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Comment by Someone1234 | Hacker News Reader

Blackmail notwithstanding, what was the $300/month meant to be for? How do they rationalise it?

You read a LOT of Yelp blackmail stories (or I have). But it isn't clear what legitimate product they're actually selling to businesses, since they'd at least need a cover.

PS - I am surprised any business has less than five reviews. If I ran a small business, I would create fake reviews just to get the ball rolling, no matter how immoral that is. Just makes good business sense.

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Advertising. You buy, for example, searches in your category in your zip code(s). It's pretty excellent advertising.

Network effect. The important metric isn't how many reviews you have, but how many your competitors and neighbors have. If no one uses yelp locally, nobody wastes time on it. My daughter's optometrist has no reviews and the most popular optometrist in the county has five. Clearly a waste of time. My favorite "old time" hardware store has one review. Yelp seems to be for coffee and food. Observation shows possibly as many as 0.1% of coffee drinkers will write a review, and a local family run very popular burger joint that all the non-vegetarian locals have probably eaten at has over 0.03% of their visits reviewed. That is far higher than doctor rates or hardware store review rates. I drove past that restaurant yesterday and they had more local license plate cars in their parking lot than total lifetime yelp reviews... Clearly whatever it is they're spending their time on is more financially rewarding than boosting their yelp score, LOL.

They sell advertising on their own site.

If someone is looking at coffee shop A, they would show ads for my coffee shop.

So does Google :)

It's excellent until you realize that you're paying WAY more for every click than you would with AdWords and that their reach is only limited to Yelp and doesn't do THAT much to boost your presence. My mom was considering it for her daycare business but I argued against it for this reason and many other small businesses that have dealt with them concluded the same thing.

yup, same here. I help SMBs with marketing, and Yelp is usually never worth paying for.

The only small case is when the ROI on adwords is reaching the level of diminishing returns

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