Yelp!

Yelp is a customer review web page, which is a great way to figure out what’s going on from locals.

This site may compete a bit with TripAdvisor, but the thing that differentiates Yelp from TripAdvisor is that the reviews are for locals, by locals. Any and all companies can be reviewed – this is not limited to “top things to do,” but includes local pet stores and hair salons in addition to restaurants and bars.

Another site that may compete with Yelp is GetSatisfaction. However, GetSatisfaction is more for customer complaints, while Yelp is all reviews – in fact, on Yelp, there are 60% positive reviews (4 or 5 stars), 20% neutral (3 stars), and 20% negative (2 or 1 stars).

The upside is clear – people looking for products and services can find them with the help of prior customers. Businesses get “free” PR from customers who want to talk publicly about their experiences.

In the middle is the way Yelp makes money. Apparently, Businesses can pay fees to Yelp in order to have a “fancier” review page, and be allowed to “thank” individual customers for good reviews. They also have the ability to highlight one review to post at the top of their Business Page.

There has been some scandal over whether paying sponsors have other benefits – like negative reviews dropping to the bottom, or being deleted by Yelp altogether. However, Yelp firmly denies that these are benefits of sponsorship.

The downside - in all open online forums, people are making public statements. If these statements are unfairly negative, the victims may sue for libel. Defamation is a tough case to make, but more than one Yelp reviewer has been sued by the business that upset them.
http://www.pcworld.com/article/161997/dentist_can_proceed_with_lawsuit_against_yelp_reviewers.html

While I understand why laws against defamation exist, I am truly concerned about the fact that a business (especially one with deep pockets) can tie up a customer (usually smaller pockets) in a lawsuit. Spreading negative reviews by Word of Mouth is the best defense that customers have against businesses that would otherwise rip them off, or sell sub-par service or products.

It seems like the only defense against this is to have the businesses who are reviewed on Yelp agree to having the reviews posted. In their Terms&Conditions, businesses could agree not to sue reviewers. Instead, the company could simply refute a disputed review.
Because social media is a conversation, companies can participate openly with customers, rather than pitting themselves against their customers!