Local business review site Yelp held a press phone call this morning to discuss major changes it's making to its site and business. Faced with class action lawsuits by business owners alleging they've been extorted by Yelp, the service has decided to make filtered-out reviews publicly visible and has removed the option for advertisers to push their favorite review to the top of their business's page.
Did Yelp just cry Uncle? Is this the beginning of the end for its most important revenue stream, as some have argued? Here's what we found most interesting about the call today.
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Yelp Gets Hit Hard With Questionable Reviews
Surprise, surprise - there are a lot of people out there who appear to be trying to game Yelp. This morning the company added a link at the bottom of each business's page to "filtered reviews." Those are the ones that the Yelp algorithm determined weren't trustworthy enough to display on the site. They used to just disappear into a mysterious black hole, something many people found suspicious. Now you can look at them, and most of the time you can see why the reviews were yanked. There are a lot of them, too.
CEO Jeremy Stoppelman said he hoped exposing these buried reviews would put to rest the "myth" that the company buries positive reviews if companies don't buy advertising and will give site users a chance to see the "unique challenge we face."
Did Yelp Just Kill The Golden Goose?
Some critics have alleged that the ability to put favorite reviews on top of the page was the most compelling thing Yelp had to offer advertisers. The new video slideshows aren't nearly as compelling as highlighting the good news and pushing down the bad news, they say.
Stoppelman offered a relatively convincing response to that when we asked him about it. He said that search placement is actually the biggest thing advertisers are paying for. "Favorite reviews" have limited draw, he said, because the site's natural Yelp Sort algorithm already displays reviews with a businesses's average rating or better at the top of the page automatically. He also said that round tables of business owners across multiple cities identified video advertising as the best possible substitute for the feature. Consider me convinced.
Complainers Are Just Complaining
Are businesses that complain about Yelp just upset that Stoppelman has built such a compelling site they feel obligated to advertise there, we asked? The Yelp CEO said in response that many small businesses are used to advertising in the newspaper and on radio and that the traditional local advertising market has been disrupted by Yelp. "Yelp represents a shift in the local business landscape," Stoppelman said. "When those shifts happen, you'll see some people lose out and then they'll register their complaints."
Do Yelp sales people pressure local business owners into advertising on the site? Do they wield the relative placement of positive and negative reviews like a weapon? It's hard to know what goes on in those conversations, but there are certainly countless business owners who are accustomed to paying for pure positivity in the form of traditional advertising and for whom the presence or risk of negative feedback on a site like Yelp is alarming to the core. As Craigslist founder Craig Newmark said in a blog post today, "By the end of this decade, power and influence will shift largely to those people with the best reputations and trust networks, from people with money and nominal power." That's where Yelp operates and it represents a change in the world.
Yelp's changes today seem like wise ones to me. This kind of transparency is likely to be helpful as the world of local business becomes more complicated thanks to the internet.
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