And like many other non-profits, the quality of the service shows - the service is merely "good enough" (in many categories, far less than good enough), with no competitive pressure to improve.
We have already seen the meteoric rise of many niche, category-specific Craigslist competitors eclipse CL in scale and influence, particularly in real estate. I suspect due to Craiglist's general crappy experience this fragmentation will continue.
Well, the lack of competitive pressure stems more from network effects than being non-profit per se.
Because of this, I don't see the fragmentation as a good thing. One of two things will happen in each craigslist market (rentals, used goods, ridesharing, etc.): either a single for-profit company will ride networks effects and establish a monopoly, or there will be severe fragmentation.
If the former, then you can expect some features to improve (in order to steal the market from craigslist in the first place) but many other things to languish due to a lack of competitive pressure. (Also, if it's a for-profit company, you'll pay money.) This is ebay.
If the latter, then it will no longer be possible to go so one site to search in that market, greatly decreasing consumer utility. This is how classified ads worked before craigslist.
Much better is a well-run, benevolent non-profit. Wikipedia, though not flawless, is pretty much the epitome of this idea. It's scary to think what it would be like if Wikipedia's data was spread over dozens of websites of varying quality and motivation. (Then again, in the scenario no one would bothered to write most of the articles anyway.)
Craigslist doesn't fit this exactly because they impose a philosophy ("localism"?) which most people don't share and which decreases usability.
There are, for example, real estate websites that are eating the CL for-rent category's lunch right now. Craigslist isn't doing much in response to these competitors, despite the fact that in some markets (particularly SF and NYC where I have experience) Craigslist is now very firmly in second place (or worse).
I've been apartment hunting in NYC lately, and it's mind-boggling what proportion of Craigslist posts are scams compared to other sites like StreetEasy or NYBits.
IMO if Craigslist was run more like a scrappy startup looking for their big exit, they'd have more than responded to these competitors by now. The network effect exists, but IMO is an insufficient explanation of their lack of action.
I agree that the fragmentation is, all things being equal, a bad thing for users - but considering how utterly useless Craigslist's moderation systems are (many categories are full of duplicate posts, spammers, and scammers), and how poor the UX is otherwise (search? hah!), I welcome it. Fragmented sites like PadMapper, StreetEasy, etc, have done way more to ease the life of renters than Craigslist in the last decade.
We have already seen the meteoric rise of many niche, category-specific Craigslist competitors eclipse CL in scale and influence, particularly in real estate. I suspect due to Craiglist's general crappy experience this fragmentation will continue.
And I for one think it's a good thing.