are as eBay asserts well Craigslist will lose the legal battle.

Shareholder agreements are contracts that determine what rights various parties have and the process through which disputes are defined and then resolved. These agreements matter and while the public may discount them based on biases they hold, but in a court of law it is black letter law.