Learn How Craigslist Works. Craigslist is a service-based company focused on online communities. The company was founded by Craig Newmark and Jim Buckmaster. Craigslist started as a pet project but grew into a full-fledged company in 1999.

The same year, Craigslist also purchased the domain craigslist.com to prevent anyone from buying it and misleading craigslist members. Each year since then, Craigslist has expanded to cover more cities and communities, becoming a powerful financial force in the process.

We won’t complete this article on How Craigslist Works without talking about the website. Craigslist.org is now one of the most visited English language Web sites, with local classifieds for more than 450 cities worldwide.

The site’s main function is to host classified ads that cover practically every category you can think of, including housing, job postings, items for sale, services and personals. There’s also a forums section that allows users to discuss topics on everything.

How Craigslist Works

If all you want to do is browse the site, you can just visit the website and click away. The site has a range of broad categories, and each category has several subcategories, making it easy to navigate to the appropriate section quickly.

All transactions are between the person who posted the ad and the person responding to it. Craigslist’s employees don’t get involved in any transactions or discussions unless someone reports a problem.

If you want to participate in forum discussions or post your own classifieds, you need to create a craigslist account. The only thing you need to become a member is a valid e-mail address.

Craigslist users act like the site’s watchdogs by monitoring the content that gets posted. Users flag posts to draw attention to those that are particularly interesting and those that detract from the site.

The tags that can be applied to posts are best of Craigslist (a funny or effective post), miscategorized (a post placed in the wrong section of the site), spam/overpost (a generic post or one that has been posted multiple times) and prohibited (a post that directly violates the site’s terms of use).

How Craigslist Works

The site earns revenue by setting fees for job postings in a few cities and for apartment listings in New York City. The job posting fee in Boston, Los Angeles, New York City, San Diego, Seattle and Washington, D.C. is $25, while the fee in San Francisco is $75.

The fee authorizes the user to post a job in one category — if the user wishes to post the same job in multiple categories, he or she must pay a fee for each one.

The apartment listing fee in New York City is $10 per brokered apartment rental ad. Job and housing ads in other cities are free.

The site generates enough revenue to support its entire staff of 25 people. The company doesn’t publicly release its financial results, but estimations range in the millions of dollars — $7 million for 2003 and more than $20 million in 2005.

Apart from paid classifieds in the aforementioned cities, Craigslist features no advertising at all. It doesn’t sell advertising space for banner ads, pop-up ads or any other kind of web advertising and has promised to remain so.