Get it Right ... Or Else!

Why is data getting so much attention these days? Why is it such a good business? Why is it so profitable? Well, there are numerous reasons, but the one I’d like to highlight today is that increasingly, data matters.

What do I mean by that? Simply that data, to a degree you don’t see with other forms of content, gets relied on to make serious decisions, some of which have significant, business, economic and personal impact. Some people (many of them rich data publishers) have understood this for a long time. For others, this insight is a new one. And one consequence of data’s growing importance is that it is increasingly the focus of lawmakers. Consider just a few examples:

In a true "only in Hollywood" moment, the state of California now has a law that says data providers cannot publish the ages of people in the entertainment industry. Yes, actors have long been skittish about putting their ages out there, but in the old days, they simply lied about their ages. Now, they have the force of law behind them. The ostensible purpose of this law is to help prevent age discrimination, however, the law also specifically includes everyone in the videogame industry as well, so go figure.

Across the pond, UK financial regulators have taken Morningstar, the mutual funds data company to court. Its offense? A number of the funds to which it gave high ratings ended up under-performing relative to their benchmarks. Apparently your predictions are now required to always be accurate. Of course, if Morningstar could identify top-performing funds with 100% accuracy, my strong recommendation to Morningstar would be to get out of the data business and into the investing business, pronto.

We also have the example of health insurance company physician directories. Every health plan publishes a directory of participating physicians, and in many cases, these directories are woefully inaccurate. Examples abound of plan directories with physicians who have left the plan, moved offices (sometimes hundreds of miles away), retired and even died. This would be just another everyday annoyance except for the fact that many people select their health plans, and spend thousands of dollars, based on the network of physicians a health plan claims to offer. The federal government has stepped in on this one, and not to be outdone, California (surprise!) has its own legislation covering physician directories.

These examples are just the tip of the iceberg. Consider all the various laws around credit data, for example.

Back to my original point, all these rules and laws simply illustrate that data at its core is all about helping people to identify, select, assess and decide. And as databases proliferate, so does their influence and impact. There is power in data, which is why, increasingly, data producers are being held to higher standards of quality and accuracy. While painful for some, in the aggregate, good data is good for all of us.

Professionally Rating Professionals

Online rating systems are ubiquitous and powerful. But not everything is easy to rate. Restaurants and hotels are pretty easy, in part because the people rating them are consumers who are simply supplying their impressions and opinions. In these scenarios, everyone who rates and comments is equally (un)informed. People know what they know and think what they think and rate accordingly. The value tends not to be in the individual comments (trust me, I’ve read more than my fair share!) but rather in the aggregate view. If a majority of people hate something, you stand very little chance of figuring out exactly what is causing the hate, but at least you know something is wrong. There is still good utility in that.

This could explain why it’s been so much harder for ratings site for professionals to take hold. There urgent need for consumers to get better insight into lawyers, doctors and other professionals is huge. But there are two major complicating factors it: knowledge asymmetry and personal relationships.

First, how does a consumer rate the knowledge and quality of a lawyer? They really can’t, which is why a lot of legal ratings devolve to “great lawyer” (read: she won my case) or “lousy lawyer (read: she lost my case). You also never see nuance such as “she did a great job despite my lousy case.” Services like Avvo have built a name rating lawyers based on public domain data. It’s a start , but it doesn’t provide the color and insight of crowdsourced consumer reviews.

Doctors are a special case. Beyond the knowledge asymmetry, many people feel a personal connection to their physician. That creates a “my doctor can do no wrong” mentality that doesn’t leave much room for ratings services. Moreover, physicians have proven to have very thin skins when it comes to being rated: doctors have been much more active in trying to get patients to sign legal agreements prohibiting their patients from rating them, much more so than lawyers.

One interesting workaround is to ask doctors to rate other doctors and lawyers to rate other lawyers. It’s not a new concept: in fact, Martindale-Hubbell has been rating lawyers this way for 100 years. More recently, Castle-Connelly has built a name with a similar service for doctors. What’s fascinating, though, is the Martindale system, originally built for lawyers to use in picking other lawyers, was something of a dud when offered to consumers. It seems that because consumers didn’t trust lawyers generally, they certainly weren’t going to trust a system where lawyers rated other lawyers. The unexpected outcome of the Castle-Connelly rating system is that doctors tended to give the highest ratings to academic and research physicians, top doctors to be sure, but ones that typically didn’t see patients.

We’re making strides, but there’s still no clear solution to this fascinating problem and massive business opportunity, one that’s been resistant to a technological solution precisely because of the human element.

The Past is Prologue … to Profit

With the arrival of a new administration in Washington, government websites have been in the news, as many groups have been closely watching them as a way to read the political tea leaves. And the new administration has not been shy about making changes. Within days of the Inauguration, there were reports of substantial changes to the White House website, with whole categories of content suddenly disappearing. Similarly, controversy erupted over removal of content from the Environmental Protection Agency website.

Leaving aside the highly-charged politics driving these actions, there is an important point here for data publishers: online data doesn’t last forever. And that’s a big area of opportunity for publishers.

Company websites are a useful source of current information on companies. They generally do a great job of keeping information on their leadership teams, office locations, products and the like all current and accurate. But while current data is what most people want, those who really want to understand a company also want to know what came before. Even more importantly, if you have enough history, you can start to see trends. But as I just noted, websites only tell you about the present, and they tell you about the present in a way designed to put them in the best possible light.

For example, knowing the name of a company’s current CEO has some value. But there is often as much or greater value in knowing the name of the company’s prior CEO – perhaps she is a recruiting target, or perhaps her biography can provide insight into the changing focus and strategy of the company. And if you keep track of all prior CEO’s and how long each served, you can, among other things, offer high-value insight into the stability of the company.

It’s the same idea with product information. Companies generally announce new products with great fanfare on their websites – usually a press release and often much more. But when new products fail and are discontinued, most companies scrub their websites to remove all traces of these products. There are lots of use cases where knowing what a company is no longer doing is at least as valuable as knowing what it is currently doing. But this kind of information disappears quite quickly online, except in cases where a savvy publisher held onto it.

Perhaps the most intriguing example of preserving online data is The Internet Archive, which takes periodic snapshots of millions of websites. This non-profit project has become a goldmine for researchers, lawyers, investigators, historians, analysts and even savvy salespeople looking to understand how companies have grown and evolved over time.

While it’s easy to conclude that “everything is online now,” the fact is that a lot of information, particularly company information, disappears fairly quickly from the web both by accident and design. Smart publishers are the ones to understand this, and who set themselves up to capture and preserve this information as a way to enhance the value of their own online data products.

Paradigm Lost

The operative paradigm in almost all forms of publishing is to centralize information. At one end of the spectrum are companies like Factiva that aggregate thousands of data sources for their customers to access for all kinds of uses. At the other end of the spectrum are media such as newspapers that scan a specified body of information, then curate it, bringing to their readers only the information they feel is most important and relevant. Data publishers fall somewhere in the middle of the spectrum, both aggregating and curating, with the added step of normalization.

What’s implicit in this centralization, however, is that the customer comes to the content in some central location. There are obvious advantages to this approach, the biggest of which is that all the content can be accessed via a single, consistent search interface.

But centralizing data isn’t always easy. This is particularly true with some types of product data. In some industries, manufacturers, for reasons good and bad, want broad distribution of their product data to qualified prospects but nobody else. Sometimes this is driven by regulation; sometimes it is driven by competitive fears. So how do you centralize data when the market doesn’t want it centralized?

One early innovator we liked was a company called Innovodex (now owned by Underwriters’ Laboratory). It worked with companies in the materials industries who wanted only qualified engineers and designers to have access to their new product data. Innovadex took on the job of screening and vetting new users, granting access to those meeting certain criteria. It was  effectively a giant extranet of product data from participating manufacturers.

Recently, we’ve seen another spin on this model. A new initiative in the pharmaceutical industry called Align Biopharma (sponsored by the always innovative Veeva Systems) wants to centralize login credentials for physicians. Much like LinkedIn and Facebook offer single-credential logins to third-party sites, Align Bipharma wants doctors and other healthcare professionals to be able to access any pharmaceutical company product information site with a single login.

Align Biopharma has other interesting data standards initiatives, but what jumped out to me was that in a fiercely competitive industry where manufacturers all want to do things their own way, it may make more sense to centralize the logins than to centralize the content.  And of course, the data gleaned from sitting in the middle is a worthy prize in itself.

Centralized users and distributed content. Sometimes great new ideas come not from thinking outside the box, but inverting the box. 

Reviewing an Imperfect Model

We all know that online ratings and reviews are increasingly popular, with some large and successful companies based entirely around providing them (think Yelp and TripAdvisor). Ratings and reviews are not only popular, they have become a profoundly influential tool in helping consumers decide what to buy and where.

Not surprisingly, as ratings and reviews have become more important to consumers, they have also become more important to businesses, many of whose revenues rise and fall in line with the quality of their online reviews. And the outsized importance of these reviews has attracted scammers and spammers. Some even argue that this ability to post online reviews puts too much power in the hands of consumers, many of whom exercise it thoughtlessly and mercilessly.

The most important rating and review systems are invariably operated by third parties, who provide critical market neutrality. But many of the biggest ratings providers got into this business with no idea how powerful they would become. What they did know was that they needed to amass lots of reviews quickly to build consumer adoption. Making volume their top priority drove down the quality and integrity of these reviews. But the review site operators deeply believed in the concept of the so-called “wisdom of crowds,” and that with enough volume, the honest reviews would overwhelm the false reviews and everything would ultimately work out just fine … at least in the aggregate. But that’s little comfort to an individual business that is suffering from an onslaught on underserved bad reviews. Horror stories abound for all of the major review platforms:

Where’s the law on all this? “Desperately playing catch-up” sums up the situation very well.  Interestingly, the review platforms themselves are well protected by federal law that views them essentially as innocent messengers. Individuals who post reviews can be exposed to lawsuits if their reviews contain defamatory or inaccurate information that causes financial or other harm, but it can be hard and expensive to track them down. A recent federal law makes it illegal for businesses to prohibit customers from posting reviews about them. And an increasing number of government agencies are cracking down on businesses that pay to have positive reviews about themselves posted.

In short, the law is increasingly acknowledging the importance of reviews in commerce, but the whole field still lacks adequate checks and balances. In particular, businesses still have a weak hand. But forcing review platforms to take responsibility for the accuracy of reviews would be such a complex and expensive task it would likely put many of them out of business.

Reviews are powerful. Consumers depend on them to determine where and with whom they spend their money. Businesses are impacted by reviews – for better and for worse. Yet the major review platforms, well insulated by current law and all seeking scale at the expense of vetting and customer service, come down heavily on the side of consumers. Ordinarily that would be fine (success comes from knowing and fiercely supporting your audience), but consumers have shown limited interest in paying to support the big review platforms (think Angie’s List). At the same time, businesses have shown only limited enthusiasm for supporting review sites where they can’t have significant control over what is said about them.

Bottom line: rating and review sites represent an important but imperfect business model. Those who benefit most from they don’t want to pay for them. The platforms themselves don’t want the cost and hassle of vetting reviews. And businesses don’t want to advertise in a place where they can’t control the message. We’ve seen some innovation along the lines of verified reviews, where the reviewer must be a known customer of the business being reviewed, but this is not a full solution to what ails this model.

Opportunity knocks for someone who finds a kinder, gentler but still useful spin on this important category of content.