According to TechCrunch, classifieds site Edgeio is shutting down after having run out of money. The site was targeting a global audience but was fundamentally local. Edgeio competitor Oodle recently redesigned and appears to be doing well. And the classifieds category continues to gain traffic.
Edgeio becomes the latest local site to shut its doors. Judy’s Book also announced it was closing quite recently. Before Judy’s Book, it was Backfence and InsiderPages, though the latter was technically sold.
One of the paradoxes of the local market is that it represents a huge and growing category, but it’s terribly challenging to monetize for a startup. As Andrew Goodman said to me, local “is a marathon, not a sprint.” He’s absolutely correct. And for that reason, most VCs and, by extension, VC funded sites, don’t have the stomach and time horizon to succeed in local. In the majority of cases, their “three years and out” philosophy is not a viable one in local, although there are exceptions.
Classifieds leader Craigslist has been around for roughly 12 years. Craig Newmark commented at a Google event yesterday that if he started the site today, it would be much less likely to succeed, in part because he might “have to take VC money.”
Borrell Associates’ new report on the 2008 outlook for local projects that include local online advertising (everything considered: search, classifieds, video, etc.) will be $12.6 billion. However, the market is tremendously fragmented, so gaining critical mass, of either users or advertisers, is difficult for other than the largest players.