Viewing entries tagged

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.