How Question Sites Could Become Big Business

If you've ever thought to yourself, "Why is Angelina Jolie famous if all of her movies are just O.K.?" you're in luck: Forty-two people have weighed in with an answer at Fluther is one of a dozen or so sites that have sprung up in the past two years aiming to tap the wisdom of crowds and supply human answers to questions search engines don't handle well. Such "social search" accounts for about 4 percent of the total search market, according to Matt Booth, an Internet analyst with market research firm Kelsey Group. And it's growing fast. "It's going to be worth a ton of money in the long run," Booth says.

Some of Silicon Valley's biggest companies and investment firms are diving in. In February, Google (GOOG) bought Aardvark, one of the first social search sites, for $50 million. The next month, Benchmark Capital invested in Quora, a Q&A site begun by two former Facebook engineers, valuing it at $86 million before it even opened to the public, according to tech blog TechCrunch. (By contrast, publicly traded Answers Corp. (ANSW) is worth about $62 million.) On July 28, Facebook introduced its 500 million members to its Facebook Questions feature.

The attraction to business of this new flavor of search is that as users pose and answer questions, they'll reveal more data about themselves and create discussion threads against which ever more targeted advertising can be sold. "There are a lot of advertising signals when people ask questions," says David Hornik, a principal with August Capital, a backer of Aardvark.

The proliferation of sites such as Fluther, Quora, ChaCha, Sirclelt, Hunch, and PeerPong raises its own question: How will they make money? Most Q&A sites will need "tens of millions or hundreds of millions of users before the revenue picture looks interesting," says Leonard Speiser, a Silicon Valley entrepreneur and former eBay (EBAY) and Yahoo! (YHOO) executive who advises Fluther. Traffic numbers for Q&A sites that can't tap the user base of a Google or a Facebook are still well below that threshold.

As their audience grows, these sites face a quality control problem. Quora was once an invitation-only site, and its discussions attracted notable names from the technology world, such as Craigslist founder Craig Newmark. Now that Quora has opened to the public, some users are complaining. "The startup grows past a certain point, the crap floods in," wrote one commentator named Greg Linden on a tech blog.

Some Q&A sites see a future in turning a smaller group of loyal users into consumers. That's the route of New York-based Hunch. It will earn money from retailers' referral fees and other businesses, says co-founder Chris Dixon. The company is developing algorithms to recommend products when people pose commerce-related queries. As the system learns more about its users, Dixon says, the recommendations should become smarter.

Other companies consider access to high-quality answers a product in and of itself. "What if you did a search and got people instead of just sites?" asks Ro Choy, chief executive of PeerPong, which is building an index of users' interests and activities pulled from their Twitter and Facebook accounts. That database will help San Francisco-based PeerPong identify experts, and the company believes question askers will pay for quality help in finding, say, the best breast cancer specialist in downtown Seattle.

Even if some of the sites fail, plenty of investors think someone will figure out how to make money in Q&A. As Dixon puts it: "Who knows what's going to work on the Internet? People were saying 10 years ago, 'How does Google make any money?' "

The bottom line: Q&A sites are proliferating online and generating investor interest. They could prove to be a valuable venue for targeted advertising.

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