Epinions Business Model - Cool or Not?

[Joubert[$]]

So, cool in the real sense? When have I ever been cool? Feh. Contributing at Epinions was fun for me, so I did.

One issue that struck me was when a friend said, "Sounds like folks get a lot of their self-esteem from posting there." I decided to stay away from the whole ego-boo concept lest my friend think I'm even more of a geek for having a lexicon that includes such concepts...

Meanwhile, a number of folks were enticed to write for the site by money. Although I have loudly proclaimed many times that I don't write here for the money, I will admit to opening the calculator in my system tray in the early days and figuring out this site could be worth thousands a year. Not enough to make me quit working, but a nice little bonus.

Let's see, a review (or two - eek!) a day and every year you could splurge on the holidays or take an extra "free" vacation. Except that level of output doesn't allow the rest of your life to be lived - unless the reviews aren't very good. And I found that I was enjoying the comments and feedback from my new online friends more than the actual by-then pennies. So I scaled way back. I don't look for reviews to write anymore. I'll get a stuck in a rut now and write a couple in Finance or several new music reviews, but I sort of meander along writing about what I want to write, much like I would discuss books in a book club. Hell, I write specifically for EasilyAddictive and have been known to throw a few hours away on a piece there.

So it didn't work out that Epinions would be a second income - big deal. It was a teaser rate. You know, I switch credit cards when the rate is lower from a new provider, I'm on my third cell phone company and am perfectly happy to substitute where appropriate.

Here's some surprising news, by the way, folks. Learn about business before you comment upon it. Do I think Epinions' management team has made mistakes? Absolutely -- probably the biggest one was allowing the online communities to flourish. It was a two edged sword that got away from them. Frankly, I would have our attorneys shut down any site that used my company's name in any way, shape or form in their URL. But it's too late for Epinions in that area.

Bad business is all around you though. Forget Enron. Think Lucent. Think about Michael Armstrong destroying AT&T to become CableCo, Inc. or whatever he is calling it this week. Think Alex Mandl imploding Telignet or Winstar starting the year with buckets of cash and falling apart only to be sold to IDT yesterday for pennies on the dollar. All of this has happened this year, along with the demise of more web services than I can count - including some pretty well-financed ones. Speaking about web services, I read an article about Auto-by-Tel last night and did some research. Last quarter, they signed up 200 new dealerships and lost 700. Hmm, how long do you stay in business doing that?

Meanwhile, Epinions has built one of the top web destinations in the world. I've seen the numbers from independent services. They ain't top 100, but they're on the way. Why? Not because you wrote a review of your lipstick or someone's CD. Because there's a huge market desire for consumer information. This year's Nobel Prize in economics was awarded to three professors who explored the price vagaries of asymmetric information and showed that buyers and sellers both benefit when information is shared equally.

Yes, content is important, and I'm not posting this to say that all is well in Epinions' domain. But they've done a lot more right than they have wrong. As I've often said to critics of any sort, "Well, that's an interesting opinion, but what exactly have you done in the same field?"

My apologies to Jeff Bezos or Meg Whitman if they're reading us. By all means, feel free to yell at Epinions for failing to better monetize their traffic. But unless you even have a remote inkling of how to cut a business development deal on the web, maybe you should learn before being quick to criticize.

That's not to say that everyone's experiences and feelings aren't justified, but I'm more prone to listen to someone who has been there or at least visited there than someone who has no experience or training, yet remains vociferous in their attacks.

but I'm more prone to listen to someone who has been there or at least visited there than someone who has no experience or training, yet remains vociferous in their attacks.

Well gosh, as someone that did just criticize Epinions, I will say that my inexperience (knowledge/whatever) with the web community hasn't got anything to do with the criticisms that I have lodged at them. The criticisms have everything to do with basic management stuff (which I *do* have experience with) and how I would want to be treated (which may or may not be good for business but it is something I have experience with too).

I will agree that they have a tremendous idea here and have built on it to a fair degree *but* the problem is that they have built it up on a paradigm that they aren't currently using (hits=cash basically). They need to rapidly convert to another paradigm (this site is for fun basically) or things will go downhill... Maybe.

The other option I can see would be to convert the site more into a survey sorta site where the content of reviews doesn't matter (to Epinions--it sorta matters to us) and where they are basically just providing our information to people. I don't exactly see that happening right now but I have seen attempts to make the information more marketable (their early e-2 attempt to force people to digitize their movie reviews through the number ratings sure seemed to be one of them).

Basically either the site looks good to people or the numbers do. With no high-end pay scale I would say that the numbers thing might be a better option but on the other hand, people are still producing solid reviews out there (they did lose a good bite of their top talent with this last cut though).

The idea that they don't exactly know what goes on in the site... Well, I have taken that from stuff I have been asked by them.

As for the rest, I couldn't care less about the whole moneterizing their traffic thing at this point.

OK, not quite true but much of the criticism I have talked about has more to do with politics and stuff like that.

Ummmmmmmmmmm... I think that my category of choice probably is one of the bigger problem areas as far as that (traffic I mean) goes and I do have some experience with the field (movies). Nothing really big but a little bit anyhow. Not really sure how they can solve their current problems. My own opinion is that they have climbed their way out onto a limb and aren't really sure how to get back down either... They seem to be trying to do the conversion I mentioned above (hits=cash to for-fun) and it might work but shrug. No idea.

The other thing that I will happily agree is that gosh they can rustle up the capital. No experience with that but I think that their numbers have a good deal to do with that.

Perhaps they will be able to keep the numbers up, perhaps not. I would imagine that the numbers have the ole' snowball effect and that many people will write on kudos alone but the problem with that as far as movies is concerned is they lack product differentiation from sites like Amazon and even the IMDB if all they are providing is numbers (at least as far as movies are concerned) and not quality. I suspect this is probably a reason that they are having some trouble doing the conversion with films but that they have to keep the films category around because the numbers look so dang good. As far as I can see, the biggest advantage that they have as far as films go though is that the quality has been pretty dang good (and that the format supports quality as opposed to short blurbs). Other than the quality of their reviews, people might as well go to Amazon or the IMDB for brief blurbs and numbers.

I mean up until this point (or the end of October anyhow), hits were a bit like the ole' give 'em a buck internet model. If a site gave everyone that visited the site a buck then it would get a lot of hits but wouldn't make any money (a ****lot**** of hits). Now they have to make it work as a site without the give 'em a buck (or in this case, a penny) thing... I would tend to say that in a couple months it will be crunch time with regards to that. I have noticed a big drop in the amount of ratings reviews have gotten personally... The number of reviews has decreased slightly but ratings have dropped significantly so I would imagine that traffic is down sitewide (so the rankings isn't quite that significant--the chance that they will get more sponsors decreases as the numbers go down).

Shrug. Nope, never worked in the technical side of webdom (webland? webopia?). But it isn't necessary to be a mechanic to know that your wheel just fell off (diagnosis is kinda easy there too) and some of the mechanics of fixing it would be similar to say replacing a bike tire (not all mind you but some) so you might still have some say on the subject.

Anyhow, they got funding, their basic idea is solid, their basic site format is all right, they got traffic to their site, and people interested in the site.

Aside from all of that, what would you say that they are doing well (in the order of "doing a lot more right than wrong")?
I would say that the biggest part of the equation is left out there...

Ander

[Joubert[$]]

Originally posted by anderclayton



I will agree that they have a tremendous idea here and have built on it to a fair degree *but* the problem is that they have built it up on a paradigm that they aren't currently using (hits=cash basically). They need to rapidly convert to another paradigm (this site is for fun basically) or things will go downhill... Maybe.

I don't agree. Either on their premise or on the notion that traffic doesn't pay. Views don't pay and CTRs are through the floor. But you die without traffic.

The other option I can see would be to convert the site more into a survey sorta site where the content of reviews doesn't matter (to Epinions--it sorta matters to us) and where they are basically just providing our information to people. I don't exactly see that happening right now but I have seen attempts to make the information more marketable (their early e-2 attempt to force people to digitize their movie reviews through the number ratings sure seemed to be one of them).

Granted, this may the only option you can see. There are doubtless others who have done a detailed SWOT analysis and reviewed the financials. They most likely have differing opinions.

Basically either the site looks good to people or the numbers do.

I call out that remark because I can't imagine how the two are mutually exclusive.

With no high-end pay scale I would say that the numbers thing might be a better option but on the other hand, people are still producing solid reviews out there (they did lose a good bite of their top talent with this last cut though).

Some talented reviewers left. One needs only capture a tiny fraction of a single percentage point of interested parties to replace that talent.

The idea that they don't exactly know what goes on in the site... Well, I have taken that from stuff I have been asked by them.

As for the rest, I couldn't care less about the whole moneterizing their traffic thing at this point.

OK, not quite true but much of the criticism I have talked about has more to do with politics and stuff like that.

Monetizing the site is the whole issue, Ander. The politics and all the other silliness are the distractions.

[lots snipped]

Anyhow, they got funding, their basic idea is solid, their basic site format is all right, they got traffic to their site, and people interested in the site.

Aside from all of that, what would you say that they are doing well (in the order of "doing a lot more right than wrong")?
I would say that the biggest part of the equation is left out there...

Ander

Aside from what? You answered the issues. They're funded with a good marketing concept, their site format is "all right", they have consumer interest and are cutting deals. What else are you supposed to get right? The contributors? Please. Epinions could cancel the account of every person who has ever contributed a review and still go sailing on the web.

Folks, let get back to reality. We, the contributors and active users, are not the site. In fact, I suspect we're more a distraction than anything else.

Folks, let get back to reality. We, the contributors and active users, are not the site. In fact, I suspect we're more a distraction than anything else.

Reality? I thought you were talking the internet (er, dotcomdom). OK, reality.

If active users don't matter in the least, what product is Epinions providing?

"Traffic" would be the obvious answer here but it isn't really the case (except in the most general sense).

Ander

[AuntieEmma[$]]

Originally posted by anderclayton
what product is Epinions providing?

That's a good question. I would say the answer is none.

I do think they're providing a service. Consumer product reviews are a good thing. I'm sure they're useful to many people. But a service is not a product, not if they're giving it away for free, which as far as I can tell is essentially what they're doing.

As for whether I think Epinions is still "cool" ... I'm not sure if I ever thought it was. I would tell people about it, and their reaction would be "You're writing for pennies!?!?" They seemed to think that was amusing and/or slightly pathetic. I only got one person to sign up, and he never wrote anything and as far as I know never read either. Well, they all got the last laugh as far as Themestream was concerned. Anyway, I'd have to say it was more like a guilty-geeky pleasure than a cool one for me.

But I have found that one of the pleasures of getting older (which almost compensates for the failing eyesight) is that it starts to matter a lot less whether people think what I'm doing is "cool" or not.

On the other hand, I don't mention Epinions to anyone any more, so maybe I'm not as past caring about coolness as I thought.

[Joubert[$]]

Originally posted by anderclayton


Reality? I thought you were talking the internet (er, dotcomdom). OK, reality.

If active users don't matter in the least, what product is Epinions providing?

"Traffic" would be the obvious answer here but it isn't really the case (except in the most general sense).

Ander

I swear I don't understand these comments. Without traffic, your web site dies. As for "general sense", that just sounds like words tossed into a sentence.

Epinions delivers highly targeted buyer traffic. I'm sorry, but if you're going to discuss web traffic, do it with facts and an understanding of the business. Understand not just the concept, but the going CPM rates for targeted versus general traffic, web based traffic and a hundred other metrics that can be named. Otherwise, the opinion loses merit.

The question of what is the Epinions service offering (companies don't offer products or services, but service offerings and product offerings - the difference is slight, but real) is a pretty good one.

My guesses:

1) Targeted audience of interested purchasers
2) Banner traffic (declining, but still substantial at this level)
3) Email campaigns
4) Spot advertising
5) Content that allows businesses to private label ratings
6) Market research studies (i.e., clickstream analysis)

I could think of more, but that should get us started.

[AuntieEmma[$]]

Originally posted by joubert
Epinions delivers highly targeted buyer traffic.

... which is now only worth a teeny-tiny fraction of what it was at the time that they dreamt up the site

I'm sorry, but if you're going to discuss web traffic, do it with facts and an understanding of the business. Understand not just the concept, but the going CPM rates for targeted versus general traffic, web based traffic and a hundred other metrics that can be named. Otherwise, the opinion loses merit.

If highly-targeted buyer traffic isn't worth much anymore, then that's all you need to know, in my opinion, to reach a conclusion. The rest is just details -- interesting, perhaps, but sort of irrelevant.

(Trying to stay on topic here by thinking of something else I could say about "coolness" ... ok, there's this: I was talking to someone about a restaurant, and she said, "Is that the one you wrote about online?" and I realized that at least one person who had nothing to do with Epinions was reading my stuff there. I thought that was pretty cool.)

[amykhar]

Brief side note. Ander won't be back to reply. He asked to have his account deleted.

Amy

[AuntieEmma[$]]

Oh, here we are.

Well, just ignore all the stuff about "coolness." I mostly just wrote that to try and stay on-topic in this thread's former home.

[AuntieEmma[$]]

Originally posted by amykhar
Brief side note. Ander won't be back to reply. He asked to have his account deleted.

Amy

?????

[Joubert[$]]

I hear you, Auntie, but the volume is high enough to warrant a significant amount of money.

[erik_kosberg]

The really big question mark long term is where does the revenue come from? Certainly not banner ads. Some from licensing and “co-branding” (I’d love to find exactly what the folks at Eps think their branding is worth), but beyond that, what else?

The original idea of Epinions is nothing short of brilliant but my little grey cells don’t have a clue where the money’s going to come from after the venture capital dries up.

[AuntieEmma[$]]

Originally posted by joubert
I hear you, Auntie, but the volume is high enough to warrant a significant amount of money.

Remember what people used to say when they wanted to make fun of the dotcoms? "We lose money on every sale, but we make it up on volume!"

[Joubert[$]]

LOL! Yes, but I think Epinions hopes for more of an eBay than an Amazon model. Seriously (looking around for the accountants...), there's a mess of fixed costs, which keep getting reduced and virtually no variable costs to speak of.

Is banner or similar advertising enough to keep the lights on? No, probably not, but it's probably a bit of change.

[AuntieEmma[$]]

Originally posted by joubert
Is banner or similar advertising enough to keep the lights on?

Well, the lights themselves cost less to keep on this year, now that the electricity crisis has passed, so that's something at least.

Seriously, it is an interesting case study, isn't it? It's like they're defying the laws of gravity. They're still around, even though nobody can really figure out exactly what it is that is holding them up. Unless they're just playing with the remaining venture capital and will close down as soon as that runs out, which wouldn't make quite as interesting a story.

[mnehr]

Overall I believe that Epinions’ business model is pretty good as a concept, however, I believe that they have some flaws in the implementation of that model. In one of my most popular reviews, I actually wrote a concept business model for Epinions and the main things that I proposed changing was first, the way the site was marketed, and second, a packaging change.

I believe the biggest flaw of Epinions is that they are running on the concept that they are a ‘Technology Company’ (to quote Nirav in one of the last chats). I believe that if Epinions works on the premise of being either a marketing or p.r. company, that it will open more doors of revenue streams.

For example, Epinions calling itself a technology company is like Consumer Reports calling itself a publishing company. The difference between Epinions and Consumer Reports, (and why CR has been so successful) is that CR knows exactly their place, while Epinions is trying to place themselves in an incorrect business family.

This has been the problem of many dot-com’s; they operate on the assumption of being a technology company. This forces these companies to operate on the false premise that they have tangible assets and physical products. Unfortunately, raw knowledge is not a tangible product until it is turned into a physically marketable product. Right now, Epinions is attempting to market raw knowledge as a physical product. It keeps them far too closed….

So, to make this short.. Concept- good; Implementation- Substandard.

[Gearfreak]

It looks like you are almost talking to yourself in this thread. I see some EA members and two or three members talking to you, but that’s it. Let me help you out here.

I don’t think many people ever thought of Epinions as a second income. I know some great members who complained a lot about the vast lack of recognition and contact with the people they are writing for. I have seen that some of them got hats now, but not because their “voices were heard”, but because they began understanding the rules of the software that identifies a member as an Editor candidate .

It has NEVER been the pennies, but it was the taking away of the pennies that caused a lot of mayhem. The penny system was the measurement tool and all of a sudden people felt lost without their recognition system.

Yes, Epinions has become a great review site! They found a gap in the market and filled it. Although they have a terrific database of the most searched items, I can’t even find the latest and greatest musical items, like the Yamaha Motif. Instead I find every variety of soap, toilet paper (moist and dry), not only the one soap bar, but its different sizes all listed as separate products, as if even one of them was worth mentioning. Their database is never up-to-date with hardly anything I’m looking for. Yes, I find reviews on a 1997 Chevy truck, or a listing for some far outdated audio equipment without any reviews. All that shows me that there is nobody actually caring on the Epinions side of the site.

The word you have for critics (“that's an interesting opinion, but what exactly have you done in the same field”) sounds pretty lame to me, because it’s not a critic’s task to “do” anything his/her field of criticism. Would you expect a boxing critic to be a world champion ? Or a car critic to build cars?

All I understand reading your post is that you want the good old times back, when you were a great champion on a great new site. Well, times change.

Now, you are mostly spending your free time writing apologies for Epinions. And you aren’t even doing a convincing job on it, either.

What’s the matter with you, George?

Sincerely,
Michael

[Joubert[$]]

Originally posted by Gearfreak
[b]It looks like you are almost talking to yourself in this thread. I see some EA members and two or three members talking to you, but that’s it. Let me help you out here.

Talking with myself? It doesn't appear so. Let's practice our counting. But before that, let's make sure we understand that this thread was split from a very long thread with a similar name. Okay, once we have that established, let's do that counting thing again. Before you posted, there were 16 posts in this thread. I had made 5 of them. What a strange characterization.

I don’t think many people ever thought of Epinions as a second income.

I can direct you to multiple threads here, on Epinions, in Wired magazine and multiple other sources. Or you could do the research yourself.

I know some great members who complained a lot about the vast lack of recognition and contact with the people they are writing for. I have seen that some of them got hats now, but not because their “voices were heard”, but because they began understanding the rules of the software that identifies a member as an Editor candidate .

It has NEVER been the pennies, but it was the taking away of the pennies that caused a lot of mayhem. The penny system was the measurement tool and all of a sudden people felt lost without their recognition system.

The "penny system" you refer to was not in place for very long, and indeed, was a reduction from 30 cents and later 3 cents. If you're going to quote history, make sure it's accurate.

Yes, Epinions has become a great review site! They found a gap in the market and filled it. Although they have a terrific database of the most searched items, I can’t even find the latest and greatest musical items, like the Yamaha Motif. Instead I find every variety of soap, toilet paper (moist and dry), not only the one soap bar, but its different sizes all listed as separate products, as if even one of them was worth mentioning. Their database is never up-to-date with hardly anything I’m looking for. Yes, I find reviews on a 1997 Chevy truck, or a listing for some far outdated audio equipment without any reviews. All that shows me that there is nobody actually caring on the Epinions side of the site.

Updating content is always a bear. To characterize the site as "nobody actually caring" makes me wonder why such absolutes are necessary. Clearly, the site is maintained at some level. Again, accuracy is key.

The word you have for critics (“that's an interesting opinion, but what exactly have you done in the same field”) sounds pretty lame to me, because it’s not a critic’s task to “do” anything his/her field of criticism. Would you expect a boxing critic to be a world champion ? Or a car critic to build cars?

Of course not. I do expect a boxing critic (aka sportswriter) to understand the sport, have knowledge of the sport, contacts within the sport, historical perspective and expert knowledge. Likewise, I expect an automobile journalist to have similar knowledge in that field. My point, which you apparently missed, is that many people without a business or management background come here and post "Epinions doesn't know how to manage their service offering" or words to that effect. My request is simple: if you do not know the history, current state of or have training in business or management, your opinion should be discounted. Or would you advocate visiting a doctor with no training who "thought [they] knew what the symptoms meant?"

All I understand reading your post is that you want the good old times back, when you were a great champion on a great new site. Well, times change.

A great champion? What in the world are you talking about? I have never been a Top Reviewer or Expert or any of those titles. I'm not on the Most Popular Reviewers list, nor are any of my 130 posts on any of the top lists in their category. I've lost count - is that your fourth inaccurate remark?

Now, you are mostly spending your free time writing apologies for Epinions. And you aren’t even doing a convincing job on it, either.

Writing apologies for Epinions? No, I don't think I've ever apologized for anything. Do let me know if you see anything that I've apologized for. I have spent a lot of effort discussing basic business principles today. Some folks responded positively. Others have felt threatened?

What’s the matter with you, George?

Nothing at all is wrong with me. I moderate this forum. That means my role is to encourage conversation and respond to folks posting here. Sometimes that's a nice quiet conversation, sometimes it's a rollicking good time and sometimes it's pointing out when folks misinterpret posts.