WIT Strategy's managing partner analyzes the future of "Local," and talks with Craigslist's Craig Newmark to get an insider's perspective.

Want to know the answer to the question posed by the headline above? It's this: Because 10 years from now, what we now term "Local" might look nothing like it does today.

If you need any defense of that assertion look no further than 1996. Back then, classifieds still comprised upwards of 30 percent of all revenue for most local daily newspapers. It was about 11 years ago that both Craigslist.org and ebay.com were technically "invented" and/or launched, in 1995. But neither really looked anything like they do today until a few years later.

In other words, 10 years' hence may seem like a long ways off. But, owing to the accelerating pace of change, it probably shouldn't seem as distant as 10 years ago does today. We're just beginning to realize serious traction in local online advertising. In their most recent projections, eMarketer estimated $1.3 billion being spent in 2006, representing only 7.9 percent of the total $16.7 billion in U.S. internet ad spending for the year. Even when local online ad spending jumps by nearly 51 percent next year to $2.0 billion, that will make it not quite 10 percent of the 2007 estimate of $20.3 billion total online ad spending, with paid search being the primary driver.

Naturally, a fast growing market with a huge upside makes for a hot topic. 

Additionally, this is fairly topical for me on a personal level. Within the past year, I've bought and sold everything from real estate to a boat to a steel door on Craigslist. Like many of you, I've also been following reports of the demise of newspapers as I've spent more time on newspaper websites than on any other kind of digital media. Especially for those of us who are males between the ages of 25 and 45, chances are that we get our local news and sports from the digital version of our local newspaper, but we conduct our local commerce someplace else.

The local media/local commerce divide online
Think that this divide isn't a big deal? Then you haven't been paying attention. The trend that has kept newspaper audiences large online while keeping their revenue down is represented by this divide as much as by any other. And as much as what we call "local" continues to change, this much has already occurred:

• Offline, newspapers receive 18 percent of all dollars spent. But, online newspapers only receive four percent, representing an enormous amount of lost market share.
• For every dollar that leaves the print newspaper industry for the web, they only retain about four to six cents of that dollar on their web properties.
• Daily newspaper circulation in the United States is dropping two to three percent per year and the rate of decline is accelerating, with some newspapers (like the Chicago Sun-Times) reporting double-digit circulation drops in the past year.
• Directory (yellow page) advertising in the offline world accounts for about 10 percent of all offline dollars spent, while its most direct corollary online, Search, accounts for 42 percent of all online dollars spent.

Many newspapers have seen their online fortunes rise of late. But the one digital property that probably holds more sway on this particular segment of the local market -- Craigslist -- is one that doesn't much pay attention to considerations of revenue and market share. In fact, they don't even charge for the bulk of what they provide.

This non-commercial stature gives Craigslist founder Craig Newmark a unique role as not only an ombudsman of sorts, but also as someone who may have a better idea about the future of local. So, I asked him some questions about how he sees Local evolving in the coming years.

Naples: Do you disagree with the characterization of Search as an interactive corollary to Yellow Pages?

Newmark: I think "Search" is a corollary to YP, if we mean the same thing by "Search."

Naples: Does Search actually have a corollary in traditional media?

Newmark: I can't think of one.

Naples: Do traditional yellow pages have much of a future?

Newmark: I wouldn't think so-- too expensive, too unresponsive.

Naples: What of local newspapers-- do you see print newspapers in most markets recovering?

Newmark: I think their newsrooms will do well online, and I think I see a future for specialized papers, and free ones in selected markets.

Naples: If you could instruct the online units of print newspapers to do three things that would improve their businesses, what would those three things be?

Newmark: Speak truth to power; engage readers in news reporting, fact checking, discussion; and speak truth to power. Digital newspapers of the future will make money in ways that are being experimented with now, such as: pay per view, traditional advertising, sponsorship and subscriptions.

What to make of this 
Local advertising in the form of classifieds used to be a cash cow for newspapers. Today, primarily in Craigslist, consumers have free classifieds choices that are more effective. National brands and automotive both remain in newspapers but have had trouble translating online until recently. Practically speaking, the divide referenced above is something that newspapers remain tremendously well positioned to exploit, since they still have the brand recognition and traffic required to keep local consumers interested.

So, which publisher will be the one that leads the way toward becoming the kind of news portal that not only provides local commerce opportunities, but which also owns the proprietary content that has always been newspapers' stock-in-trade? Some have tried, with varying degrees of success. But, if Craig Newmark is correct, newspapers may best succeed by focusing their energies on that proprietary content of theirs-- and by taking risks with it. As the "Foxification" of news continues to rankle many of us, the notion of newspapers taking that responsibility more seriously is certainly one that many of us would welcome.

Mark Naples is managing partner at WIT Strategy. Read full bio.