Long gone are the days of "pure" search engines, services whose main goal is to help people rather than to make money -- everyone knows that. The biggest search engines now are businesses, many of them struggling businesses, and the world of search has become cutthroat, dog-eat-dog, fight-to-the-death, ugly.
But there are apparently still some practices that are frowned upon in the all's-fair world of search, and LookSmart -- the directory company that provides listings for some of the Internet's biggest search engines, including MSN Search -- is being accused by webmasters and search engine experts of biting the hand that fed them.
After the company launched a fairly standard pay-per-click listing service last month, one in which webmasters are asked to pay 15 cents for each Web surfer LookSmart delivers to a site, site owners who'd become used to LookSmart's old one-time fee became enraged.
It's not that they were outraged that the service raised its prices (although, of course they were outraged at that). It was that they said LookSmart's promise of making the product more affordable for small businesses actually wound up hurting those same businesses.
On obscure Web forums dedicated to discussing the nuances of search, LookSmart -- and, by association, MSN -- has been the target of unprecedented criticism. People have compared its business practices to Enron's and its executives have been called every bad name you can think of. And some sore webmasters have filed a proposed class-action suit against the company, alleging "breach of contract" and generally unfair business practices.
The company is now in a serious bid to win back the support of webmasters, and it is launching a communications effort to pacify some of its customers.
LookSmart's troubles began, as usual, with a bid to make more money. For the past few years, it has been charging all "commercial sites" a one-time fee of a few hundred dollars for inclusion in the LookSmart directory. The one-time fee is a standard in the search business, with most of the engines asking for hundreds to quickly add a commercial site into their databases. (Google is a notable exception here; adding a site to its listing is only a matter of typing in a URL, or waiting for it to "discover" the page.)
But LookSmart says that its one-time inclusion fee of $299 was scaring away small businesses. "There was a lot of risk in not understanding what you might get for the money," said Tony Mamone, who heads LookSmart's efforts to get businesses to list their sites in the directory.
So the company reduced its one-time fee to $49, and it began charging webmasters a per-click-rate of 15 cents.
This would seem like a cost reduction, a move that would make webmasters happy. But those who had already paid the $299 weren't at all happy. LookSmart offered those people a hundred "free clicks" a month for 20 months, but if they want to stay in the database after they use up the hundred clicks, they have to pay up. If they don't pay, they're dropped from the directory until the next "billing cycle" begins.
After the system was implemented, sites that had been receiving much of their traffic from MSN Search -- the second-biggest search engine after Yahoo, according to Nielsen//Netratings -- noticed a significant drop-off in their pageviews.
And webmasters began receiving messages like this one, posted by a site owner on a search discussion site: "Your listing(s) did not receive the maximum traffic level LookSmart could have delivered during this billing period because you reached your monthly budget of $15 and as a result we temporarily interrupted traffic to the listing(s) in your account.... LookSmart recommends raising your monthly budget to $1,500 in order to get the maximum value from your listing(s) in the future."
In other words, sites that had paid $300 for what they assumed would be a permanent spot in the LookSmart directory were now being told that $300 hadn't guaranteed anything, and that staying in the directory might cost them thousands each year.
LookSmart justifies this move by saying that its previous "terms of service" did indeed guarantee nothing. The TOS reserved LookSmart's right to "remove your site from the directory, move the listing to a different category or subcategory and change or remove any keywords, comments or annotations at any time, for any reason."
But webmasters are of course not satisfied with such technicalities. In fact, David Huddleston, a LookSmart customer who's so upset at the firm that he's launched a scathing parody site called ActDumb, said that it's exactly LookSmart's legalisms that have boiled his blood.
"My biggest beef is that they insult your intelligence in every single e-mail they send out," he said. "They obviously exhibit no understanding of their customers."
LookSmart's pay-per-click system is not novel. Overture is the main player in this market, providing a system that allows webmasters to neatly bid on specific keywords: the more they bid, the higher they appear in the search order. Google's AdWords program works in a similar way -- so similar, in fact, that Overture has sued Google for allegedly infringing on its patent. (Google denies any infringement.)
But one difference with LookSmart's results as they appear in MSN Search is that there's no indication to users that the links are paid for. They appear in a section called "Web Pages," unlike the paid-for links from Overture, which appear in a section called "Sponsored Sites."
A spokeswoman for MSN Search said there's nothing deceptive about this practice, because the 15 cents-per-click price is standard for all sites, and "doesn't give any preference for placement" to some sites over others. Links are ordered based on LookSmart's own determination of "relevancy," not on how much a site pays, she said.
The spokeswoman also said there is no change in MSN's relationship with LookSmart.
LookSmart, too, said that its sites shouldn't be represented under a "sponsored" section because they're not ordered by how much a site pays for each click.
But it's worth noting that in a certain sense LookSmart's results are ordered based on how much people are willing to pay, since people who decide to pay for more clicks stay in the directory longer each month. A site that pays LookSmart $100 per month could stay in the directory longer than a site that pays only $50 a month; when that site's $50 runs out, it's deleted from the listings, leaving a bigger share of the audience to the wealthier site.
Some wealthy webmasters love this effect. Steve Crawford, who maintains the website for Guardian Disability Insurance Brokerage, said that since the LookSmart's new service was implemented, his traffic from MSN has jumped 15 percent, mostly because the higher fees have "eliminated many of my competitors" from the listings.
Crawford concedes, though, that for this 15-percent surge he's paying considerably more than 15 percent more. He now pays around $250 a month to LookSmart -- $3,000 a year, or 1000 percent more than the $300 he paid under the old system.
Because of this high price, in fact, Crawford said that he would actually like MSN to drop LookSmart and use another, cheaper listing service -- which can't be a good sign for LookSmart, since Crawford is quoted in the company's latest press release as being one of LookSmart's happiest customers.
Lost in the fury over LookSmart's change in service is the average Web surfer who doesn't know the secrets of search. How accurate are search results? When results aren't labeled as "sponsored," are they always untainted by money?
The fact is that it's long been standard practice for companies to consider search engines just another medium for ads, and in these beleaguered times, some search companies are more than happy to accommodate them.
LookSmart insists it is not one of these, and that it considers the relevancy of its listings very important. "We may not have done the best job we could have" in explaining the new service, said Robert Goldberg, LookSmart's vice president of marketing. He said that the company will work very hard to correct those mistakes.
