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Epinions Giveth, Epinions Taketh AwayOct 26 '01 Write an essay on this topic.
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The Bottom Line We have to hope that this is a good business move that will right the ship, and hope that it isn't too late to avoid the iceberg.
For those who haven't seen the news from Wednesday (I just read the official posting myself), here is the latest from the Epinion's news desk: In an effort to increase the operational efficiency of Epinions' financial incentive system, monthly Income Share will become the sole form of Eroyalties credits awarded to reviewers. Member and non-member visits to individual reviews will continue to be tracked and displayed, however base Eroyalties and Content Partner Eroyalties payments will be discontinued. This measure is being taken for the following reasons: - To emphasize Income Share as the primary system for rewarding the most valuable reviews, as determined by Epinions users. As many of you are aware, Income Share currently accounts for the majority of incentives distributed on the site. - To eliminate financial compensation for reviews with low average ratings (e.g., "Not Helpful" or "Somewhat Helpful".) - To better protect the community against fraudulent activity involving the base Eroyalties system. The majority of gaming on the site is triggered by base Eroyalties. - To respond to many of your suggestions that Epinions take this step to address the above issues. After careful consideration, we have decided that Income Share is the most efficient method for rewarding the best reviewers on Epinions. This transition will take place on November 1st, 2001. OK. Lets take a stab at reading between the lines: What They Said In an effort to increase the operational efficiency of Epinions' financial incentive system, monthly Income Share will become the sole form of Eroyalties credits awarded to reviewers. What They Meant "We're losing money. Ad revenues are down. The economy sucks. We're scared of Anthrax. We want to lighten the financial burden of writing so many checks." Anyone who has participated in a "pay-per-click" site of any kind could see this coming from miles away. All the sites do this eventually. They take steps to reduce costs, improve cash flow, and make money. I don't like it. You don't like it, and I'm betting Epinions doesn't like having to do it. What we have to be concerned with is whether or not more cost-cutting steps will follow. What They Said This measure is being taken for the following reasons: - To emphasize Income Share as the primary system for rewarding the most valuable reviews, as determined by Epinions users. As many of you are aware, Income Share currently accounts for the majority of incentives distributed on the site. What They Meant "Nobody knows what the Income Share formula is, so we can make changes to THAT without having to announce it. AND, if you write "popular" opinions (regardless of their information quality), you can assume your Income Share will be greater than "unpopular" opinions." The only thing that bothers me about this "reason" is that Income Share formula is not published or otherwise made known to us, the contributor. For that reason, they can "tinker" with it (like they did earlier this month when there were "inconsistencies" with the way the formula paid out). The fact that popular (MH, VH, and H) opinions will still garner the lion's share of Income Share doesn't bother me except for the fact that many SHORT, to-the-point reviews get knocked down in rating. I'd urge every reader to carefully consider a short review for it's information quality. If you learn enough from that review to help you make a purchase decision, then give it the Helpful rating it deserves. What They Said - To better protect the community against fraudulent activity involving the base Eroyalties system. The majority of gaming on the site is triggered by base Eroyalties. What They Meant "Our fraud protection schemes aren't working. Too many idiots are out there trying to boost their penny count by setting up false accounts, writing bogus reviews, etc. There are a lot of dishonest people out there trying to scam the system, but we don't have any good safeguards in place to prevent fraud, so we have to eliminate the penny count." This, in my opinion, is analogous to grounding the airlines after the terrorist attacks of Setpember 11. Is it necessary? Probably, but only until a better, long-term solution can be found. And it has the potential to cause so much discord with the honest Epinion faithful that it ultimately causes more harm than it alleviates. What They Said "- To eliminate financial compensation for reviews with low average ratings (e.g., "Not Helpful" or "Somewhat Helpful".)" What They Meant "We're not going to pay every time someone writes a review that says, 'This Movie Sucked'" I whole-heartedly agree with this reasoning. However, I think there is a better, if more cumbersome, solution to the problem. New members to Epinions should be subject to a screening process for all their reviews. Only after they have written a number of quality reviews can they directly publish them without being screened. This will establish and separate the quality review-writers from the poor ones. It will also keep poor reviews from seeing daylight. The Well-Trodden Path To Bankruptcy One thing we all have to remember, whether we agree with this policy change or don't, is that Epinions is ultimately a business. Revenues must be generated, expenses must be paid, and markets must be appeased. With that in mind, we must also reflect on the fact that the "pay-per-click" business model has yet to prove fruitful. The "All-Advantages", et al, have come and gone with little left but a bitter memory for those that hoped to make even a little pocket change. And each, sadly, took steps trying to keep themselves afloat prior to their ultimate watery death -- steps that resembled what Epinions is doing with the elimination of Eroyalties. This move is a distress signal, and it's time to watch how many rats flee the ship. More distress signals will follow. Look for Epinions to increase the redemption threshold to perhaps $25 in a move to improve cash flow. If that happens, then they are truly taking on more water than they can pump away and the lifeboats need to be launched. Epinions CAN turn this whole thing into a good-news story. How? By first, making public their Income Share formula, and 2) announcing restructuring of this formula to pay better rewards than it currently does. If they do that, then they can at least call this "give and take" instead of all "take". As for me, I'm not quite ready to jump my furry rat fanny off the ship yet. But I assure you, I'm not far from the railing.  |
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