Via Matt Yglesias, Barron YoungSmith has a post over at TNR arguing that Craiglist isn't a ruthless corporate killer of newspapers because unlike, say, Wal-Mart, Craigslist isn't driven by profit maximization:

While Wal-Mart is bent on maximizing returns for its shareholders--an appropriate goal, for a corporation--Craigslist is not. [...] Craigslist doesn't even try to profit from its economic activities, because its owners are devoted to a form of libertarian ideology .



But Craiglist doesn't have any shareholders! It's a privately held company. Wal-Mart is driven by profit maximization because its managers have a fiduciary duty to maximize shareholder value. If they don't, then (in theory) they'll be fired. And if they aren't fired, then (in theory) the company will be ripe for a gruesome Carl Icahn-style takeover. Craig Newmark, on the other hand, can do whatever the heck he wants. And because Craigslist is privately held, I don't know how you'd falsify the claim that what he does isn't motivated by a desire for profit.

(But maybe a lawyer will know this: At the very least, doesn't Craigslist need to show an intent to make a profit, if it wants to claim various business tax credits?)

A related point is what this means for newspapers. Both Matt and Barron say it doesn't make sense for profit-maximixing newspapers to compete with an ideologue like Newmark. But what I find odd about this sentiment is that newspapers have never really been profit-maximizing instituttions. There's the New York Times and its two classes of stock; there's the Washington Post, basically run on the dole with money from Kaplan test prep; there's the Associated Press, with its weird not-for-profit cooperative ownership structure (sounds socialist!). And while I'm all for adding to the list of crazy hybrid ownership structures, I'm not so eager to cheer the destruction the preexisting ones.





Photo from Flickr user monochrome



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