I’m sorry that I haven’t posted in about a month. In the last few weeks, my role of CEO and father have seriously cut into my blogging time.
Now that I have had a chance to play with GoogleBase it's safe to say that it's definitely more than a classifieds platform. It will be interesting to see all the different ways this product evolves. A simple to use, hosted database in the sky is a very cool thing. I was a big fan of Quickbase, a similar service Intuit pioneered about five years ago.
That said, that GoogleBase -- or more precisely the classifieds solution that will be built on GoogleBase -- will definitely rock the world of classifieds. GoogleBase is simply the first of several platforms that Google may tie together to provide a classifieds solution and perhaps the least interesting. Two other future platforms, which have been written about in the blogosphere, will be much more interesting: Google Automat (which enables a CPC like model for listings published in GoogleBase) and Google Purchase (which could enable Google to participate or at least track a transaction between two parties).
Google’s moves are significant in that they will push the market to adopt a new revenue model for classifieds. This model is poised to change from a classic media model (where the advertiser pays an upfront fee to reach a captive audience) to a performance-based model (where the publisher gets compensated for delivering prospects to the advertiser).
This shift has occurred with all other forms of online advertising but it hasn't yet happened with online classifieds. Why? First, none of the existing players -- newspapers, Yahoo, vertical sites like Cars.com -- want it to change (perhaps a rational decision on their part). Second, and more significantly, no renegade company to date has forced them to change.
I used to think this would be Craigslist. Craigslist certainly got the ball rolling by finding a way to make the free classifieds model work (through community moderation). But it has failed to act as a catalyst to drive industry wide change from a business model perspective. I think this is true for two reasons. First, many of the existing players outside of the Bay Area still aren’t getting hurt badly enough by Craigslist. Craigslist mainly targets private party ads and most existing classifieds publishers make their money through listings generated by small businesses (car dealers, real estate agents, property managers, hiring managers, etc.). Second, Craigslist -- when it chooses to charge – still employs a classic media model.
Google will act as the forcing function for this change. It doesn't have an existing classifieds business to protect and it's demonstrated a clear focus on developing the long tail of advertisers (classifieds advertisers being the right end of that tail). Having said that, I certainly don't think this is game over for existing players. It's just finally time for them to change their model.