Recession and the End of ‘Web 2.0′

Given the recession, it’s probably reasonable for us to now start talking about the “end of Web 2.0.”

I’m not talking about the end of innovations (e.g., community) that have been lumped under that heading. Rather I’m talking about the closing of most of the companies that populate this site.

I previously argued that only a fraction of the businesses represented by the logos above would survive in a recession and the site would effectively become the “Web2.0 graveyard.” I’m not hoping for any startup’s failure; I just think the money is drying up and, as with the “dot-com crash” of 2001, we’re going to see lots of them.

Along those lines, Om Malik and Venture Beat report on the Sequoia Capital “RIP: Good Times” meeting for its portfolio CEOs. (The slides are on Venture Beat for those that want them.)

Scary stuff: the panicked selling on markets all over the world is turning fears of a global recession a self-fulfilling prophecy.

But what about Local? I have my own ideas about how the next 12 months may unfold (consolidation is one theme) but what do you folks think is going to happen to “the local ecosystem”?

Will we see:

• The demise of all local startups without meaningful cash flow?
• Acquisitions of many weakened smaller players by larger ones?
• Consolidation or mergers among YP publishers out of necessity?
• Newspapers: will many of them be going bankrupt?

Facebook Finally Turns On Live Search

Microsoft Live Search was implemented formally today on Facebook. This is a big traffic pool and source of “inventory” for Microsoft. However, there’s no Microsoft branding there, so it will benefit the company in terms of reach and monetization but it won’t necessarily translate into brand recognition/growth for Live Search. 

Still it’s a big deal for Microsoft and an important add for Facebook, which had forced users to go outside the site to conduct Web searches — until now.

Yelp Introduces ‘Review Snapshot’

Yelp has had the good fortune to have so many reviews in some cities it creates a new challenge for readers/users: making sense of all of them. This is one of the points made by GoodRec founder Mihir Shah: people want quick recommendations, they don’t want to wade through tons of lengthy narratives. (I would say people want a snaptshot but also the capacity to drill down in some cases.)

Yelp had review summaries that showed the concentration of reviews and trendlines, which was very helpful — and more helpful actually than a pure composite star rating. Now Yelp has introduced what it calls “Review Snapshots,” a “box” of at-a-glance information to give people a quick way to evaluate a business.

Here’s one for the SF restaurant Foreign Cinema:

ServiceMagic’s Reviews Quality Control

Based on some of my recent posts about reviews I was contacted by ServiceMagic. They explained their process and quality control for reviews (they claim 500K consumer reviews). Here are some verbatim excerpts from the email I received:

Only homeowners who were matched to a contractor through ServiceMagic are allowed to submit a review, so the “legitimacy” issue is taken care of at the onset.

We have a team of 25 people who spend much of their time reviewing each R&R before it’s posted. We do this to identify any unsatisfied homeowner (rating score of three or lower). That score triggers customer service outreach to the parties involved. In roughly nine out of ten instances the negative rating is the result of a misunderstanding or a lack of communication between the homeowner and service professional. Consequently, our staff is trained to mediate and help the parties reach a resolution. In most cases, the consumer retracts their negative rating after the situation was rectified by the service professional and both parties are happy as a result.

We also give service professionals the opportunity to respond to ratings posted about them. We know there are two sides to every story, and do not wish to leave one side without a voice. That’s especially the case when a negative rating gets posted.

We’ve added the ability for consumer-reviewers to reach out to one another. Someone posting a review can indicate that they’re willing to be contacted by other consumers in the event they have a specific question about what’s been written, or in a general sense, the performance of the contractor they’ve been matched to.

Angie’s List does something similar with dispute resolution.

I especially like the final point about consumers contacting one another. That obviously doesn’t apply in a category like restaurants, but it’s very useful and valuable in “high consideration” categories such as remodeling and home repair.

AOL Relaunches, Blogifies Digital City

AOL is relaunching DigitalCity, it’s former city guide that was renamed AOL Cityguide, which spawned another site City’s Best. 

Here’s the new homepage:

Here’s what AOL said in the release: 

[DigitalCity is] a new, magazine-style site that enables readers to stay on top of the latest entertainment trends and stories from around the world.  Digital City takes a new approach to geo-blogging by showcasing original content with a local slant, but global appeal.

In addition to daily posts on topics ranging from the arts to fall festivities, Digital City has weekly features focusing on news and trends in entertainment, concerts, nightlife and dining. The monthly blogazine “Drink World” is devoted to the global culture of drinking.

DigitalCity began at roughly the same time as Microsoft’s SideWalk and Citysearch. It was originally an independent company that was acquired by AOL. Eventually it became more and more obscure within the layers of AOL sites. But it’s now getting blog treatment, like many of AOL’s recent site re-dos. The local element is interesting here: it’s there but not the defining characteristic.

The “magazine” treatment is also interesting. If the economy weren’t in total meltdown, one could see an eventual, offline version of the publication. 

In the upper right “nav” are links to other AOL local properties: City’s Best, Cityguide, YP, MapQuest (there’s also AOL Local Search). MapQuest is being positioned as the high-traffic front door to all this content but each site will all serve to promote the other properties as well.

GoodRec Gets a ‘Thumbs Up’

Just when you thought you’d seen all the local review sites you were going to see for awhile along comes GoodRec. The temptation might be to regard the site as a Yelp wannabe and quickly dismiss it. Not so fast.

There are some very interesting things going on here that make the site different:

• Simplified recommendations (as opposed to lengthy narratives)
• A mobile-centric approach
• A broad, horizontal content strategy that extends to products 

In our conversation last week, CEO Mihir Shah (formerly of Yahoo!) kept correcting me that GoodRec “isn’t a review” site. In his mind there’s a significant difference between sites that solicit narrative reviews and what he’s doing — building a broad database of quick recommendations, which can be sorted by “everyone” and by “friends.” 

Of course “sort by friends” implies lots of participation. To that challenge Shah responds that GoodRec has removed the barriers to entry by radically simplifying the process of generating “reviews.” GoodRec asks people for a simple Thumbs Up or Thumbs Down, though it allows them to offer “quick tips” (comments) for color:

Other sites, such as OpenList, take this simplified approach as well:

On GoodRec, recommendations can made from several different places on the site: listings/profile pages or from a map view. They can also be quickly published to social sites (i.e., Facebook, FriendFeed, Twitter). But most importantly recommendations can be quickly made from mobile phones.

Mobile is a central component of GoodRec’s strategy and one of its core differentiators in Shah’s mind. He believes that it’s a mistake for Yelp not to permit reviews from mobile phones because when people are out and at a restaurant, bar, etc. is when they’re most likely to recommend or pan it. They’re also able to take photos and upload them on the spot. 

GoodRec offers an iPhone app; it also has a traditional WAP site:

I asked Shah where he got his listings data. He told me that it was from crawling but that people can easily add listings where they don’t currently exist. He said that in the roughly two weeks since the site launched it’s receiving recommendations from various places throughout the US and in Europe. This flies in the face of the single city launch strategy.

If you take a look at San Francisco restaurants, for example, there are already a surprising number of recommendations. The top listing (below) has 44 recommendations, which would seem to validate Shah’s belief that if you remove barriers more people will participate. 

During my phone interview with Shah, I downloaded the iPhone application and made about 12 recommendations of places in my neighborhood and extended area. 

Beyond mobile as a would-be differentiator the broad, “horizontal” content approach is an interesting angle. The idea is to create a single trusted site where people can get product recommendations as well as restaurant recommendations. Right now “products” includes wine and books, but will later include other categories. 

Certainly there are things to criticize about GoodRec. But Shah and his team have been quite thoughtful about what they’re doing. No single element of the site is entirely original but the way the different elements and ideas have been combined and presented is.

Moms, Media & Multitasking

A study by AOL and ad agency OMD Worldwide, among 7,000 moms in 13 countries, found that they’re cramming 27 hours worth of activity into a 16 hour day. The Internet takes the top prize in terms of time spent with media:

• Total time spent with media: 8 hours (single moms spend 9.5 hours)
• Internet: 2.6 hours
• TV: 2.1 hours
• Radio: 1.2 hours
• Newspapers, magazines, games: 30 minutes

According to the survey, seeking parenting information is the top activity online, “ahead of search, e-mail and news.” Beyond parenting advice, these moms shop online (79%) “get information” (71%) and look for coupons or sales (52%).

I don’t have the raw data, but when it says “shop online” what that probably means is online research. A much smaller percentage of that activity is going to be e-commerce.

The survey also reports that only 1.4 hours of the “27 hour day” is spent by the moms on themselves.

Moms are decision makers and influencers. The study confirms this:

Most online moms (86%) report being the primary household decision maker . . . More than half (52%) say they tend to recommend good products and/or brands to others.

There were some interesting findings (with marketing implications) surrounding “emotional connections” with the various media types. Here are the associations:

• Television and radio primarily evoke “entertained” and “relaxed” feelings.
• Magazines evoke “interested” and “relaxed” emotions.
• Newspapers evoke “focused” and “interested” feelings.
• Online search is related to feelings of “task-oriented,” “focused” and “interested.”
• Web sites often related to “entertainment.”

What are the takeaways?

Moms are the most important audience for most marketers. They will drive word of mouth (see below). They’re time starved and looking for things that will save themselves money and/or time.

To reach them marketers need to have a campaign that touches multiple media types (i.e., “integrated”).

From a branding or awareness perspective, parenting sites and mom-oriented social networks (and shopping sites broadly defined) are going to be effective places to reach them online.

And even though the study doesn’t discuss this, they’re mostly going to fulfill or transact offline.

____

Here’s interesting related data comparing Gen X and Gen Y moms and their use of the Internet. Here’s a study about moms and word of mouth.

CityVoter Closes Second Round

CityVoter closed a second round of funding for $2.6 million. It was announced today:

CityVoter.com today announced it has closed a second round of funding for $2.6 million. Second round primary investors include Allen & Company and Series A investors Dace Ventures. The company welcomes Curt Viebranz, former CEO of Tacoda, Bradley Wechsler, co-CEO of IMAX, and media investor Vivi Nevo to its advisory board.

CityVoter has been chugging along, adding partners. Recently the site added Hearst’s SF Chronicle as a partner. CityVoter uses voting to generate top lists rather than asking users to write extended narrative reviews:

But where’s that iPhone app?

CBS Affiliate Hammers Yelp — Again

Maybe it’s the tone of this political season, maybe it’s that CBS is the home of 60 minutes; but a local, SF Bay Area CBS affiliate appears to be on a self-appointed mission to uncover perceived conspiracies at Yelp. The station’s most recent report reprises its original “Yelp is deceptive and unresponsive” report.

I wrote a post in response to that original report. It received a lot of comments, including a couple of personal attacks on Yelp personnel that I removed because the posters had used false identities to level the attacks.

Yelp has changed, in the past several years, from a “cool” underdog startup to a highly influential information source for consumers. 

Here’s an interesting bit from the most recent CBS report:  

Yelp told CBS 5 ConsumerWatch having competitors’ ads on a businesses page is no different than advertising in the Yellow Pages. But businesses CBS 5 spoke with say the Yellow Pages does not post reviews by individuals, reviews that some feel are unfounded.

This statement, in an unreflective way, captures the cultural shift from the world we used to live in to the one we live in today. The piece then goes on to talk about a particular local business in which there’s a perceived attack on the owner:

Weimax Wines in Burlingame had 25 positive reviews and one negative on Yelp, but it’s not about the store, it’s about manager Ellen Weisl.

“This is a personal attack on my character,” Weisl said.

Someone Ellen doesn’t even know wrote this review saying: “She must have a miserable life…Someone who thinks her poop doesn’t stink.” The reviewer also said, “Sorry I didn’t waste my education on wines…” 

Weisl emailed Yelp requesting the review be removed.

But Weisel said Yelp told her,” They reviewed the posting and that they wouldn’t remove it.”

The review in question is the third one down from the top. Beyond the off-color remark about “poop,” the review expresses a mostly legitimate opinion regarding customer service at the shop — albeit in a personalized way. It’s not defamatory but it raises a very difficult question. 

In my understanding of the current state of the law, Yelp isn’t on the hook for defamation if reviewers do post something libelous. However, if Yelp gets into editing or censoring those reviews it could be. It creates a dilemma because Yelp wants to create a “respectful” and “fair” culture but not get into rendering legal opinions about individual reviews. In addition, it’s a slippery slope when you start to remove some reviews but not others; your “editorial integrity” becomes compromised. (There need to be bright lines about what’s not permissible in reviews.)

Fairness is the key word here. 

Many business owners are probably shocked by the fact that their customers and potential customers now have this sort of power and that they need to be careful. There will always be wackos and outliers but the Internet has shifted power to consumers. But I’m also quite sympathetic to the challenges of running a small business these days. A business owner can have a “bad day” and that can become enshrined in a kind of permanent record online. It’s a difficult problem. 

Yelp decided not to allow businesses to post responses to individual reviews but it will allow businesses to contact reviewers “behind the scenes.” According to my research, a majority of SMBs still appear to have a positive view of the online reviews phenomenon:

What small businesses need from Yelp and other, similar sites is clarity and guidance about the rules (see this post on what is a “legitimate review“). There’s obvious confusion in the market about what SMBs should expect and what’s permitted. 

The law will also evolve to address how publishers can and should handle defamation on user review sites. But more importantly the immediate challenge is to create balance between the interests of businesses and consumers and tools for businesses to address consumer complaints. Yelp has done that to a degree. Indeed, the site might go further in the direction of services for small businesses (calendaring, online booking, video, etc.) rather than straight placement-based advertising. 

Kudzu has also done something interesting with its business network, an alternative way for businesses to recommend and promote each other in front of consumers. 

The world of UGC and “Web 2.0″ is messy and complex and very much still evolving. But it’s a waste of time to be nostalgic for a time when all of this didn’t exist. 

Google Maps Bounces Navteq

Mike Blumenthal alerted me to the fact that Google is now relying exclusively on TeleAtlas for mapping data. Mike has the scoop:

Google Maps has now switched their map data provision completely over to TeleAtlas from Navteq. Now the google Maps, the Google API and the Google Maps for Mobile all use the same underlying data. This switch was only a matter of time given Nokia aquisition of Navteq. Here is the announcement from Google’s Maps Guide Adam:

Hi Everyone,

I wanted to give you a heads up that Google Maps recently made some changes to the map data. Specifically, we have moved Google Maps over to use the same map data from Tele Atlas that is currently used by both the Google Maps API and Google Maps for Mobile. While most of the map will look the same, and in many areas it will improve, there may also be some cases where the data may not be optimal . . .

I know that Google was concerned about the ownership of Navteq by Nokia. And Google recently signed a new deal with TeleAtlas in which the latter gets the benefit of community edits to Google Maps data. I wonder if there was some exclusivity provision in that contract that we’re now seeing play out in this move.

Between the two companies, TeleAtlas was generally regarded as a stronger player in Europe, Navteq the better data source in the US. However, things may have changed.

MoJoPages Celebrates First Birthday

I thought MojoPages was older than one, but the site issued a press release this morning saying that it had reached its first birthday and some milestones. I was initially put off, as they say, by what I perceived to be MoJoPages’ hubris — acting as though it had invented something entirely new. When, in fact, the site was basically duplicating (albeit with video) the pre-existing model of sites such as Judys Book, InsiderPages and Yelp.

Running a startup is very challenging and I’m happy to see MojoPages succeed, given how hard the market is. Indeed, this year has evidently been a humbling one for the company, as evidenced by this quote from the CEO in the release:

When reflecting on MojoPages’ first year, Carder said, “We realize this is a competitive and complex space. Many of our competitors have excelled in specific areas, but MojoPages recognizes that sustained success in this industry requires a multipronged commitment to community, innovative technologies and a fiscally responsible business model. We’re encouraged by our traction to date and excited about the opportunity to improve the local search experience.”

Happy Birthday.

If someone were to launch a local startup today, what would you advise them? I have my standard list of things that I say. But I’m looking for your thoughts — best practices at a high level — that people should consider in thinking about the local space.

News Roundup: BooRah, BuzzLogic, Palore & Outside.in

Boorah has redesigned and added “additional semantic search elements” to restaurant pages. The BooRah blog posts about the latest features and upgrades.

Buzz analytics firm BuzzLogic formally introduces its new ad network:

In beta since June 2008, the Conversation Ad Network is designed to reward bloggers leading influential conversations on specific topics with quality brand advertising and more advertising revenue. Bloggers are either invited into the network or can apply to join, and receive compensation based on the influence ranking within BuzzLogic’s system, which considers factors such as subject matter expertise and the nature of linking relationships as part of its calculation.

To deliver campaigns, the Conversation Ad Network leverages BuzzLogic’s Conversation Ad Targeting platform – which also reaches partner networks to serve ads since its launch last year – to identify high-impact conversations and the credible blogs leading and participating in them. The platform then matches campaigns from BuzzLogic advertisers to the appropriate sites to reach engaged audiences actively following the dialogue.

Palore has more data on SMB online ad spending (in Denver):

Outside.in is launching StoryMaps. Here’s an example:

CEO Mark Josephson said in an email to me: “StoryMap is the first of many products we are offering publishers that help them organize and promote their content and take advantage of the ‘geoweb.’” More later after I chat with him.

NYT on Yelp vs. Zagat

Randall Stross in the New York Times looks at the evolution of user-generated reviews online (they’re improving) and zeros in on and compares Yelp and Zagat in the restaurants segment. He prefers Yelp to Zagat (the original UGC publisher):

Access to Yelp’s ratings is free; Zagat online freely displays customer comments but reveals its ratings only to subscribers, who pay $4.95 for a 30-day subscription or $24.95 for a year. Even when Zagat provides averaged scores, it doesn’t link to the comments and ratings that a given reviewer has provided for other places, as Yelp does.

Two years ago, in August 2006, Yelp attracted about twice as many unique visitors as Zagat.com. Since then, Yelp’s traffic has expanded geometrically while Zagat’s has grown only a little. This July, Yelp drew 4.76 million unique visitors, compared with Zagat’s 384,000. (Zagat doesn’t disclose sales figures for printed guides, other than to say its New York City guide sold more than 650,000 copies last year.)

ZAGAT.COM’S owners have not been willing to utilize the Web’s unlimited space to cover far more establishments than its printed guide ever could. The print influence is also evident in the way Zagat’s ratings on the Web site are set only once a year, on the eve of the publication of the printed guide for a given city. Then the numbers sit, frozen, until the next year.

Zagat would argue that there’s more quality control and thus more value in being favorably reviewed by Zagat. That may be true but the culture is changing and the value of the Zagat brand (in the flagship restaurants category) is under pressure from the range of free, “pretty good” sites online. (Zagat is reportedly for sale.) When consumers can get “good enough” information from a free site there’s no incentive to pay for a subscription.

Consumer Reports has managed to do well with a subscription model, amid the UGC onslaught. (Angie’s List also told me subscriptions were up.) The difference there is that Consumer Reports and Angie’s List are consulted in categories that are more expensive and require more “consideration”: home improvement, consumer electronics, cars, appliances, and so on.

It’s a tougher fight in the restaurants category, where I’m not taking a huge financial risk on a restaurant I’ve never been to ($30-$70). Thus my inclination to pay for a Zagat subscription is less than it would be to pay for Consumer Reports to do research on stoves or cars.

A place where Zagat can regain some lost momentum is in mobile. Zagat, I’m sure, has an iPhone app in development (you can get the site on the iPhone today). The company otherwise has mobile apps (and changes an annual subscripton fee).

Yelp is about to release the next version of its iPhone app in the next week or two. It has a range of expanded features and capabilities.

Palin and ‘Wikigate’

The NY Times has an article that details how someone altered Sarah Palin’s Wikipedia entry in the 24 hours before the VP announcement. The changes provided much more detail and greatly enhanced the bio — for the positive:

Beginning at 2 a.m Eastern time on Thursday, a Wikipedia user with the name YoungTrigg began an overhaul of the article, adding compelling stories about her upbringing, including that “she earned the nickname ‘Sarah Barracuda’ because of her intense play” as point guard for her high school basketball team and that she and her father “would sometimes wake at 3 a.m. to hunt moose before school.”

Many details were culled from, and footnoted to, the book “Sarah: How a Hockey Mom Turned Alaska’s Political Establishment on Its Ear,” by Kaylene Johnson.

Soon enough, YoungTrigg pivoted from the biographical to the political, adding that Ms. Palin had high approval ratings as governor and that, as mayor, she had “kept her campaign promises, reducing her own salary, as well as reducing property taxes 60 percent.”

As governor, YoungTrigg wrote, her “tenure is noted for her willingness to take on oil companies” and that she has been called “a ‘politician of eye-popping integrity.’ ” Both of those statements were attributed to a profile in the conservative Weekly Standard magazine.

In total, YoungTrigg — whose user name is a reference to Ms. Palin’s infant son, Trig — made 30 “edits” to the article, all positive and largely unnoticed . . .

Nobody knows the identity of “YoungTrigg” (named for Palin’s youngest child). If it’s not a Palin relative, it’s a likely bet that it’s a McCain campaign operative (not even members of Palin’s staff and reportedly all but a tiny few McCain insiders knew of the announcement ahead of time). So it’s unlikely to be some random, prescient editor.

One of the reporters I saw on TV (CNN) shorly after the VP announcement said, “I didn’t know much about Sarah Palin, I must admit that Wikipedia has become my friend this morning.” Clearly the envisioned and intended result: to influence the public perception and early news coverage of Palin.

Wikipedia is the top entry for Palin on the result for her name search:

Should we call this “Wikigate”?

Brownbook the Tortoise in Directories Race?

I spoke to Brownbook earlier today and it’s a fascinating site started by the people who used to run Scoot in the UK. Everything is pretty much right there on the surface: a user-edited directory, a simple business model (claim your listing for $10 annually and some other services) and global ambitions.

Yellowikis failed at a similar project, though Brownbook is much more user-friendly. I see the effort as a something of a philosophical mix between Craigslist and Wikipedia. And like both of those it could be spectacularly successful — if it can last long enough.

The company has taken some seed funding but is seeking to avoid taking any big rounds. The question is how long will it take to get traction at scale? My sense — based on nothing other than inutition — is that it could take four or five years. But if the company can do so the value it might create would be signficant.

The site is all about getting sufficient content and coverage in enough places to drive usage and, in turn, greater SMB advertiser adoption. If it can gain the participation and content it will rise in search results, more people will discover the site (as they did Wikipedia) and that, in turn, will generate more participation — and so on.

The international dimension of the site allows it to diversify revenue sources beyond saturated markets that offer a dozen competitors in horizontal-local.

The interesting thing here for me is that there’s no special competitive advantage that the site has, other than its audacity. Brownbook also flies in the face of conventional wisdom, notwithstanding some comparable products in market now in terms of open editing (Yahoo Local and Google both now allow it). But despite the absence of any “secret sauce” or other novelty, one can see it almost inevitably succeeding if it can simply last.

Brownbook Launches in US Market

The UK-based wiki-like community edited directory Brownbook.net has launched in the US. The site’s ambitions are global, however.

The site will take some time to build “critical mass” in terms of listings and certainly reviews content. But it offers quite an SEO opportunity and is ultimately angling for Wikipedia like status in search results. (Spam may become an issue as it become more visible.)

Here’s my short original post on the site.

Judy’s Book Coming Back?

From a consumer standpoint, most people don’t know that Judy’s Book effectively shut down. The site has remained live. Theoretically, the assets were for sale and I’m assuming somebody bought them. After the departure of CEO Andy Sack and co-founder Chris DeVore I hadn’t heard what had happened however.

Last week on vacation I got this email:

Judy’s Book has gone through some major changes and now we are inviting you to take a first peak into the new website.

We have gone back to our roots and are committed to being a book of local secrets that helps you make decisions. All the best information on the web has been collected on this one site, so now there is no need for you to look elsewhere.

All that’s missing now is you! People value the opinions of their friends and so do we. That is why we invite you to come share your opinions on the local restaurants, shops, contractors, dentists and other businesses. We want your voice to be heard and will recognize you as a “Friend of Judy’s” on your profile.

Come check out the new features and start creating your own book of local secrets to share.

So the original vision for Judy’s Book, now with the tag line “a book of local secrets,” appears to be on again. I’ll be interested to hear who’s now running the site and what they’re going to do differently to “monetize it.” The challenge of selling advertising directly to SMBs was what caused Sack and DeVore to shift their model and to become a “local deals” site in the first place.

I’m going to guess somebody with a sales channel bought the site for the traffic.

Is This the Future of Online Reviews?

Many sites are now starting to allow businesses to respond to reviews. This arguably offers “balance” and “fairness” for the businesses, but makes for a curious user experience. Note these reviews on TripAdvisor for a Northern California hotel:

Some site owners have argued to me that allowing this sort of “exchange” between customers and business owners degenerates into defensiveness and name calling. While the responses succeed to some degree in disqualifying or blunting the criticism from the customers, they also reflect poorly on the business itself.

Yelp has created a behind the scenes method for business owners to communicate with reviewers to avoid this. And Kudzu, which does allow comments, has created a business network that allows businesses to publicly endorse one another — thus providing another input for consumers.

There may be no single best approach but, given how important online reviews are becoming, it’s important for publishers and sites to continue to experiment with ways to be fair to business owners and allow them a “say” and to “participate in the conversation” but in ways that don’t diminish the overall user experience.

What Is a Legitimate Review?

A version of this discussion has come up several times in posts and comments on this blog: What is a legitimate review? Miriam Ellis offers a thought provoking post in which she suggests that a site like Yelp might remove multiple positive reviews coming from a single computer or IP address as suspicious.

The scenario she paints is this: a business owner offers a “public” computer on premises or even free WiFi and enourages people to write reviews, directly or indirectly. But the review site, in this case Yelp, might see a bunch of positive reviews coming from a single IP address and regard them as illegitimate.

Clearly if I as a small business owner pretend to be another person and write a fake review lauding my own business or if I get friends and family who are not customers to do something similar that’s “verboten.”

But what about a situation in which I provide an incentive of some kind to write a review while in my shop/shore? How about a “free cup of coffee to anyone who writes a review on Yelp?” This type of incentive was being used — as in free Starbucks cards — by a number of the early review sites (InsiderPages, Tribe, etc.) to get people to write reviews.

In my hypothetical no one is being asked to write a “positive” review, just to write “a review.” Say my program is extremely successful and suddenly (the week I start it) 30 or 40 mostly positive reviews show up. How would Yelp or another, similar site respond? If the reviews are written on-site using free WiFi Miriam’s post suggests they might raise suspicion coming from the same IP address and be removed. But should they be removed because of the incentive alone or would they if they appeared en masse in a relatively compressed time frame?

Let’s put aside the IP address issue for a second. How would my incentive program be treated? In my example these are all real people. I as the business owner haven’t asked them to say anything in particular, especially anything positive. I might even go out of my way to say “tell us what you really think, good or bad.” Yelp does explicitly address this situation and doesn’t like it either way. It asks users to disclose incentives and discourages them from writing reviews in response to such a program:

What if the business I’m reviewing gave me something for free or at a discount?

You should never accept freebies or discounts in exchange for reviews. For example, if a bar owner offers you a free drink in exchange for a 5-star review, you should not accept his or her offer.

Of course it’s ok if you were given something for free or at a discount independent of your review, but you should always disclose any special treatment, gifts, or discounts in your reivew. For example, if the restaurant manager gave you free appetizers on opening night, you should include that information in your review. Yelping is about real, honest reviews, so while we’re happy you had an extra special experience, we ask you to tell us (your readers) the whole story.

I’m in the midst of another survey of small business advertiser attitudes. To the question (also asked last year), “What do you think of online reviews?” the top response so far is “online reviews are a good thing and are helping us improve our business.” That was the winner last year as well:

As you can see we’re in a gray area ethically and philosophically with some of this behavior. But the stakes are high for local businesses, as consumers increasingly look at reviews as part of their decision-making process. In a city like San Francisco, Yelp arguably has more influence than any other single site.

What is needed is additional clarity regarding what’s permissible and what’s not (e.g., “reviews coming from the same computer will potentially be disallowed”). Most businesses will be ethical — just like most people are ethical — but they’re trying to figure all this out. I certainly don’t blame them for being creative.

Yelp: Higher Profile, More Heat

Yelp is now in the national spotlight. Most of the publicity the site has received to date has been positive. However, a local CBS affiliate did a critical piece on the site and its policies toward advertisers. (Urban Mapping called it to my attention.)

The controversy at the heart of the report concerns representations or promises allegedly being made to potential advertisers regarding treatment of negative reviews (that they would be de-emphasized or pushed down). Yelp denied that they agree to do anything like this. Citysearch has been accused of similar things in the past.

The link above shows the full segment on the news, together with interviews of the business owners who contend that they were wronged.

There’s also the parallel issue of removing positive reviews that were allegedly written by business owners or their friends. (This is a gray area: what if my relative or friend is really also a customer?) Yelp previously shut down trading of positive reviews among business owners.

All this reflects that the stakes are very high for local businesses and they’re trying to do something to influence how they’re perceived and represented online. There are also numerous challenges that Yelp now faces in holding such a powerful position in certain markets.

One of the interesting things that restaurant reviews aggregator BooRah is doing is enabling communication between restaurants and customers through its loyalty program, which I previously blogged about. As part of that program, businesses may collect comments from customers (favorable or critical) and may selectively publish them. BooRah then syndicates those comments to its partners. In this way local restaurants can publish positive reviews and choose not to publish negative remarks.

While there are several “reputation monitoring” programs in the works, this is the first such program that actually generates positive reviews or gives businesses this level of control. To be clear, these are comments that diners are making to business owners not reviews being written publicly on the BooRah site (as I understand the program). The business then has control over whether to make the comments public. It’s thus different than “de-publishing” a negative review.

Previous online research conducted by Opus Research (owner of Local Mobile Search) and AllBusiness.com last year we found that most SMB respondents had a favorable view toward online reviews. But this is a complex area that is still evolving.

The Kudzu program I blogged about this morning is another effort to give businesses more control or influence with consumers.