The six steps to overcoming a disruptive business model and creating a new one to live by.

With CraigsList in your market, the time for hand-wringing and worrying is over. It’s time to do something.

So far newspapers like mine in smaller markets have had the fortunate position of watching as consequences unfolded elsewhere. Problem is the clearest thing we’ve learned from other newspapers is no one can keep Classifieds paid and expect to retain market share. The second problem is no one makes money from free classifieds.

To survive, the small newspapers must take a more revolutionary approach than anyone who has come before us. As the week progresses, I’ll outline six steps to beating CraigsList and then some.

I’m saving the best for last. Step No. 7 has nothing to do with CraigsList. And that’s why you’ll want to read it.

1) Match CraigsList at its game

When it moves into a new community, CraigsList’s biggest challenge is attracting enough people to its site that it then becomes a reliable source for classifieds. The first step to beating CraigsList is keeping market share.

CraigsList’s only tool for luring customers is that it offers Classifieds for free. Face the facts: No one is going to pay for something they can get for free elsewhere. The sooner your newspaper stops charging for classifieds, the better. Newspapers that were slow to the free model lost virtually all market share.

But CraigsList defines Classifieds in a much more limited way than traditional newspaper categories. Much of what newspapers call “Classifieds” can still be charged for, such as the very profitable real estate programs that essentially look like display ads. Anything that looks like a display ad can still be sold. What CraigsList gives away are text listings.

If newspapers don’t retain market share of the core text listings, then it puts at risk all of the high-end paid “classifieds” programs.

Tomorrow's entry: Step No. 2, Change Paradigm