Yellowikis: a Web 2.0 Case Study, Part 2 - Industry Disruption and The Competition

Yellowikis: a Web 2.0 Case Study, Part 2 - Industry Disruption and The Competition

Summary: Yesterday I wrote about Yellowikis, an open business listings site that has the potential to shake up the Yellow Pages industry. The reason I chose Yellowikis for this case study is because it has a lot of the characteristics of a Web 2.

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TOPICS: Browser
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Yesterday I wrote about Yellowikis, an open business listings site that has the potential to shake up the Yellow Pages industry. The reason I chose Yellowikis for this case study is because it has a lot of the characteristics of a Web 2.0 business - it was developed by a small team (2 people in this case), it was cheap to build, uses open source infrastructure, relies on word-of-mouth advertising, and perhaps most importantly it will only be successful if it achieves network effects. Which brings me to the number 1 piece of feedback I got from Part 1.

Lack of data

It's fair to say that Yellowikis hasn't yet reached the tipping point. There isn't a lot of content on the site so far and it has few users. Mike Arrington also noted that it doesn’t have tagging and an open API for the data. Mike thinks this will "get the network effect flowing" and I agree. Yellowikis demonstrates the classic dilemma of the current generation of web applications and services - in orderto be successful and/or generate revenue, it needs a lot of people to both contribute content and use it.

There's also a question around the structure of the content. Dick Larkin, who works in the Yellow Pages industry and writes a newsletter called The Yellow Pages Commando, wrote in an email that Yellowikis faces issues "gathering sufficient data that is consistently structured for ease of use by the searchers." 

Can it disrupt an Industry?

To find out more about the business environment Yellowikis is challenging, I exchanged emails with Greg Sterling, Program Director of The Kelsey Group - a leading consultancy in the Yellow Pages industry. Greg thinks Yellowikis is a medium-to-long term experiment and that "had Wikipedia not gone before and, remarkably, proved what online communities are capable of it would be quite easy to dismiss this."

According to Greg Sterling, the traditional Yellow Pages industry took in revenues of approximately US$26.1 billion in 2004 on a global basis. The US market represented almost US$15 billion of that global figure. Web-based Yellow Pages services have so far not had much impact on this industry - Greg put their revenue growth in the very low single digits. However, he said "long term, the migration of usage from traditional media to the Internet will have an impact on revenues. That plays to Yellowikis’ long-term potential strength."

So the upshot, according to Greg Sterling, is that Yellowikis does not appear to have significant disruptive potential over the short term. "It's currently 'under the radar' and thus without much content", Greg wrote. "There's a kind of chicken and egg problem. Over the long term, however, it could ultimately affect the ability of established publishers to charge for inclusion in their online directories."

The Competition

Let's not forget also the competitive threats to Yellowikis. The telephone companies are the major obstacle. In an article last year entitled The Story of YellowPages.com, Dick Larkin outlined how SBC and BellSouth teamed to buy the domain name and business YellowPages.com for nearly $100 million in November 2004. So they're serious about business listings on the Internet!

The big Internet companies also represent a significant threat. John Battelle wrote a post in February 2005 that suggested Yahoo could become "the new Yellow Pages", because of its ability to aggregate business listings through Yahoo! Local. Google also has such a product, called Google Local.

Then there is the question of whether a Wiki is really the best way to collect and distribute Yellow Pages data. Software Consultant Marty Himmelstein wrote an article in Feburary entitled "Local Search - The Internet IS the Yellow Pages" (PDF download). The gist of the article is summarized in a comment Marty left on John Battelle's blog:

"The question I pose and try to answer in my article is "What would it take for the Internet to duplicate and enhance the functionality of the print and Internet Yellow Pages?" A key challenge is to aggregate information for the millions of businesses that don't have a web presence. One way to do this is to decentralize the job of collecting this data, to entities that are close to these businesses, such as Chambers of Commerce, or trade organizations. These entities have relationships of trust with both the public and the businesses they represent. They can act as gatekeepers, ensuring the data they collect or certify is authentic."

So Marty believes entities such as Chambers of Commerce or trade organizations are best placed to take Yellow Pages data to the Internet - not collaborative wikis for the people.

Summary

It's obvious Yellowikis is potentially disruptive to the multi-billion dollar Yellow Pages industry. But it's needs a lot of user help to do that. Data needs to be input - and in a structured format. Lots more people need to use Yellowikis and the system needs to scale up along with it. Things such as tagging and open APIs, as suggested by Mike Arrington, may well help push things along.

In a nutshell: Yellowikis needs to achieve the same level of success that Wikipedia has had, in order to disrupt the Yellow Pages market.

In Part 3 of this series, I will look at alternative markets for Yellowikis and also investigate the design lessons for other Web 2.0 companies.

Topic: Browser

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4 comments
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  • Tough Call

    In the early days search engines, and other new kinds of Net site, grew quickly by word of mouth marketing - because everyone was interested in the next new idea - and there were few competitors.

    Your article could not have been written about Alta Vista in 1996.

    Whenever I hear that a 'new' business model has appeared on the Net I'm reminded of that old cartoon about new businesses from the early days. It features two talking dogs - the first dog is pictured using a PC. The second dog asks the first dog: "Why do business on the Internet?" The second dog responds: "On the Internet, no-one knows your a dog."

    I'm not suggesting that Yellowikis is a dog - only time will tell that.

    However, Yellowikis will suffer from a late start. There are now so many dogs out there that most Netizens are getting used to having to check out the details of who they are doing business with - getting back to a Buyer Beware culture.

    I see this as the biggest problem for Yellowikis. Copying the Wiki comments section is not enough. Somehow, they have to gather real comments from real customers and make the real easy to read and understand.

    The search today is not for the tool that will find any one who supplies any thing - which is the problem that Yellow Pages fixed for past generations. It is finding the tool that will find me a plumber who will turn up on time, will traet me in a professional manner, is trained, accredited, insured, recommended, and has parts and tools.

    That is why you were led down the path of looking at organisations such as chambers of commerce. The Net gives us the opportunity to do this whole thing better - Yellowiki has an open goal to kick at...

    Satisfied customers are the ones who create the best word of mouth marketing...
    Stephen Wheeler
    • the best word of mouth marketing

      http://www.analogstereo.com/nissan_xterra_owners_manual.htm
      us_forums
  • Not so tough

    Hi Richard,

    RMacM: " Let's not forget also the competitive threats to Yellowikis. The telephone companies are the major obstacle."

    Richard, welcome to Web2.0 "Who Moved My Business Model?". Yellowikis has no investors, no demands for RoI, no advertisers to keep happy, no office, no telephone, not even a coffee machine. Nothing. Nada, Zilch. How do "traditional" companies with their roots in 20th centaury capitalism compete with someone who is playing a totally game with a different set of rules... and no ball? How do you think the telephone companies are going to stop us? Drop their advertising rates? Deliver more, bigger paper directories? or smaller local ones? Buy and sell each other for billions of dollars? Sell out to Google? The only way they can stop Yellowikis is to buy us and shut us down. The bad news is that if we get closed down another 14 year old school girl and her dad will set up 'Yellowikis v2.0' within a week. Read my lips: "it's the end of business as usual".

    The clever Yellow Pages publishers will adopt our ideas - take our data - Hey! It's free! No Copyright! Come on down! Partner with us - buy us a coffee machine. We come in peace! Be friends, play nice.

    And the reality is that VoIP is the real challenge to the telephone companies - Yellowikis is the least of their concerns.

    Marty Himmelstein: "... One way to do this is to decentralize the job of collecting this data, to entities that are close to these businesses, such as Chambers of Commerce, or trade organizations "

    PY: I totally agree with Marty's analysis. But he misses the last logical step: Let's decentralise the job to the businesses themselves. If CofCs and trade organisations get involved with collecting and editing data which infrastructure do you think they are they going to use? 1) set up their own propriatory system? 2) add their members details to lots of different Yellow Pages directory systems around the world? 3) join in with Yellowikis - remember: it's Free! No Copyright! Come on down! That's what is so disruptive about the idea of Yellowikis.

    Marty also highlights the importance of trust - but who would you trust more? Yellow Pages with thousands of big budget advertisers who want to squash smaller local companies out from their own market place with huge adverts and paid-for ranking or hundreds of thousands of business owners looking after their own contact information? Ummmm... let me think...

    RMacM: "...data needs to be input - and in a structured format."

    PY: Wrong again. Structured data has been made redundant by computing power. People prefer to search unstructured data (i.e. the web with GYM) than structured data (Yellow Pages). It's quicker and easier. In his paper Marty points out that most users go directly to Google for local seraches, they don't want to struggle with structured data it's too slow and cumbersome. I think the minimalist structure supplied by Yellowikis is about right. Two really important fields: Company Name and a geo-code - everything else is free text. We don't aspire to be a destination site - let GYM index Yellowikis database and present the results.

    RmacM: "In a nutshell: Yellowikis needs to achieve the same evel of success that Wikipedia has had, in order to disrupt the Yellow Pages market."

    PY: Wikipedia didn't spring from nowhere - it was launched five years ago. Every day Yellowikis gets bigger and beter. Just imagine how big we are going to grow in five years.
    PaulYoulten
    • structure

      Wiki with the BackLinks provides an excellent mechanism of building the structure by the users themselves. This is used by the custom of making Categories. The Yellowikis perhaps does have only two structured fields, but still the users can build any structure they would need. And this is exactly what peer production is all about.
      zby