In order for an online service to compete with the power of offline media, newspapers or example, it has to have a high level of utilization among the public, enough critical mass to bring buyers and sellers together. This is not accomplished easily. Yahoo for example had many free services in their early days, but as time went on and they needed to make money, as all good businesses must, they lost much of their appeal, and not as many people use these services. This is a vicious cycle because as they lose users, the classifieds lose value, and when they are not free, it gets hard to justify paying the money to post the ad.

So along comes Craigslist.com, who not only keeps their listings free, but also refuses to put any ads on their site whatsoever. The net effect of their efforts is that slowly, over time, more people catch on until the site has critical mass. Now Craigslist.com is a major competitor not only to newspaper classifieds, but also to online giants like Yahoo and eBay. After all, free is hard to beat.