AUTHOR: Russell TITLE: When Words Collide DATE: 11:51 AM ----- BODY:
There's certainly been a lot of buzz about the lawsuit against popular online business review site Yelp. Most of it is a misreading of the situation. What's going on in this lawsuit will not have any impact on those of us with business reviews of any kind, nor is it a "potential death knell" for online reviews as some are breathlessly claiming. What the Yelp lawsuit is about, pure and simple, is alleged extortion. The company suing Yelp is claiming it was told that if it advertised, negative online reviews would be hidden or removed, and if the company didn't advertise, the negative reviews would remain.

What this lawsuit does highlight, however, is something I have discussed previously: the inherent friction between user reviews and paid advertising. The case of Yelp points up an important but subtle distinction. Usually the issue is how a publisher can add user reviews to paid listings. In the case of Yelp, the question is how a publisher can add paid listings to user reviews. Same difference? I think not.

For the buying guide publisher, the business model is already established: companies pay for an enhanced presence within the buying guide. To add user reviews is not simple: advertisers want a positive environment in which to advertise. Don't expect a paid listing surrounded by negative user reviews to be renewed. Even the most enlightened advertiser will have trouble finding the value in that equation. There are ways to walk a fine line where reviews and advertisers can peacefully co-exist. Capterra was awarded a 2009 Model of Excellence award for, among other things, devising a successful approach to this. But the reason that a middle ground can be carved out is that user reviews are an additional feature for a buyers' guide. They are not the reason the buyers' guide exists.

Contrast that with Yelp. Yelp's success is entirely due to it achieving a critical mass of reviews. Users respond to it and value it because it lets users have their say - the good, the bad, the ugly. Yelp strikes an unabashedly consumerist stance. Without this positioning, which fostered a critical mass of reviews, Yelp would be just another also-ran in the highly competitive local business directory space.

So how does Yelp sell advertising? It can't be that easy. The business with glowing reviews could quite reasonably see no need to advertise. The business with horrid reviews could quite reasonably have no desire to advertise. Yet the moment Yelp starts fiddling or filtering its reviews to accommodate advertisers, it puts its business at risk. Nothing would kill Yelp faster than a general perception (amplified by social media of course) that it had "sold out." Bottom line: the reviews are not an additional feature; they are the product.

I don't see an easy answer to this one. If Yelp wants to succeed selling local business advertising, it's going to need to make compromises that one or more of its constituencies won't like. The strategy and its execution are both critical. And the object lesson is that it does matter which came first: the directory or the reviews.

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----- -------- AUTHOR: Russell TITLE: No Help From Yelp DATE: 11:23 AM ----- BODY:
As soon as you visit the popular website yelp.com, you'll know you're looking at the future of the yellow pages business ... and you'll also see why yellow pages publishers are finding it so hard to get real traction online.The young start-up combines an accurate and deep city-specific directory of all types of local businesses with user reviews and ratings that provide site visitors with plenty of information to make informed choices about local vendors. Beyond this, Yelp provides local event guides and works hard and apparently succeeds in building a sense of community among users of the site. Yelp also innovates. I previously wrote about Yelp's clever process for summarizing user comments to make them more useful.

But a recent profile of Yelp in the New York Times leaves me thinking that the company's founder is offering up more attitude than answers to the company's growing pains.

You see, Yelp generates revenue by selling advertising to the very businesses its users are posting comments about. Invariably, those two activities come into conflict. The article cites a business that called Yelp after a sudden and unexplained drop in its overall rating, and got no assistance. Yelp's founder, Josh Stoppleman, dismissively blamed the problem on an "overly vigilant" spam filter meant to cull suspicious reviews. If Stoppleman had even the slightest concern that his algorithms were impacting revenues of small businesses - the very businesses he wants to advertise - it didn't come across in the article.

When a local restaurant complained about a negative review regarding a dish the restaurant didn't even serve, Stoppleman told the Times, "We can't referee factual disputes. Why believe the business owner who has skin in the game?"

Throughout the article, the implicit message from Yelp to the business community is that "you need us more than we need you." And quick, can anyone think of another group that adopted that same attitude towards local businesses? Right, the yellow pages publishers.

And what of the late lamented yellow pages industry? Well, while Yelp exhibits more and more hubris rather than trying to address real issues with its business model, the yellow pages industry is in fact going back to the drawing board on its business model.

One great example of fresh thinking comes from SuperPages.com, which just launched a program called SuperGuarantee that guarantees its users a satisfactory experience with any service provider sporting the SuperGuarantee logo. Complain to SuperPages, and they'll resolve things to the customer's satisfaction or offer reimbursement up to $500. Best of all, users must register with SuperPages to take advantage of the guarantee, providing incredibly powerful proof of ROI back to participating advertisers.

Why is a giant yellow pages publisher willing to roll up its sleeves and get involved in messy customer disputes when the young, hip, cool start-up is so unwilling to address even clear-cut factual disputes? I think some of the answer is cultural. Too many online start-ups I see seem intent on building black box systems designed to avoid any customer interaction. Great work if you can get it, but the real world is messy, and most of the online services I see really can't deliver maximum value and utility on a totally automated basis. User needs can't be reduced to online forms. What the article on Yelp screams to me is that Yelp simply doesn't want to do the work - too messy, too slow, too labor-intensive. Unfortunately, that's a big part of what publishing is all about. And that leaves an opening competitors can drive a truck through.

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----- -------- AUTHOR: Russell TITLE: I Pay, I Say DATE: 10:29 AM ----- BODY:
While user rating and comments in buying guides and directory listings may seem all sparkly new and very Web 2.0, the concept has been around for a very long time. Indeed, I was involved in a research project with a major yellow pages publisher way back in 1990 to assess whether or not to add ratings information to restaurant listings (with the idea other categories might benefit as well).

The core issue back then was the same as it is now: can objective ratings co-exist with paid advertising?

Perhaps not surprisingly, restaurateur response to ratings played out roughly as follows:

The problem is a fundamental one: advertisers don't want to pay to tell the world ambivalent or negative information about themselves. It's why restaurants don't post negative reviews in their windows.

We tried clever variations. What if we only printed positive reviews? Advertisers shot this down quickly as well. If only good reviews were printed, then those restaurants without reviews must be bad. The ditty "if it's pay to play, then I decide what to say" pretty well sums up the long-standing dynamic.

That's why I was so surprised to see a truly unusual new approach to this age-old coming from user review site Yelp.com. According to the New York Times, while Yelp won't censor or remove negative comments its users make about its advertisers, Yelp allows advertisers to sort positive listings about their business first. The thinking, of course, is that user reviews are much like search results pages: nobody gets past the first few.

Has Yelp artfully cracked the advertising-reviews conundrum? At first I believed they had. Then I started thinking that this was just a cute ploy that advertisers would quickly see through. Then I thought that allowing advertisers to game the system was a little slippery. Finally, my view shifted again: isn't Yelp making a cynical statement about its own value proposition: if nobody is really reading all the reviews it posts, what's the point? Where's the value?

Having thought about this until my head hurt, I thought I'd toss this back to my readers. Breakthrough or not?

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----- COMMENT: AUTHOR:Anonymous john tilly DATE:5/26/08 10:57 AM Often feedback systems create an overall rating that is an aggregate of all of the ratings feedback, and generally people read the first few reviews (in which case Yelp is being clever) and glance at the overall number (usually out of 5 - as 5-star rating is the norm). If Yelp is including the latter as well, its being clever, if it is only including the former - with no aggregate rating - then they are trying to use reviews as an advertising tool and that undermines the whole purpose (and the reader will see through it) - IMHO. ----- --------