Citysearch buys InsiderPages for an Undisclosed Price

VentureBeat has the news:

Citysearch, the division of IAC focuses on local reviews of restaurants and other services, has acquired the struggling local review start-up, Insider Pages.

The purchase (amount undisclosed) comes at a time of increasing competition in the race to deliver a compelling local search services. Citysearch’s parent, IAC, has already bolstered its local search offerings, namely with Ask City, a property that packages everything from local search to local maps, reviews, and ticket services.

However, more entrants have arrived to nip traffic away from Citysearch, an early player that has seen its traffic stagnate in recent months. There’s Yelp, Judysbook and Backfence, for starters. Earlier today, we mentioned new competitor Outside.in, another company going after the local community news and events area. (…)

Insider Pages has about 600,000 user reviews, and they’ll be integrated into the Citysearch’s offering, she said. It has 2.5 million monthly unique readers, she said, based on Comscore and internal tracking numbers.

She would not say whether the purchase price was more than $10 million invested in the company by Sequoia Capital, Softbank and Idealab. She said there were multiple bidders, but that Insider Pages preferred Citysearch because it is complementary. Insider Pages is popular among suburban parents and homeowners, she said, giving it strength in the home, garden, health and plumber review areas. Citysearch is stronger in bars, arts and entertainment. Citysearch will absorb Insider Page employees in its San Francisco office.

Rev2 says it was sold for “for an estimated sum of $13 million.”

What it means: I’m surprised it was not acquired by a directory company as it would have been a great jumpstart for any user review strategy (becoming more and more important in any local search site). From the article above, it sounds like the acquisition will be complimentary based on different content & users. I know the Citysearch demographics well (Yellow Pages Group used to be the Citysearch licensee in Canada) but I don’t know enough about InsiderPages’ users to really comment on the complementarity.

Citysearch buys InsiderPages for an Undisclosed Price

VentureBeat has the news:

Citysearch, the division of IAC focuses on local reviews of restaurants and other services, has acquired the struggling local review start-up, Insider Pages.

The purchase (amount undisclosed) comes at a time of increasing competition in the race to deliver a compelling local search services. Citysearch’s parent, IAC, has already bolstered its local search offerings, namely with Ask City, a property that packages everything from local search to local maps, reviews, and ticket services.

However, more entrants have arrived to nip traffic away from Citysearch, an early player that has seen its traffic stagnate in recent months. There’s Yelp, Judysbook and Backfence, for starters. Earlier today, we mentioned new competitor Outside.in, another company going after the local community news and events area. (…)

Insider Pages has about 600,000 user reviews, and they’ll be integrated into the Citysearch’s offering, she said. It has 2.5 million monthly unique readers, she said, based on Comscore and internal tracking numbers.

She would not say whether the purchase price was more than $10 million invested in the company by Sequoia Capital, Softbank and Idealab. She said there were multiple bidders, but that Insider Pages preferred Citysearch because it is complementary. Insider Pages is popular among suburban parents and homeowners, she said, giving it strength in the home, garden, health and plumber review areas. Citysearch is stronger in bars, arts and entertainment. Citysearch will absorb Insider Page employees in its San Francisco office.

Rev2 says it was sold for “for an estimated sum of $13 million.”

What it means: I’m surprised it was not acquired by a directory company as it would have been a great jumpstart for any user review strategy (becoming more and more important in any local search site). From the article above, it sounds like the acquisition will be complimentary based on different content & users. I know the Citysearch demographics well (Yellow Pages Group used to be the Citysearch licensee in Canada) but I don’t know enough about InsiderPages’ users to really comment on the complementarity.

Insider Pages Acquisition May Be Announced Next Week

According to TechCrunch, InsiderPages has been sold to a public company. They add: “Our understanding is that the acquisition price is more than the total capital raised by the company, but not by much.”

SFDaddyo commented that “Rumor has it that they were for sale for less than $10 million”.

Peter Krasilovsky adds on The Kelsey Group’s blog: “I would speculate that possible purchasers are probably CitySearch, Yellowpages.com, or RH Donnelley. Theoretically, Yellowpages.com and RHD would have the most to gain from such an acquisition, since they could use the 600,000+ reviews as a building block for their own review archives. Yellowpages.com, in fact, has just rolled out a review feature, and it is going to be tough to ramp it up quickly. They could also use Insider’s crack tech team. But some people’s money would actually be on CitySearch as a buyer. While CitySearch wouldn’t incorporate the technology, it would like to get ahold of the 3 million+ unique viewers that come to the site every month. It could also gain from SEOing all the businesses that are covered. I bet there isn’t even ten percent overlap with CitySearch. Theoretically, City could also integrate “Insider Advice,” a Yahoo Answers-like feature. Still….$9 million or so is a lot for what are –basically– aging reviews.”

What it means: I had tried last week to do a “back-of-the-envelope” valuation model (based on the Switchboard.com acquisition by InfoSpace) which put their value at around three to four times the total raised by the company. If TechCrunch is right (and they’re usually pretty good!), my model was faulty as it looks like they we will be sold for a little
bit more than $10 million. Which might mean that the original investors will not get much out of the transaction (there were two investment rounds). I’m not sure Citysearch would get much out of Insiderpages though. I suspect the acquirer might be one of the big three US directory companies (YellowPages.com, RHD or Superpages).

InsiderPages.com is for Sale: How Much is it Worth?

Greg Sterling reports that InsiderPages.com is for sales and speculates on who could buy it.

  • A newspaper or newspapers (looking for a YP property)?
  • A yellow pages publisher (for the reviews)?
  • A media company looking for a community site/local site?

What it means: will be interesting to follow. I wonder how much they are looking for? Let’s try to calculate a napkin valuation. This San Francisco Chronicle article says they had 1M unique visitors per month in September. They had received a second $8.5M financing round a year ago for a total of $10M (which must have valued the company at $40-60M). Switchboard was bought by Infospace in 2004 for $160M, they had 5.5M searches per month then (but also $15M in revenues and $55M in cash). if you remove the cash position, Switchboard was bought for about $100M. InsiderPages must generate 2 searches per month per user, so 2M searches. Based on that transaction, InsiderPages would be worth $36M. From a unique visitor perspective, it means $36 per unique visitors, another good method of doing a quick evaluation. I think most of the transactions I’ve seen in the last few years were worth around $30 to $40 per unique visitor, another sanity check there. So, InsiderPages might be worth $30M to $40M currently.

What’s More Important: Social Or Local?

The blogosphere has been abuzz in the last few weeks about the shake-up in local search sites.

  1. Major lay-offs and resignations at InsiderPages (via TechCrunch, Local Onliner, )
  2. Same at BackFence (via Greg Sterling, Local Onliner)
  3. Change of model at Judy’s book, moving away from merchant reviews (via Judy’s Book’s blog)
  4. Resignations at TrueLocal (via Local Onliner)

Consensus seems to be that Yelp is the one that’s running away from the pack in that start-up category (defined IMHO as Local Destination Sites start-ups).

I will note a couple of excellent comments amongst all the buzz:

  • Greg Sterling said: I told a reporter on Thursday that winning in local “is like climbing Mt. Everest.” We’re now seeing attrition (or something like it) in local because it’s much harder to monetize local consumer destinations with direct sales than people think when they start out. That’s not to say building a great consumer destination is easy, but in many respects that’s the easier part.”
  • Uri L. commented in Techcrunch: “In terms of community social reviews – Yelp had the most successful model, which put a focus on the community interactions (pictures, “i like” features), and build around it the local biz reviews. The site design reflected the warm and cozy attitude, and was to young people (who are probably the most contributing sector to ugc). Insider Pages took a more “directory” style, cloning traditional YP with the added value of community. (…) Judy’s Book is somewhere in between, focusing originally on parents and 30+ sector. (…) However, it seems that Yelp has managed to come with the best model for Karma – “You review, the community loves you back”. In none of the other sites you could really feel “loved” as in yelp. Maybe that’s a thing to remember…”

What it means: Two things:

  1. Local/Social sites should come up with an alternative business model that does not depend on having their own sales force and instead should try to partner with existing traditional local media companies.
  2. I believe the social aspect might be more important than the local aspect when dealing with a site that combines the two.

JPG Magazine: User-Generated Content in Print

jpg_magazine_issue_7.jpgAlex Padalka reports on the NewAssignment.net site about the latest issue of JPG Magazine. Issue seven of the magazine relies completely on photos submitted by their online community.

“Instead of starting in print and building a community, you start online. Then when you launch your first copy, you have supporters there,” said Derek Powazek (one of the co-founders). JPG was, in part, an expansion of a working idea called Photo Club – a service that delivered an original photo once a month to subscribers. The Powazeks went online and named their endeavor JPG Magazine, “to honor all the fantastic work being put online that never saw the light of day in print.” They accepted digital submissions from anyone using all the digital tools at their disposal (gmail, flickr, lulu), selected the best and produced six issues over the next two years.”

“Issue seven had more than 1,400 submissions and issue eight has already received over 5,000 submissions. And while editors still have final say, the community now votes on what photos they would like to see in the magazine. Think American Idol for magazines. One thing JPG discovered early on is that while an open submission and voting policy is best for the health of the online community, it requires moderation from an editor to produce the highest quality magazine.”

JPG pays each photographer who gets published $100 and a free year subscription.

Michael Arrington at TechCrunch says: “More print magazines should be doing similar things to embrace an online community instead of just copying their print content to their website. Periodic news magazines have no chance over the long run against their own online competitors. But magazines like JPG Mag, which people want to keep and display over the long run, can be successful. If they come up with the right way to bridge the online and offline worlds.”

What it means: I think the key learning there is the importance of the editor. This is definitely a model that should be embraced by any company operating in both the offline and online space. Do you have content in your online properties that could be valuable offline, in the printed, TV or radio world? Can a local social site become a print directory? Yes, see InsiderPages.com’s efforts. Can a podcast become a radio show? Can something posted on a video site become a TV show?