While in Grad School our Economics professor has study the writings of Joseph Schumpeter and his classic theory of Capitalism, Creative Descrution. This theory basically states that long term economic power will come from fierce competition due to entreprenuers and their creativity uses of technology. There are countless examples of this today as new companies rise and others who fall asleep at the wheel become obsolete or lose market domination. In the music industry the 8-Track once dominated, but then was surpassed by cassette tapes, which then feel to CD, which has once again been surpassed by MP3 players.
This year, major newspapers have closed because of this creative desctruction as upstarts like Craiglist have turned their Billions in revenue into Millions for the latter. People may want to entirely blame Craigslist for the newspaper industry decline but they are only a peice of the complex puzzle. That revenue shift has been spread across the thousands and thousands of people who use the service every day. Yes, Newspapers revenues have been hurt by this free site, but consumers would not use it if they did not find value in it’s service. The fact that it’s free versus classifieds which cost $50 to $100 or more only makes sense that it will gain wide spread use.
As the web continues to grow and entreprenuers continue to inovate they will create shifts in business models like we’ve never seen before. These changes will create new jobs, but also foster long term economic growth.
