Media Ethics: Issues and Cases 8th Edition by Philip Patterson, Lee Wilkins

Exercise 10

YELP!!! Consumer Empowerment or Small Business Extortion?
LEE WILKINS
University of Missouri
In the middle of the last decade, San Franciscan Jeremy Stoppelmen had an idea to empower consumers online by harnessing something that was happening on social media. If you like a local business, or if you feel abused by one, let you friends know. YELP promised to bring that information to the world.
For about five years, from 2005 to 2010, YELP dominated a class of Web sites-Google is now in the business-that allowed consumers to post their unfiltered opinions about local businesses, including restaurants, shops, and other sorts of local services. The site and its content were both successful and powerful. Local businesses particularly thrived with positive mentions; they were punished by negative reviews. YELP's imitators now include Angie's List, a subscription service. In some ways, YELP is an online version of something travelers are familiar with: Zagat ratings, which come in book/magazine form in many cities throughout the world. YELP's initial business model did not allow anyone other than individual consumers to post their opinions on the site.
But, when YELP turned the power of rating local firms over to individual consumers, it ran into a buzzsaw of criticism and ultimately legal action. Small businesses filed lawsuits against YELP, complaining that consumer reviews posted on the site were manipulated depending on which companies advertise on the site. In one 2010 suit, a Long Beach, California, veterinary clinic sued when it alleged that the site had published a false and defamatory review and then refused to help, instead demanding about $300 per month in the form of advertising to hide or remove the review in question.
YELP's vice president of communication provided this statement in response to the lawsuits: "YELP provides a valuable service to millions of consumers and businesses based on our trusted content. The allegations are demonstrably false, since many businesses that advertise on Yelp have both negative and positive reviews. These businesses realize that both kinds of feedback provide authenticity and value."
But, as YELP matured, it also decided that it had to find a way to allow local businesses to respond to the comments on the site. Beginning in April 2009, it allowed small-business owners to respond publicly to reviews, in large part because local businesses had been demanding more of a voice on the site. YELP's chief operating office Geoff Donaker noted of the responses, "as long as it's done in a respectable way, it's good for the consumer and good for the business owner."
In general, local business owners welcomed the opportunity. Peter Picataggia, the owner of Tart, a Los Angeles restaurant and a YELP advertiser, was quoted in the New York Times as saying that while his staff responded privately to almost every YELP review, he welcomed the opportunity to respond publicly.
These business model tweaks apparently worked in another way. In March 2012, YELP offered sales of stock in the business-which in financial terms is called an initial public offering (IPO)-to investors. The stock offering was successful and the price of YELP stock, three months later, was about $6 per share above its initial price of $15.
In an ethical sense, should businesses be allowed to respond either privately or publicly to such criticism?