It is widely known that newspapers, faced with competition from proliferating sites like Craigslist and GoogleBase, are losing classified ad revenues, one of their staple sources of income. Bill Mitchell of Poynter attended the Newspaper Association of America convention to find out how newspapers were faring with their own free classified experiments. Turns out, not so well.

The San Diego Union-Tribune began providing free classifieds to those not hawking products for over $5,000. The promotional phase of the initiative worked relatively well, increasing lineage significantly, but up-selling didn't work.

The Tribune Company also reported difficulties in up-selling for its Recycler.com site. Director of corporate development, Tom Finke said, "The up-charges weren't enough to offset the cost of acquiring the customers."

Mitchell concludes, " It's unclear whether either case provides sufficient reason to abandon free altogether. But they certainly do provide a realistic sense of the risks."

Source: Poynter