Angie’s List, When to Stop Following the Crowd(sourcing)


Founder Angie Hicks
Founder Angie Hicks

A common homeowner predicament, Angie found herself in need of in-house repairs but did not know the most reliable contractor. To remedy this situation in 1995 Angie went door-to-door in Columbus, Ohio and collected a list of over 1,000 reviews and ratings of local contractors. Since then “Angie’s List” has grown to provide a include reviews of over 700 different industries, supporting over 2 million users! Now it is an information search website for contract services facilitated through crowd-sourced reviews and ratings, a service platform connecting local business with customers.

It's easy as 1, 2, 3, 4!
It’s easy as 1, 2, 3, 4!

In a world with so much information, and especially in the service industry with information asymmetry between companies (experts) and consumers (usually novices), people are looking for less costly ways to be more informed by delegating the information search to the “Wisdom of the Crowd,” (Surowiecki, 2005). Some companies have designed their entire business models around this idea; crowdsourcing and crowdfunding have shown how to “let the crowd get your work done for you- cheap, perfect and now,”(Malone, et. al., 2010). Some companies (Wikipedia) have successfully harnessed and managed collective intelligence to provide platforms of information(Malone, et. al., 2010). But how can anyone be sure that Angie, or any other platform, is providing us with unbiased information?

Angie’s website boasts several parameters set in place to safeguard content. For starters, members have to pay between $10-47 for an annual membership fee, to limit the website to only “serious” users. Also, the website does not allow any anonymous reviews, and all posts are submitted to the website controllers to be reviewed, additionally the data is certified with a third party seal beforehand to demonstrate customers their trustworthiness (Özpolat, et al., 2013). Users give reviews and rank services through a grading system of A-F, and the average score is used(Saarijärvi, 2013).

Third Party Assurance Seal
Third Party Assurance Seal

There is a heated debate surrounding the level of bias in Angie’s List, and whether “certified data” is actually code for pro-stakeholder filtered content. While Angie’s List advertises itself as a company run by crowdsourcing, the reality is over seventy percent of the company’s revenues come from advertising, which are the same companies reviewed on the site, obviously a major conflict of interests. It has been reported that if a negative review is posted about a company which advertises with Angie’s List, that the bad review will be taken down and the low grade will be altered with a higher score. This puts the entire validation of their third party assurance seal into question, as well as the reputation of the company(Özpolat, et al., 2013).

They say one of the hardest parts in constructing a platform for two-sided markets is “getting the pricing right,”(Eisenmann, 2006) but it seems that Angie didn’t get any of it right. The point of crowd-sourcing for non-biased information search systems (like Wikipedia), is to not charge the consumer for access (at least subsidize costs), and not accept money from the services being reviewed as it is a conflict of interest.

Angie’s List philosophy now seems rather ironic, “Companies can’t pay to be on Angie’s List.” It seems that me that both consumers and companies pay to be on Angie’s List…

References:

  • Eisenmann, Thomas, Geoffrey Parker, and Marshall W. Van Alstyne. “Strategies for two-sided markets.” Harvard Business Review 84.10 (2006): 92.
  • Majchrzak, A., and A. Malhotra. “Towards an information systems perspective and research agenda on crowdsourcing for innovation.” Journal of Strategic Information Systems 22.4 (2013): 257-268.
  • Malone, Thomas W., Robert Laubacher, and Chrysanthos Dellarocas. “The Collective Intelligence Genome.” MIT Sloan Management Review 51.3 (2010): 21-31.
  • Özpolat, Koray, et al. “Research Note-The Value of Third-Party Assurance Seals in Online Retailing: An Empirical Investigation.” Information Systems Research 24.4 (2013): 1100-1111.
  • Saarijärvi, Hannu, P. K. Kannan, and Hannu Kuusela. “Value co-creation: theoretical approaches and practical implications.” European Business Review 25.1 (2013): 6-19.
  • Surowiecki, J. (2005). The wisdom of crowds. Random House LLC.

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