According to a press release this a.m. classifieds aggregator Oodle has now grown to 20 U.S. metro areas. It's still a site in search of a business model, but it's obvious value to consumers will probably bring a (perhaps newspaper) buyer at some point in the not-too-distant future.
Just a few miles away, LiveDeal is also hitting some impressive benchmarks and developing a mutifaceted strategy. I met with CEO Rajesh Navar and VP Steve Harmon last week. The company will be making some announcements in the next few months.
Most of the action in the online classifieds arena is happening in verticals (some of which are newspaper owned) or at non-newspaper sites (e.g., Craigslist, LiveDeal, Oodle). I've had a few current and former newspaper people recently tell me off the record that they believe the newspapers have already lost the classifieds business (despite it being worth $16 billion offline in 2004).
I think that position is too simple and severe, but the innovation is happening outside the newspaper culture and, mostly, outside newspaper ownership. This puts continuing pressure on newspapers to keep buying their potential rivals (e.g., KRD, Gannett, Tribune acquisition of HomeGain or NYTimes investment in Indeed) to stay in this very fast-moving online game.