How Craig conquered the world

To most of its 50 million users, it is the world's largest car boot sale, where a little rummage turns up anything from a model of the F-111 Aardvark bomber to a Legend of Zorro DVD and a million items in between. It is a place to find a house, a car, a new job, or even love.

But to fulminating politicians and law-enforcers in the US, it is "America's pimp", where prostitutes tout for business among the lonely hearts ads. Consumer advocates say it is a seething nest of scam artists and forgers. It is, in other words, the human souk in all its glory, a venue for any and every kind of transaction. It is Craigslist.

Assailed by legal challenges and a high-profile murder charge in Boston for the so-called "Craigslist killer", you might think that this 14-year-old internet phenomenon was cowed and on the defensive. Because its major sources of revenue are job listings in US cities and estate agents in the teetering economy of New York, you might think the recession is giving it a beating. Far from it. According to a new report, Craigslist is bigger and healthier than ever, and is on course to top $100m (£61m) in revenues this year for the first time.

It has been an extraordinary rise, and local newspapers reliant on classified ads are still reeling from the impact. Craigslist itself, though, looks as homespun and dishevelled as any car boot sale, an unadorned page of links, run without fanfare by 28 employees out of a Victorian house in San Francisco.

So, $100m. The figure comes from a US consultancy called the Aim Group, which has been counting the ads on Craigslist and doing the sums since 2003. Most of the postings on the site are free but with the massive audience has come the chance to charge professional advertisers. Recruiters in Silicon Valley pay $75 to list job vacancies; recruiters in other major US cities pay $25.

Six years ago, the website could have had revenues of barely $7m, says Peter Zollman, the Aim Group founder. The jump this year is projected to be 23 per cent. "It just continues to grow," he said. "There is absolutely nothing fancy about it, nothing glitzy or glamorous, but it works... And the website has grown almost entirely by word-of-mouth and through free publicity, because they spend a minuscule amount on marketing."

The Craig whose list it is is Craig Newmark, now aged 56, balding and bespectacled and looking nothing like the dot.com squillionaire you might expect. A New Jersey native, he relocated to Silicon Valley and was working in an IT security job at a stockbroking firm when he began emailing local listings news among a small circle in 1995. A year later, that email list became a website bulletin board where others could submit events, list items for sale, or see if there was anyone nearby who might want to have sex with them. As word spread, users in other cities asked for their own pages and now the phenomenon spans the globe, covering 570 cities in 50 countries.

The reason that Mr Newmark does not look like a dot.com squillionaire is that he has no ambitions to live like one. He is happy running Craigslist according to what he calls "nerd values" – taking enough out to maintain a decent living, paying more attention to creating a community.

That might not seem so charming to his rivals. One of the profound consequences of Craigslist's rise is that newspapers have seen a massive erosion in their sales of classified adverts. Classified revenue plunged 29 per cent in 2008 at US newspapers, where Craigslist's revenue growth was an estimated 47 per cent.

All this talk of revenue is a touch distasteful to the folks at Craigslist. They have never confirmed any of the Aim Group's figures. It is not clear how much Mr Newmark and his chief executive, Jim Buckmaster, own between them, although we know that eBay owns 25 per cent because they are having a furious legal battle over that investment. In 2004, the auction site bought into Craigslist expecting Messrs Newmark and Buckmaster to capitalise on the goldmine they had created, yet five years on, only a fraction of listings are paid for and there are no ads on the site.

In the past year, politicians have seized on Craigslist as a place where prostitutes tout for business. The issue was brought into stark relief when a medical student, Philip Markoff, was charged with killing a prostitute, Julissa Brisman, he contacted through the site. Attorneys general have been pressuring the site to stamp out the ads. It agreed last month to replace its "erotic services" category – which charged for ads but gave the revenue to charity – with a more closely monitored "adult services" category.

To say that Mr Buckmaster is aggrieved would be an understatement. In the company's latest blog post, he lists dozens of adult adverts that appear on other websites and railed against "the absolute disinterest shown by politicians and journalists in hardcore sex-for-money ads featured in journalistic media, no matter how numerous or graphic they may be".

In other words, this stuff will always be with us; Craigslist is just one of any number of meeting places for the dizzying array of human transactions. Fulminating against Craigslist is like fulminating against the human condition.

Craigslist by numbers

50 million Users of Craigslist every month.

1.15 billion Classified ads that have been posted so far.

24 minutes Average time users spend on "erotic services" ads.

23 per cent Estimated growth in revenue for 2009 28 Members of staff running the site.

Rhodri Marsden on the impact of the net independent.co.uk/cyberclinic