Thursday, October 26, 2006

Users Share in Search Revenue

ZotSpot is a new search engine that offers to pay users a nominal sum (or let them give the money to charity) for using the search engine -- and more importantly -- for getting their friends to use it.

I spoke with CEO Mark Davis, and he said that search engines can't compete on the quality of search results anymore, so they are competing on price by bettering the "free" search market with a payment plan. I'm not sure that I agree with that assessment -- engines that get clearly better results will gain an audience, although there is plenty of inertia that keeps people using Google and Yahoo instead of trying something else.

Davis says that if you refer 10 friends who each refer 10, who each refer another 10, you could make a few hundred bucks per year. I thought this could lead to people conducting bogus searches just to increase their commissions, but he said the payment algorithm focuses more on the number of referred people searching than the number of searches per person.

"It's a pyramid without the scheme," according to Davis.

Zotspot doesn't increase the payouts based on click-throughs either, so there is no incentive to disingenuously click on the ample amount of ads that populate the search results page.

I'm not sure how ZotSpot can compete financially with the big search engines considering they have to share some of the revenue generated by searches with the users. ZotSpot doesn't have it's own ad network either, so the company has to further share its proceeds.Davis is hopeful that world of mouth will help the company to grow.

Sometimes I hear about a new company and the light clicks on that their ideas make absolute sense and have a real chance at success in the market, like when I first saw a TiVo. This isn't the case with ZotSpot.

Posted By John Gartner at 12:57 PM
Permanent Link: Users Share in Search Revenue | Comments (2)

(2) Comments on Users Share in Search Revenue

I agree with your closing paragraph. This is a horrible idea.

Comments by Anonymous : Thursday, October 26, 2006 at 05:34 PM

It doesn't seem like a terribly original idea, either. There have been other search engines that gave searchers money or prizes (iWon). I remember reading something about MSN trying out something like this, but they probably figured out it was a bad idea. There are two main problems with that type of business model. First, there is a huge incentive for users to game the system by searching/clicking on stuff they really don't care about and second people really do care about the quality of their search results so the honest users won't stick around for long to earn their 20 cents/month.

Comments by Dave : Friday, October 27, 2006 at 11:04 AM

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