But the point is, entrepreneurs are currently fighting on the basis of their ideas, and failing, even though their ideas are better than Craigslist, because Craigslist is winning merely because of network lock-in, not because of innovation.
Craigslist disrupted the classifieds industry because it had first-mover advantage in a new medium, the Internet. It now abuses that advantage in order to not innovate or even compete.
The market is not working over time -- proof is how everyone complains about how crappy Craigslist is.
But a solution, for example, could be something like: legislators could force companies with over, say, 25% market share, that are mainly based on user-generated content, to not be able to sue other companies if those companies re-display information originally input by users, that is publicly visible on the site.
This wouldn't force Craigslist to alter its behavior one bit. But it would allow entrepreneurs to actually fight once again on the basis of their ideas, as opposed to whoever had first-mover advantage and subsequent network lock-in.
I think this is fuzzy logic, to say the market is not working over time because some people you are close to complain about craigslist. You are ignoring a huge number of people and the vast majority of the market's information (even analysts can't pin all the dynamic in a market).
An idea can't "beat" Craigslist. It's the whole of a product and team mixed up with constantly shifting market dynamics and human preferences.
It's just way more complicated, and legislation shouldn't even come into the conversation here unless the company is provably violating another's civil or property rights. Are they?
An idea can't "beat" Craigslist. It's the whole of a product and team mixed up with constantly shifting market dynamics and human preferences
Here's an idea that can beat Craigslist: put up billboards all over town, offering $500 per ad to property managers and individual landlords in return for giving your site a 4-week exclusive on those ads.
That's the only way people will stop putting ads on Craigslist first, which in turn will be the only reason people will stop looking there first.
Network effects as powerful as Craigslist's can't be fought with a better product alone, as you point out. (See eBay for another example.) You either have to spend some money to take their market from them, or you have to be there when they fuck up.
And whatever else you can say about Craigslist, they are very, very good at not fucking up.
I agree with that. Their network effects make new entry more difficult. That is a perfectly valid mechanism of a free market, as long as it's based on free exchange (no force).
Craigslist disrupted the classifieds industry because it had first-mover advantage in a new medium, the Internet. It now abuses that advantage in order to not innovate or even compete.
The market is not working over time -- proof is how everyone complains about how crappy Craigslist is.
But a solution, for example, could be something like: legislators could force companies with over, say, 25% market share, that are mainly based on user-generated content, to not be able to sue other companies if those companies re-display information originally input by users, that is publicly visible on the site.
This wouldn't force Craigslist to alter its behavior one bit. But it would allow entrepreneurs to actually fight once again on the basis of their ideas, as opposed to whoever had first-mover advantage and subsequent network lock-in.