Craigslist Takes Upstart Competitors to Court

Is the classified-ads site behaving like a bully—or legitimately protecting its business interests?

Classified-ads site Craigslist is a big, fat bully. That’s the conclusion many in tech policy circles have come to after a federal court ruled last week that the company can carry on with a suit against three smaller competitors. In Craigslist’s shoes, however, you might resort to bullying, too.

The defendants—3taps, PadMapper, and Lovely—have built their businesses by using Craigslist advertisements without permission. 3taps operated Craiggers, essentially a copy of Craigslist with an alternative interface that made navigating classifieds easier. As the site’s tagline put it, “Craigslist data, better than Craigslist!” PadMapper and Live Lovely take listings and display them on maps, which also makes it easier to search and browse ads.

Many of those critical of Craigslist focus on the fact that the defendants are making Craigslist’s better by offering features the company has so far refused to offer.

In an open letter to Craigslist founder Craig Newmark, Steve Schultze of Princeton’s Center for Information Technology Policy wrote that he was “at a loss about why Craigslist is taking such a scorched earth tactic against a site that appears to help more people find Craigslist postings.” And congressional-staffer-turned-copyright-activist Derek Khanna wrote that “instead of innovating, [Craigslist] has chosen to go after new market participants that have wanted to use Craigslist’s data on classified postings.”

In some respects, Craigslist had this backlash coming because it has long branded its service as something of a for-profit non-profit not averse to sharing. The site’s icon is a hippy peace symbol, and it operates not under a “.com,” but instead a “.org” domain, which it says “symbolizes the relatively non-commercial nature, public service mission, and non-corporate culture of craigslist.” Newmark has long held that the $1 billion company is not motivated by profit. So it’s little surprise that as the company has moved to fend off competitors that use its data without permission, tech elites have developed a negative perception of Craigslist best articulated by The New York Times: “It has dug an effective moat by cultivating an exaggerated image of ‘doing good’ that keeps its customers loyal, while behind the scenes, it bullies any rivals that come near and it stifles innovation.”

Yet it’s pretty easy to see why Craigslist should care that others are building on top of and extending its service. What makes the company so valuable is its strong network effect. People go to Craigslist because that’s where the people are. If it loses that, it loses its business.

PadMapper aggregates and presents listings not just from Craigslist, but from other apartment listing sites as well, including Apartments.com and Rent.com. This is great for users because they only need go to one site to browse all the listings across multiple databases. It’s bad for Craigslist, however, because it makes it less of a focal site. Such aggregators make it less important that an apartment be listed at Craigslist specifically as long as it is in the aggregated list.

PadMapper also offers listings of its own listings through its PadLister service. This means that PadMapper relies on the network effects that Craigslist has developed in order to draw in an audience, and then promotes and sells its own listing service to that audience. While that business model is certainly innovative, and may not violate copyright, it doesn’t sit well, either.

Craigslist disrupted the newspaper industry by decimating traditional classifieds. It did this by offering a better alternative to its competitors that attracted consumers away from newspapers. Craigslist didn’t copy newspaper ads to jumpstart its operation, just as Facebook didn’t jumpstart its network by copying over MySpace accounts. That’s true innovation: taking command of the network effect by offering a superior product. So shouldn’t we expect the same from new entrants in the classifieds space?

Some don’t think so. 3taps, for example, is pretty clear that it thinks data about classified ads should be “public property.” In several white papers that do violence to economics the company proposes a “data commons” and also calls for “exchange neutrality,” the idea that sites like eBay, Craigslist, Monster.com, and Match.com would have to make their users postings available for anyone else to take and use on their own sites because “[s]ociety at large, not just a few, should benefit from the coming breakthroughs in availability of exchange-related information.” It’s not clear what incentive new or existing posting services would have to operate or innovate if they were forced to give up any possibility of exclusive use of data.

This is not to say that Craigslist’s claims in court are all correct. The company should fail on its copyright claims. For one thing, a site like PadMapper only copies facts about a listing (i.e. 3 bedrooms, 800 sq. ft., $2,000 a month, etc.), and mere facts are not subject to copyright. Additionally, as the court ruled last week, in order to exclude others Craigslist would need an exclusive license to listings from its users, a high bar that it likely hasn’t met and can probably never meet. Additionally, Craigslist brought actions under the Computer Fraud and Abuse Act. This is problematic because, if successful, the charge would equate with hacking some common practices of many Internet users, such as using proxy servers.

It’s unfortunate that Craigslist has sought to rely on such claims to protect itself, but one can understand why it might have thrown the kitchen sink into its lawsuit. The common law legal theories otherwise available to it, like trespass to chattels and misappropriation, are controversial and somewhat untested in the Internet space. Perhaps this will be the case to flesh them out.

By billing itself as a public service, Craigslist certainly put itself in a position to be at the short end of the PR stick now that it’s acting like it cares about its market dominance. Despite this hypocrisy, and despite the fact it’s using some bad legal theories to advance its claims, we shouldn’t give up on the healthy notion that if others want to displace Craigslist, they should do so by building their own user base. It’s the least one can expect from an innovator.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Paul.||

    It's not easy when there's no clear bad guy?

    Where does Dianne Feinstein come down on this?

  • SQRLSY One||

    Dianne Feinstein says it's not related to her billion-dollar hubby's fish-cannery business and so Craig's List is a bunch of greedy capitalists, and therefor should be hung at dawn! And who CARES about the ultimate owners of the information provided, the sellers!?!? If someone helps them sell their wares or services, who is Craig's List to whine about it, because, well, they're just greedy corporationists who act all corporation-ey!!! Money is ALL evil, except, of course, if Government Almighty moves it around! -Channelling Dianne here...

  • SusanM||

    Should we exorcise you with a $100 bill and a copy of Atlas Shrugged to make sure you don't do that again?

  • eddy820||

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  • Fist of Etiquette||

    Craigslist should just buy them out.

  • prolefeed||

    Buy them out with what? They have a "we'll make very little money" business model, leading to massive market share but barely enough revenue to pay expenses.

  • Bill Dalasio||

    Good point. Actually a licensing agreement would probably be the best negotiated settlement. Craigslist could offer a cheaper price for ads exclusively on their site than for ads that they offer to aggregators.

  • prolefeed||

    Craigslist could offer a cheaper price for ads exclusively on their site

    The price for posting an ad on CL is "free".

  • Bill Dalasio||

    Hence, "than for ads they offer to aggregators". They could charge a nominal fee for "public" ads and offer their own free of charge.

  • Bill Dalasio||

    If Craigslist were acting on its own to make its site incompatible with these aggregators, I'd say more power to them. But, even this supportive article looks to me like it acknowledges that they shouldn't have a legal leg to stand on. Really, there's not really much of an argument other than that they're playing dirty pool. Honestly, to side with Craigslist, I think you have to work from the assumption that the ads themselves are Craigslist's property. But, rightfully, shouldn't the ads be the property of the advertisers?

  • setTHEline||

    Good points Bill. I think that rightfully though the ads should be the property of the party specified in the TOS and listing agreement. From their TOS:

    You automatically grant and assign to CL, and you represent and warrant that you have the right to grant and assign to CL, a perpetual, irrevocable, unlimited, fully paid, fully sub-licensable (through multiple tiers), worldwide license to copy, perform, display, distribute, prepare derivative works from (including, without limitation, incorporating into other works) and otherwise use any content that you post. You also expressly grant and assign to CL all rights and causes of action to prohibit and enforce against any unauthorized copying, performance, display, distribution, use or exploitation of, or creation of derivative works from, any content that you post (including but not limited to any unauthorized downloading, extraction, harvesting, collection or aggregation of content that you post).

  • DJK||

    Seems like they have a pretty ironclad contract right to the postings. They own the postings. I note that they continually talk about "derivative works" - clearly setting themselves up for some copyrights. I'm not sure they have much of a copyright, though. Maybe to the post, itself. But if the competitor modifies it at all...I think that's it.

  • Bill Dalasio||

    That does seem to suggest that the advertiser transfers ownership of the ad to Craigslist. Great point. So, THAT would be a legitimate cause of action, rather than a claim that they own the network effect of the ads, which is what Brito seems to be arguing. That strikes me as creating a legal monstrosity that would allow anyone with large market share to shut down any upstart competitor.

  • DJK||

    Their TOS doesn't grant them a legitimate cause of action against competitors which just use some of the data from the posts that they own. Facts aren't copyrightable; only expressions are. They MIGHT have a cause of action for copyright infringement if the competitors straight up copy the whole text of the posting, but I'm not even sure that flies. It reminds me a bit of Feist v. Rural, where SCOTUS ruled that information alone is not copyrightable; you need at least a modicum of creativity. This was in the context of phone books, but I think it's pretty apt here.

  • Bill Dalasio||

    Then the aggregator would have to strip out any actual language or sales photos offered in the ad, wouldn't they? It strikes me that the actual arrangement of facts within the ad might also constitute a degree of creativity.

  • DJK||

    Every Craigslist posting I've looked at has no ads. If they did, you're right. The arrangement of those ads might constitute creativity. Easy solution is to just pull the ads.

    I think it's pretty indisputable that anyone could come and take the basic facts in a Craigslist posting. The could probably take the entire wording verbatim.

  • Tulpa (LAOL-VA)||

    It would have to be a creative use of language to be copyrightable. "Two bedrooms and a bathroom a mile from the train station" isn't copyrightable, for example, while a more creative description might be. The photos would definitely be copyrightable.

  • Concerned Citizen CA||

    Yup, I think you're right here, they don't own the copyright and this is more like the Righthaven case, where the judge threw out Righthaven's right to litigate because they didn't own anything but the right to litigate, which doesn't give them standing. Seems like the same exact thing here. Get out the popcorn!

  • DJK||

    Sure. I think Righthaven is a closer match. But as far as I know, it's only gone to the district court level and no one cares what some federal court in Colorado says. I chose Feist v. Rural because it was a SCOTUS case and is thus binding precedent for the whole country. Doesn't matter where the case is being fought and there's no room for split circuit decisions.

  • ||

    It seems to me that if they just listed the basic facts and had a link to the original CL positing, then there would be no cause.

    But that might not be the case here. it could be that the aggregator is copying the text and photos and contact info en masse and "converting" it into what appears to be an ad on their own site, without attribution to CL or a link to the post it came from.

  • setTHEline||

    So is the only real issue that Craigslist claims to be a peace loving hippie fest, but actually operates as a business?

    CL isn't really like Ebay. CL doesn't process transactions, it posts ads. So usurping their ads without permission is basically usurping their product without permission.

    This may not be the clearest case, but certainly CL should be able to defend their TOS agreement.

  • DJK||

    So what? Usurping ads? Who cares? What right does Craigslist have to those ads? They may have a copyright to the ad as displaced on their site, but that doesn't extend to competitors taking information from that post. It MAY extend to wholesale copying of the text of the ad, but the competitors could easily claim that changing its formatting, etc on their websites makes it a different form of expression.

    I'm not convinced Craigslist has any rights here. If you want to be a profitable business, do something profitable.

  • DJK||

    I love these hippie businesses. Whole Foods is one of my favorites. When my liberal friends find out that John Mackey is pretty libertarian, they tend to lose their shit.

  • Sevo||

    Newmark ain't
    He used to blog on the SF Chron website and he seems to actually bleeve in 'free stuff'.
    Right after King Obozo was elected for his first term, Newmark was all over 'We're going to change how government works now that that nasty Bush isn't there anymore! We'll make information free and our new, cool pres is going to make everything transparent'.
    They or he ended the blog 'bout year two; no more noise about *that*!

  • BarryD||

    True enough. If thing are sold as a result of the ads, Craigslist gets... Uh... Nothing. So it's difficult to prove that an aggregator "stole" anything, any more than Google "steals" content from websites so that Google's users can find information on those sites.

    So the court could even find the defendants to have infringed on Craigslist's right to the revenue from the ads, yet award damages of $0.

  • Tulpa (LAOL-VA)||

    This may not be the clearest case, but certainly CL should be able to defend their TOS agreement.

    The TOS is an agreement with the ad poster only; it can't grant rights to Craigslist that the ad poster himself doesn't have.

  • Barton Sage||

    So ... information does not want to be free, then?

  • The Last American Hero||

    I'm partial to Craig's List. I mean, do you know how hard it is to find a lead singer for a Focus cover band?

  • Sevo||

    "I'm partial to Craig's List. I mean, do you know how hard it is to find a lead singer for a Focus cover band?"

    You have my sympathy!

  • PapayaSF||

    The company should fail on its copyright claims. For one thing, a site like PadMapper only copies facts about a listing (i.e. 3 bedrooms, 800 sq. ft., $2,000 a month, etc.), and mere facts are not subject to copyright.

    IANAL but I believe this is not quite correct: aggregations of facts like phone directories, maps, reference books consisting of lists of movies or whatever can indeed be copyrighted. In fact it's a common tactic for publishers of such to include false or distorted entries in order to have evidence in court that another publisher just copied their work and didn't do original research.

    If Padmapper just took an individual CL apartment listing or two they'd be fine, but by crawling the entire site and copying them all, even in part, I think they are opening themselves up to a copyright suit.

  • Sevo||

    "IANAL but I believe this is not quite correct: aggregations of facts like phone directories, maps, reference books consisting of lists of movies or whatever can indeed be copyrighted. In fact it's a common tactic for publishers of such to include false or distorted entries in order to have evidence in court that another publisher just copied their work and didn't do original research."

    Me neither, but your example only covers copy/paste aggregations; IOWs, the exact wording, layout, etc.
    Picking the info and key-stroke entering it (AFAIK) isn't infringement.

  • PapayaSF||

    I really, really doubt that any of these sites are keystroke-entering this data. I suspect it's all done by bots. But even so, I think my point stands. If I produced a book of movie lists that consisted of titles, dates, and cast lists, and it was created from what's in Leonard Maltin's books minus directors and reviews, I'm pretty sure that would be infringement.

  • Sevo||

    PapayaSF| 5.6.13 @ 10:00PM |#
    "I really, really doubt that any of these sites are keystroke-entering this data.'

    In which case, the rest of your argument goes nowhere.

  • PapayaSF||

    Are you really saying that automated site-scraping somehow insulates them from copyright infringement charges? I'm pretty sure that the law doesn't make much of a distinction between manual copyright infringement and the automated sort.

    Also, I'd like to object to the term "competitors" in the headline. Gathering their own ads would be "competing." Repackaging information from CL is something else.

    (Disclosure: I know Craig.)

  • BarryD||

    Repackaging information, like Google or Reason.com, and a million other sites do, you mean?

    I predict a complete loss in court, unless the whole jury also knows Craig.

  • ||

    Google and Reason.com generally include a link to the original ad and post an excerpt. They don't copy the entire text of the article, strip off the authorship, and post it on their own website as if it had been there originally.

    It's not exactly clear what's going on here, but I suspect this is more a case of these websites copying ads en-masse without linking back to craigslist than just "aggregating" them with links.

  • BarryD||

    Repackaging information, like Google or Reason.com, and a million other sites do, you mean?

    I predict a complete loss in court, unless the whole jury also knows Craig.

  • Sevo||

    PapayaSF| 5.7.13 @ 12:05AM |#
    "Are you really saying that automated site-scraping somehow insulates them from copyright infringement charges?"

    No. I posted that keystroke entry of data found anywhere is not an infringement.
    If I understand correctly, your argument is that if it were auto-entered, it would be infringement. I make and have made no comment on that.

  • PapayaSF||

    @HazelMeade: Yes.

    @BarryD: There's a big difference (ethically and legally) between repackaging bits of information from many sources and repackaging lots of information from one source.

    @Sevo: One can certainly infringe with just keystrokes, but I think systematic site-scraping is even more evidence of infringement.

  • Tulpa (LAOL-VA)||

    There's a big difference (ethically and legally) between repackaging bits of information from many sources and repackaging lots of information from one source.

    No there isn't. You seem to have dropped the "IANAL" a bit too quick.

  • PapayaSF||

    Yes, there is. Read up on fair use. IANAL but I've been in publishing.

  • Tulpa (LAOL-VA)||

    IANAL but I believe this is not quite correct: aggregations of facts like phone directories, maps, reference books consisting of lists of movies or whatever can indeed be copyrighted.

    Wrong.

    Feist Publications, Inc., v. Rural Telephone Service Co., 499 U.S. 340 (1991), commonly called Feist v. Rural, is an important United States Supreme Court case establishing that information alone without a minimum of original creativity cannot be protected by copyright. In the case appealed, Feist had copied information from Rural's telephone listings to include in its own, after Rural had refused to license the information. Rural sued for copyright infringement. The Court ruled that information contained in Rural's phone directory was not copyrightable and that therefore no infringement existed.
  • PapayaSF||

    Hmm. That does seem to overturn the precedent that was in place when I was in publishing. I'm still not convinced that it applies here, though. And doesn't it matter that the site-scraping violates CL's terms of service?

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  • 0x90||

    The federal government cannot stand idly by as Craigslist attempts to leverage its monopoly position over a service that has become essential to the proper functioning of the interstate economy of the USA.

  • Sevo||

    So commerce clause?

  • 0x90||

    Yep -- there's pretty much nothing it can't do. And Craig's all for net neutrality, I hear: why should he be able to force us to view ads through his interface alone? His company is not even really a private company -- without signals and wires running through public airwaves and rights-of-way, he would have no business at all. In other words, it's not his business -- it's ours.

    So, just to be clear, we're not talking about regulation here. It's just about playing well with others.

  • Sevo||

    Yep, that was the same sort of baffle-gab the twit used to post on SF Gate.
    Keep in mind, we're dealing with a guy whose claim to fame is simply offering the e-equivalent of Auto-trader.
    This is not a 'thinker' with whom you'd like to spend a lot of time. Prolly 20 minutes would plumb the depths.

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  • 21044||

    How is Craigslist making any money?

  • Matthew Borcherding||

    "Craigslist charges $25 for recruitment ads in 28 of the 29 markets where it charges for job listings, and $75 in the San Francisco Bay area. It also charges $10 for apartment ads placed by brokers in New York City, and $10 for ads for “therapeutic services” (primarily massage parlors and spas) everywhere in the U.S. It does not charge for advertising outside the U.S."

    http://aimgroup.com/2012/11/07.....7-million/

    So it gets by on some pretty reasonable fees (much cheaper than most other job boards) and running very, very lean. Sparse interface = less bandwidth to purchase and less servers to buy/manage. They automate just about everything they possibly can. Changes are minimal (new markets, mostly).

    Still, those fees add up. They'll probably make $130m/year in 2013, based on the research at the article I linked.

  • BarryD||

    So an aggregator is hurting their revenue in what way?

  • ||

    I'm guessing that the aggregator doesn't have a click-through to the craigslist post. It copies the text and turns it into a post on their own site, strips off CL's ads, and sticks their own on.

  • 21044||

    thanks

    never placed an ad and never used it except to help the kid find a housing share at uni.

  • DJK||

    And running very, very lean basically destroys any intellectual property claim Craigslist might have otherwise had. No original content (images, design, etc) basically precludes a copyright.

  • PapayaSF||

    Nonsense. Directories, maps, and other such reference works can be copyrighted.

  • Tulpa (LAOL-VA)||

    Wrong. So long as any creative arrangement or presentation of the information is not copied, a mere lister of information cannot sue for copyright infringement.

  • BarryD||

    Uh, the new entrants ARE building their own user base.

    Aggregators and search engines need to have users, or they don't matter. The users are using the aggregation and/or search services.

    If the author is suggesting that every entity on the Internet is obligated to provide original content, not function as a search or aggregation service, or that a search/aggregator should not be able to also offer original content, he's on crack.

    Really bad crack.

    What "name" site or service on the Internet DOESN'T do this?!?

  • ||

    Yeah, this is like arguing that 'Zillow' shouldn't be allowed to aggregate the listing placed on real-estate agencie's websites (which is the whole fucking point of Zillow), or that it shouldn't be allowed to have a feature to allow users to post ads on illow. Crazy.

  • PapayaSF||

    Sure, but it seems clear to me that it would not be "aggregation" if a site simply scraped Zillow and repackaged their data.

  • ||

    So, wait aggregator sites are now violating Craigslist's property rights over the ads that other people put on craigslist?

    I don't see craigslist as the good guy here at all.

    But maybe they should get their way and be excluded from all aggregators in the future.

  • ||

    I think maybe the point is that instead of having a click-through to the origjnal CL posting, the aggregator copies the text and turns it into a posting on their own website, while stripping off any CL ads and putting their own on.

    In that case, it's not exactly aggregating, it's "harvesting".

  • DJK||

    Umm, why am I supposed to feel sorry for Craig Newmark? He had the opportunity to leverage a huge market and chose to offer his services basically free. And he chose to do so in a manner that basically afforded him no intellectual property rights. His poor business practices are not my problem.

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