Like many in the venture community much of my December date book centers around internal meetings and planning sessions for the coming new year. I’ve found that a number of these meetings ended with us having a fairly freewheeling discussion about User Generated Content (UGC), its implications for consumer internet companies in particular, and its place in the development of a number of companies we are specifically involved with. These internal discussions were punctuated somewhat by news items over the past week about the on-again, off-again talks between Yelp and Google. Today’s PEHub piece provided the latest dispatch in the saga.
While I wouldn’t want to speculate as to what issues would cause the Google/Yelp talks to snag, my own view is that a re-appraisal of UGC is underway among many early stage investors in consumer internet companies. UGC has proven to be far more complex and difficult to properly harness than many in the start-up community probably considered when initially drafting strategies for their companies that were highly dependent on UGC.
The ‘noise’ factor in UGC remains unabated. The somewhat Utopian vision — promoted by some when YouTube, UStream and others were in their infancy — that there would emerge a uniform way to manage, cleanse and tag UGC to control for noise never materialized. Our foray into Location-Based Services (LBS) a few years back, chronicled in a prior post about a GPS-enabled tour development and delivery platform company, was a good primer for us on the enormous potential and pitfalls of User Generated Content. LBS and UGC seemed a natural marriage to us then and is certainly a “hot” play now given the recent Gowalla and Foursquare funding announcements.
Weaving content into GPS waypoints and then embedding bits of information provided by users to those waypoints made a lot of sense. Our initial thinking was that licensed content — namely, content we’d get from tour book publishers — would provide the necessary backbone so that users would get a uniform, quality experience; over time, however, UGC was expected to dominate. In truth, that hasn’t occurred. The UGC contributions were almost unmanageable. The development team quickly learned that the amount of time required to cleanse it almost negated the benefits of incorporating it. The net result was that the UGC piece has been de-emphasized on the company’s product roadmap. Now, content available through the tour delivery platform will be primarily reliant upon licensed content. To be fair, the source of this content will go downmarket so that, over time, the company will become less dependent on the more expensive content from the travelogue publishers and more reliant upon small, local tour companies going after a more custom, hyperlocal experience.
Still too many competing interests/axes to grind. In addition to the usual spam, quality issues and overall noise with UGC, we were troubled by how common it was to find people using UGC to settle petty scores, rivalries or just to cause mischief. In recent reporting on the Google/Yelp talks, there is a sobering itemization of the number of lawsuits filed against Yelp from irate merchants and others who feel they were unfairly maligned by anonymous posters on the site. Also a common problem was instances when, say, a restaurant would receive a scathing review only to uncover later through an investigation that the poster was the owner of a competitor restaurant across the street.
Conceptually, I have long been suspicious of sites that provide posters a forum to anonymously bash a restaurant, retail store or service provider without requiring anything from the poster in terms of supporting documentation. Ratings are fine and they have value, to be sure, but abuse has now become rampant on so many UGC-driven review and rating sites. Ask virtually any restaurant manager or small business owner about Yelp or a similar site and it seems they all have a story about an unfair review that they had no way of properly defusing, defending or responding to. One bad review can seriously damage a small business; however, a bad review that is also of questionable merit or is an out-and-out mischaracterization is altogether more disturbing.
Gaming the system. Almost as bad as unfairly maligning a business is the epidemic of hoaxes or “ghost” reviews, usually of the glowing variety, that so often pepper the ratings of certain businesses and skew rating scores to the point that they become meaningless. Stories have become legendary of business owners writing their own rave reviews and, in some cases, forcing their employees to offer their own effusive praise. Yelp and other rating/review sites insist that they are working diligently to address these issues and I have no reason to doubt their sincerity, but clearly this is a big problem.
To be sure, UGC is powerful and will ultimately drive a lot of successful consumer internet businesses going forward. That said, is it no longer the can’t-miss buzzword in an investor pitch. Consumers want unvarnished candid comments and feedback — whether they are restaurant reviews or travel tips — but even more than that they want to have confidence in that information and a consistent experience. With the exception of a few companies that have been able to selectively weave UGC into their business models and maintain that consistent, reliable product, most companies still fall far short of delivering that experience.