IP/Internet/New Media Blog

By Galen Gentry

Yesterday, Mayor Villaraigosa signed a measure to cut business taxes for internet based firms. Last year internet firms were reclassified from multimedia to business and professions. It’s an important distinction because the former pay a city tax rate of $1.01 of gross receipts and the latter pay $5.07 (yes, fellow attorneys you are unfortunately in the $5.07 category). The change was approved without dissent by the city council. The rate change is retroactive. The fact that it is retroactive will cost the city at least $3.4 Million in revenue according to an article today’s Los Angeles Times Business Section by Phil Willon.

The mayor and the city council were clear as to the reasons for the change of heart–they believe internet based companies are easy to move and that the drastic increase in city tax would result in an exodus which would ulitmately cost Los Angeles more revenue in the long run.

By Galen Gentry
PC Magazine reported that two law firms have filed a class action law suit against Yelp for allegedly extorting advertising payments in exchange for removing or modifying negative reviews appearing on the site. The named Plaintiff is a veterinary hospital in Long Beach, California. The plaintiff claims it asked Yelp to remove a false and defamatory review and in response the company sales representatives repeatedly contacted the hospital and requested that it advertise with Yelp in exchange for hiding or removing the negative review.

What is interesting is that the allegations in the complaint are not new. On February 18, 2009 The East Bay Express, a free weekly publication, based in Oakland, California published an article entitled “Yelp And The Business Of Extortion 2.0”

In the article The East Bay Express stated that interviews with dozens of business owners revealed several people were promised that negative reviews would be moved or removed if the business would advertise by Yelp sales reps. Further in another six instances positive reviews disappeared after owners declined to advertise.

Web 2.0 is all about user generated content. That business model, pioneered by Google, is used more and more as the cornerstone of the marketing efforts of businesses large and small. Yelp is a popular website which posts user generated content in the form of reviews of small businesses such as restaurants, dry cleaners, nightclubs, tire stores, and the like. Yelp attempts to monetize the content by obtaining advertising contracts from businesses which have been reviewed on the site. Yelp’s business model is not unique (Avvo.com has a somewhat similar site for lawyers) but it is one of the biggest players. Negative reviews on Yelp, particularly if a business has a small number of reviews, can really impact sales.

Last year Yelp’s CEO Jeremy Stoppelman responded to the article in the East Bay Express saying that claims of manipulation of reviews result from the fact that the businesses do not know how Yelp’s proprietary review algorithm works.

Yelp is hugely popular. It seems unlikely it would engage in wholesale extortion. It doesn’t need it. User generated content is the key to Web 2.0 and Generation X likes Yelp. Perhaps individual Yelp employees in their zeal to make a sale may have promised more, much more, than they could deliver.

By Galen Gentry

Aided By Exciting Competition, Higher Than Expected TV Ratings, And A Hockey Game For The Ages NBC’s Experiment In Social Media Will Pay A Dividend

NBC did a great job on www.nbcolympics.com. There was lots of video; it downloaded easily, and it was not exclusively of and about U.S. athletes.  NBC had tweets and blogs as a page on its site, allowing good access to the personal if not always interesting blogs and tweets of those involved in the games.

NBC also did a good job using its local news affiliates.  In addition to making NBC’s content available the affiliates focused on connections to local athletes.  NBC Los Angeles had articles and video of on the numerous athletes in the games with California connections  including skater Mirai Nagasu and ubersnowboarder Shawn White.  NBC Los Angeles had the tweets of some local athletes as well.

In my February 16th post I noted that NBC was making a concerted and expensive effort to measure the use of different media platforms at the Vancouver games so that ultimately it and advertisers could make meaningful decisions on how to spend money in emerging media. NBC hopes to determine what media the public used—mobile devices, computers and how they used it.  Monetizing new media content is the Holy Grail.  The 2010 Winter Olympic games will give NBC and its advertising clients lots of data to crunch.

 There was plenty of buzz, the television ratings were higher than expected,  and the both premier and secondary events were filled with excitement. Did NBC’s push into social media work?  Probably.

By Galen Gentry

NBC believes that the Olympic Games are a giant petri dish for new media consumption and the company is making every effort to effectively measure and evaluate new media trends and use.  Monetizing new media is the mantra of the world’s biggest corporations.  All of whom have serious money to spend in advertising and are involved to greater and lesser degrees in different media platforms.  The problem is that there are no standards by which to measure the audience of the most of the outlets.

Advertisers want  numbers, but collecting and quantifying the data on emerging media use is in its infancy.  NBC has hired a host of market research companies and  will release  among other things a daily total audience measurement which will count  how many people watched the Olympics on the various media platforms.  Sample size, the means of measurement and other issues will affect how much faith advertisers put in the numbers, but professionals involved in the legal and marketing aspects of  emerging media are very interested in NBC’s “daily total audience measurement.”