Note to Yelp: Sell.
The rumor du jour is that Google is in talks to buy Yelp for ~$500 million. Yelp should take any money offered and run.
Yelp has a damned if you do, damned if you don’t problem, one that I believe is present because of a horribly broken rating system. A city either has too little data and the handful of reviews vary so wildly as to undermine the cumulative stars, or too much data and the subjective nature of star reviews by the crowd becomes all too apparent.
This is especially a problem in SF: the ebullient, foodie nature of the city combined with an over-sharing tendency made Yelp an instant hit. However, it also means that nearly every restaurant is rated 3.5-4.5 stars. Search results suffer hugely from this.
Case in point: Range, the amazing Michelin-starred Italian inspired restaurant that I cannot say enough good things about, has 4 stars on Yelp. The bodega/deli two blocks away 4.5 stars. Search for restaurants in the Valencia/Mission area and guess which comes up first.
Granted, there are filters, but my point is that star-ratings on Yelp are a joke to users but figure largely into aggregation. Recently, I’ve abandoned Yelp altogether and pop open Google Maps to find spots I know are there, ever since they added local business notes on their maps.
And this is a problem I don’t think Yelp can solve. Netflix uses the five-star rating system very well, and their success illustrates a few rating-lessons, if you’re going to use 5-stars:
- Embrace perspective and encourage ratings. Netflix’s system works because the star ratings change based on your own tastes. For movies, this works fantastically, and in it probably would work well for restaurants. I’d suggest Yelp license it, if they aren’t bought, but they’d also need to figure out how to encourage ratings by users. Right now, hardcore users make up the lion’s share of Yelp ratings, and there is not call-to-action for users to rate or non-users to join. (Beyond some small copy here and there, of course)
- Make sure you have cash-flow. Developing an algorithm to sort ratings based on a user’s preferences is expensive. Netflix spends cash on this, and can, because it results in more revenue for them. Yelp has yet to find a strong model that could support the cost of live rating.
The way I see it, Yelp has their hands tied by their rating system. They don’t have the cash or UX to fix it right now, and new-comers like 4 Square and Gowalla (and Google!) promise to give them a run for their money. Google wins if they acquire Yelp, as the rating problems disappears overnight with their current knowledge base.
Sell, Yelp, sell.
