Only a matter of Time for Angies List
As a contractor and as a person who is very involved with other individual business owners both online and off, I could not be happier to read this article from remodeling.com. It basically says Angies List doesn’t turn a profit, hasn’t turned a profit and isn’t projected to any time soon :) You can read this whole article on why Angies List is in trouble.
Angie’s List Inc.‘s net loss shrank to $14.3 million in the second quarter compared with a $23.4 million loss in the year-earlier period, in large part because the amount of money committed to by the service providers rated on the site rose 63%, the company reported today.
With the losses for the March-through-June period, Angie’s List now has posted net losses totaling $163.4 million since 2009, financial reports from the Indianapolis-based review site show. But the company’s news release focused instead on growth, such as the 51% increase in total paid memberships from 2012′s second quarter to total 2.2 million, or the 42% rise in “participating service vendors” to 42,452.
Angie’s List gets the vast bulk of its revenues from contracts that those service providers–including remodelers and medical professions–sign to advertise on the Angie’s List site and in its publications as well as take part in e-commerce transactions. The value of those contracts as of June 30 totaled $165.6 million, up sharply from $101.7 million a year before. Advertising revenue rose 76% in the quarter from the year before to hit $38.3 million, while e-commerce revenue gained 44% to reach $5 million. Membership revenue totaled $15.9 million, up 41%.
Why am I so anti-Angies List? Its pretty simple actually. Their business model rewards and encourages bad reviews. On a popular message board I have heard more then one comment from contractors that the homeowners would give them a bad review on Angies List if they didn’t get a discount.
In principle this type of website can be a great source of information, but alas when profits need to be generated it is based on fear tactics and intimidation to either obtain a good review or not to get a bad one. The content generated on the site is literally based on the contractor is a predator and without Angies List to protect you, your a goner.
Up next is the HomeAdvisor website that is a massive headache not only to contractors but homeowners as well. I will save that for future ramblings.