{"id":4580,"date":"2017-03-20T14:58:20","date_gmt":"2017-03-20T18:58:20","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/angies-list-the-original-in-crowd-sourced-reviews\/"},"modified":"2017-03-20T15:24:01","modified_gmt":"2017-03-20T19:24:01","slug":"angies-list-the-original-in-crowd-sourced-reviews","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/angies-list-the-original-in-crowd-sourced-reviews\/","title":{"rendered":"Angie\u2019s List: The Original in Crowd-Sourced Reviews"},"content":{"rendered":"

Founded in 1995, Angie\u2019s List crowd-sources reviews of local home-related services, so members can find the help they are looking for while also being confident in their selection in terms of service quality and price. The company also serves as a means of advertising and sourcing new sales for businesses looking to reach a broader audience at a reasonable price.<\/p>\n

 <\/p>\n

Value Creation – Incentivizing Participation and Managing the Crowd\"\"<\/a><\/strong><\/p>\n

There are nearly 5 million members on Angie\u2019s List, many of whom are attracted to the site since it offers a comprehensive list of local service providers that span over 720 different categories. With over 10 million reviews, Angie\u2019s List provides robust data to potential customers (and service providers), which helps members save time and have greater peace of mind when booking a service. Having access to a Complaint Resolution team and the opportunity to publically rate and review a service provider also gives members greater confidence in their hiring\/purchasing decisions. This process promotes a virtuous cycle, and the platform also offers exclusive deals, helping members simultaneously save money.<\/p>\n

 <\/p>\n

Angie\u2019s List works rigorously to verify reviews, protecting against companies reviewing themselves and\/or competitors as well as other fraudulent behavior. Additionally, the \u201ccrowd\u2019s\u201d comments are \u201cmanaged\u201d since reviews aren\u2019t anonymous and the overall rating and review process is subject to annual audits.<\/p>\n

 <\/p>\n

Local businesses are drawn to the platform since it helps them gain greater exposure and attract valuable customers; indirect network effects play a large role incentivizing participation. To manage the business crowd, Angie\u2019s List conducts annual background checks and features a Complaint Resolution team to protect against poor customer experiences and fraud.<\/p>\n

 <\/p>\n

Value Capture\"\"<\/a> <\/strong><\/p>\n

Angie\u2019s List captures value in a few manners. For the Member side of the platform, Angie\u2019s List currently utilizes a freemium model, which features three different membership tiers: Green, Silver, and Gold. Silver members are charged $24.99 and Gold members are charged $99.99 annually. [See chart for breakdown of benefits] As for service providers, Angie\u2019s List generates revenue from them via advertising and promotional fees, as well as other e-commerce offerings on the site.<\/p>\n

 <\/p>\n

Challenges and Growth Potential<\/strong><\/p>\n

Although the platform has grown significantly, the company has struggled with being a profitable endeavor for over 15 years. The company was profitable in 2015; however, it ended 2016 with a net loss of $7.9MM\u2014although for Q4\u201916, net income amounted to $8.9MM. According to press releases, the company hopes to return to profitability and continue growth by focusing on driving stronger member engagement and delivering move value for service providers.<\/p>\n

 <\/p>\n

It\u2019s challenging, however, to see significant growth potential in Angie\u2019s List. The competitive landscape is dense with companies like HomeAdvisor and TaskRabbit in the market, to name a few. Moreover, when Angie\u2019s List made the move to a freemium model, the company aimed to increase membership numbers significantly. Although membership has continued to grow, it has done so at a decelerating clip. Additionally, some paying members have moved to non-paying memberships, which has eroded revenue figures. With increasing membership figures, it\u2019s reasonable\u00a0to anticipate more on-platform purchases from service providers and for the number of service providers on Angie\u2019s List to grow (due to indirect network effects). However, this phenomenon hasn\u2019t been truly witnessed yet. Perhaps the platform is loosing its stickiness and\/or the experience isn\u2019t enough of a closed loop process. Transactions may be taking place outside of the platform and, accordingly, Angie’s List must devise a way to combat this, especially for business that specialize in reoccurring services (vs. single use\/time purchases). Nonetheless, it\u2019s not surprising to hear that Angie\u2019s List is rumored to be seeking an acquirer despite its efforts to turnaround. [1]<\/p>\n

 <\/p>\n

 <\/p>\n

Footnotes:<\/p>\n

[1] http:\/\/seekingalpha.com\/article\/4054644-angies-list-problem<\/a><\/p>\n

 <\/p>\n

Sources:<\/p>\n

http:\/\/www.angieslistbusinesscenter.com\/<\/a><\/p>\n

https:\/\/www.angieslist.com\/faq\/how-does-angie-s-list-make-money\/<\/a><\/p>\n

http:\/\/investor.angieslist.com\/releasedetail.cfm?ReleaseID=1011942<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

For over 20 years, Angie's List has leveraged technology to help homeowners make wise purchasing decisions, but does the company have staying power? <\/p>\n","protected":false},"author":473,"featured_media":4594,"comment_status":"open","ping_status":"closed","template":"","categories":[1308,672,1309,807],"class_list":["post-4580","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-angies-list","category-crowd-sourcing","category-homeadvisor","category-reviews"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/managing-digital-crowds\/","yoast_head":"\nAngie\u2019s List: The Original in Crowd-Sourced Reviews - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/angies-list-the-original-in-crowd-sourced-reviews\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Angie\u2019s List: The Original in Crowd-Sourced Reviews - 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