Yelp and the Business of Extortion 2.0 

Local business owners say Yelp offers to hide negative customer reviews of their businesses on its web site ... for a price.

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Given the economics of the Web, Mark believes Yelp has no interest in curbing illegitimate reviews. "They needed more people to go on the site; they needed to promote the site; so they can't stop it," he said. "They don't want to stop it and create any problems for themselves. So they just let it open and try to get as many people on as they can." Mark said he stopped working with the company after several years because he didn't agree with the direction it was headed in.

Here's what advertisers receive, according to an e-mailed sales pitch that a local business owner sent to this newspaper. They can highlight a favorite review to appear at the top of the page about their business. They also show up first in search results for similar businesses in their region (for example "coffee" near "Alameda, CA"). Ads for that business appear on the page of local competitors, while competitors' ads do not appear on their page. Owners can post photo slideshows, add a "personal message" about their business, and have the ability to update info on special offers and events. They also can find out how many users visit their web site, update their page, contact Yelpers who've reviewed their business, and have access to an account manager who will help "maximize" their experience with Yelp.

But aside from a single "sponsored review" at the top of the page, the order of all other reviews is based on a secret Yelp algorithm, spokeswoman Ichinose said. The order is mostly due to recency and reader votes for certain reviews as "useful," "funny," or "cool." But Ichinose said there are other factors, including how frequently reviewers contribute to the web site and "what kind" of review writer they are. "It's a number of different things we don't disclose," she said. "To be explicitly clear, the algorithm is an automated system. There's no human manipulation of that. ... If we were to start doing that, that would erode the trust we have with consumers."

Yelp officials strenuously deny that the company moves negative reviews for advertisers. So how to explain all the stories?

In an interview, Chief Operating Officer Donaker said it is all a big misunderstanding. "Do I think that sales reps call are saying, 'We'll move your bad reviews'?" he asked. "No. But I think it could be true — when you get to pick your favorite review and put it to the top, if I said it a little different way, it might sound a little nefarious." Donaker conceded that Yelp could do a better job of training its sales team to be "crystal clear about what you get and don't get."

Donaker also offered a more cynical answer to the question of why so many businesses accuse it of extortion. "Change isn't good for everybody," he said. "The vast majority of dentists and salons are getting a lot of benefit out of the New World Order, but there are some who aren't benefiting from it and like it the way it used to be. Maybe customers weren't happy but they could market their way out of it."

However, the advertisers and advertising prospects interviewed for this story weren't just responding bitterly to harsh reviews on Yelp. That's because Yelp doesn't allow just anyone to advertise on its site. In order to advertise, businesses need at least a three-star rating and a "significant number of reviews," Ichinose said. Consequently, every person interviewed for this story was favorably reviewed by a majority of Yelp reviewers.

Former Yelp advertiser Mary Seaton said she took the company up on its offer to move her negative reviews if she advertised. Seaton, the owner of Sofa Outlet in San Mateo, paid $350 a month for six months about a year ago. During that time, Seaton said, her negative reviews were removed and old positive reviews showed up. "There was one negative review but they pulled it down and then it came off," she said. After her contract was up, Seaton said a negative review appeared, which contained lies. When she asked her sales rep, Katie, about it, she responded, "We don't get involved with that. We're not mediators." Seaton said at that point she chose not to renew her ad contract.

One San Francisco merchant said a Yelp sales rep rearranged the reviews on his restaurant's page to entice him into advertising. Greg Quinn, general manager of Anabelle's Bar and Bistro in San Francisco (168 reviews, 3.5-average star rating), said that around January 2007, a Yelp sales rep was trying to get him to advertise. Quinn said he subsequently noticed that some of his negative reviews had moved further down on the page. "It was clearly ... a sales tactic," said Quinn, who added that the rep called him up and asked, "'Did you notice what I did? Well, we can keep doing that for you.'" Quinn said he ultimately turned the sales rep down, and told Yelp's latest sales rep to never call him again due to "the lack of reliability of the reviews and the narrow demographic."

"She said, 'I'm very sorry you feel that way.' And I said, 'It's not how I feel; it's fact.'"

Another East Bay business owner said that in January of 2008 he was approached by Yelp sales reps offering to move one- or two-star reviews of his business if he advertised. The owner, who we'll call "Joe," said he initially toyed with the idea. His two businesses have more than two hundred total reviews; one averages a three-star rating, the other averages four stars.

"At one point, I finally said to them, this doesn't sound too local," Joe said. "This is the voice of the people and you're manipulating the voice. She got her manager on the phone to respond to that. 'No, not at all, we've been doing this for years. We're not eliminating your bad reviews, we're shifting them around. We do that anyway, we move them around anyway. This is just to your advantage.'" But Joe wasn't impressed. "I said, 'This sounds like the Mafia — I'm paying you off to make me look better. I'm not comfortable with this.'"

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