“City Guides”

An
Web 2.0 Sector Analysis
By
Web Buddies
S A Enayath

Kartiksinh Sarvaiya

Shikha Gupta
Executive Summary:
As the web is increasingly becoming participative, more and more websites are being
developed on the Web 2.0 platform and the existing ones are transtioning themselves to include the
Web 2.0 features. One of the domains where the Web 2.0 features have been successfully leveraged
is that of City Guides.

When someone wants to have some information about a particular city or a particular
product/place in a particular city, he can ask his friends, read books/yellow pages on the particular
city or he can browse the net for the information. The Web 2.0 platform gives him the benefits of a
place/product being reviewed by a large number of users so that he can take an informed decision.
This sector was pioneered by two gentleman from US namely Craig Newmark and Bill Gross in the
year 1995.

The three top players in this sector are craigslist.org, citysearch.com and yelp.com. Both
craislist.org and citysearch.com started as Web 1.0 sites and gradually trasitioned to Web 2.0, while
yelp.com started in 2004 completely as a Web 2.0 initiative. All the three sites are US based and
include mostly the cities of US. The users of these sites also show a similar demographic profile but
the differtiating factor with Craigslist which enjoys the maximum traffic among the three lies in the
fact that it provides a platform for dating and job-search which is unique to Craigslist. Citysearch and
Yelp have a similar revenue model comprising banner ads and classified ads while the sole revenue
for Craigslist is the paid job-ads in select cities.

As the internet penetration has incresed in India over the years, so has the use of local city
guides. Some of the prevelant players in the Indian market include sulekha.com, justdial.com and
whereincity.com. Among these, Sulekha has the highest ranking. Sulekha also started as a Web 1.0
site and currently it has almost all the features of Web 2.0. Its revenue model is similar to Citysearch
and Yelp.

As the online ad-industry is growing very rapidly, the revenue model of these sites is pretty
sustainable. The future trends in this industry include virtual tours, the use of 3G and GPS on mobile
for directions and the increasing use of video ads. Also in the developing countries like India where
we have city guides for particular cities and not a single point, the industry may see a consolidation
where the small players from each cities would integrate their databases.
Letter of transmittal

Praxis Business School

Date: 18/08/2008

To: Mr. Prithwis Mukherjee

From: Web Buddies

Dear Sir,

We are enclosing a report on the analysis of city guides after detailing all our observations. The
report gives a detailed description of city guides, the demographic profile, the web 2.0 component of
the sector, the competitive scenario, the top three players, the legal issues, India story and the future
trends.

Web Buddies

S A Enayath

Kartiksinh Sarvaiya

Shikha Gupta
 Contents

SL.NO PARTICULAR PAGE NO.

1 Introduction 4

2 Users Participation 5

3 The Web 2.0 Component 7

4 The Competitive Scenario 9

5 The Pioneers 10

6 Major Global Players 11

7 Market Analysis 15

8 Taxation & Privacy Policy 17

9 The Indian Story 19

10 Future Trends 22
City Guides Praxis Business School

Introduction
There are three ways to look at how society is informed. The first is that people are gullible
and will read, listen to, or watch just about anything. The second is that most people require
an informed intermediary to tell them what is good, important or meaningful. The third is
that people are pretty smart; given the means, they can sort things out for themselves; find
their own version of the truth.
But with the growing number of sites the ability of people/users to find and explore new
content is becoming increasingly important. One way to approach this problem is by
developing a standard for aggregating content. A content aggregator would presumably
then be able to index the incoming feeds and provide the user with information about
content she's likely to be interested in.
Aggregator, also known as a feed reader, news reader or simply aggregator, is a Web
application which aggregates syndicated web content such as news headlines, blogs,
podcasts, and vlogs in a single location for easy viewing. The more you will be able let your
content find its distribution channels online without trying to own and control each choke
point, the least resistance you will be offering to the sweeping transformations that are
already shaping the way that people access and engage with their favourite content.
City guides and reviews is one such content aggregator sector in web which aggregates web
content on accommodations, restaurants, attractions, etc. of your city. City guides websites
features in the use of Internet to improve the city service and provide opportunity to
emerging business.
Using a web 2.0 city guide website is the fun and easy way to find, review and talk about
what's great (and not so great) in your world. You already know that asking friends is the
best way to find restaurants, dentists, hairstylists, and anything local. A web2.0 city guide
makes it fast and easy by collecting and organizing your friends' recommendations in one
convenient place.
A city guide taps into the community's voice and reveals honest and current insights on local
businesses and services on everything from martinis to mechanics. It connects to just real
people, writing real reviews, and that's the real deal. It is the fun and engaging place for
passionate and opinionated influencers to share the experiences they've had with local
businesses and services.

Need or want that a city guide aim to satisfy

• Accommodations
• Restaurants
• Attractions
• History
• Calendar of Events
• Map
• PDF of your visitors guide

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Users Participation

Through these emerging electronic mediums, the Web has enabled its users to create,
increase or renew their social capital. These mediums/communities are not merely trading
grounds for information but a powerful extension of the social networks. And as in any
social system, looking at the motivations helps in understanding the reason behind their
active participation. The Hierarchy of Needs was the brainchild of Abraham Maslow, one of
the founding fathers of humanistic psychology. He believed that people are motivated by
the urge to satisfy needs ranging from basic survival to self-fulfilment, and that they don’t
fill the higher-level needs until the lower-level ones are satisfied.

We can assume that people are motivated to participate in order to achieve a sense of be-
longing to a group; to build self-esteem through contributions and to garner recognition for
contributing; and to develop new skills and opportunities for ego building and self-
actualization. We have compiled a list of reasons why users are becoming participants.
While reading this list, consider that an individual may be motivated by multiple reasons.

1. To gain status or build reputation in a given community.

2. To create connections with others who have similar interests, online and off.
3. Sense-making and understanding.
4. To inform and be informed.
5. To create.

Now if we look at the participants in a city guide site we identity the following contributors
in a usual web 2.0 city guide website:
1. Business Owners –
These are business houses or business owners who want to advertise about their
product, service and their business to the right target customers within a specific
geographical location in the most cost effective way.

2. Reviewers –
These are the people who may or may not have monetary stake in the particular
product. But they might have been the users of these products and would like to
discuss about their experience associated with it.

3. Visitors –
They are the regular visitors to the site and want to just check the updates in it.

Web 2.0 Sector Analysis Page 5

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4. Knowledge seekers –
These people visit the sites only to increase their knowledge base.

5. Locals –
Who will know the neighbourhood better than the locals itself, they visit these city
guides sites of their own city and contribute the development of the site by posting
new information and also reviewing older post.

Reviewers
Knowledge
Visitors
seekers

Locals
City Business
Guides owners

Web 2.0 Sector Analysis Page 6

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The Web 2.0 component:

The reasons and the extent to which the Web 2.0 characteristics are manifested in this
sector can be understood by answering the following questions i.e. if a particular site gets
positive responses out of the following questions, it means that
that it can leverage Web 2.0
concepts:

• Are your customers likely to participate in user-generated

user generated content? Will your site
visitors read and comment on blogs? Will they share their views in user reviews? If
your target audience is loyal and passionate about yoyour
ur company, providing them an
opportunity to share their views can be extremely valuable, enabling them to
influence others
• Do your users have a special skill or knowledge that relates to your product or
service? If so, wikis and forums are a great way for them to contribute to the body of
knowledge around your products and services, enriching their experience and that of
others
• Are your customers likely to be comfortable with rich internet applications that
function somewhat differently from those to which they are accustomed? Is your
user base change averse? The more accepting of change your audience is, the more
rapidly you can adopt Web 2.0 technologies
• Have your competitors deployed leading technologies? If so, you may want to
escalate your adoption of Web 2.0.
• Do your customers frequent sites that have leading edge technologies? A positive
response indicates that your customers are ready to accept Web 2.0 technologies
• Do you serve a technically savvy group of customers? If your target market readily
adapts
pts the latest technologies, Web 2.0 technologies are likely an excellent way to
invest your resources. If your customers are slow adopters, consider waiting until
they are farther along in the adoption curve
Since most of the city guide websites score veryvery high on the above questions, Web 2.0
concepts are highly leveraged in this sector.

The Web 2.0 tools used in this sector are:

Chats Blogs Communities Forums Mobile Rating RSS

City Guides Praxis Business School

The Web 2.0 technologies used in this sector are:

MySQL is a relational database management system (RDBMS). MySQL is popular

for web applications and acts as the database component of the LAMP, BAMP,
MAMP, and WAMP platforms.

Linux is an open source operating system which is widely used in servers. Most of
the Web 2.0 platforms rely of Linux servers.

Ruby on Rails is an open source web application framework for the Ruby
programming language.

Apache is developed and maintained by an open community of developers under

the Apache Software Foundation. The application is available for a wide variety
of operating systems, from Linux to Microsoft Windows.

PHP is a computer scripting language originally designed for producing dynamic

web pages. PHP is a widely used general-purpose
general purpose scripting language that is
especially suited for web development and can be embedded into HTML.

Asynchronous Javascript + XML .

The Ajax technologies are - HTML/XHTML, Document Object Model (DOM), XML,
XSLT, XMLHttpRequest, Javascript.
City Guides Praxis Business School

The Competitive Scenario:

People have been using the concept of the city guides since long back even before the
existence of internet. The way people get information about various cities and places were:

• Ask friends and relatives who have visited the places before
• Contact the travel
el agents for information
• While going to a new city, ask the Taxi drivers and other locals about the city, places
and products
• Get information about the cities from the books available for particular cities
• Look into the yellow-pages
pages for specific information
• Browse the internet for Web 1.0 sites on cities and online yellow
yellow-pages
• Use the Web 2.0 city guides for information and user and editorial reviews

Hence this sector faces a lot of competition from not only the Web 1.0 sites but also
from various other substitutes

The differentiating factor for Web 2.0 sites vis

vis-à-vis Web 1.0 being:

• Places being reviewed by large user base which helps to facilitates the decision
making and is more trust-worthy
worthy than one person writing something about a city or
a place
City Guides Praxis Business School

The Pioneers:
This sector of city guides was pioneered by two people in the year 1995

1. Craig Newmark

Having observed people helping one another in a friendly, social and trusting
community way on the Internet, the WELL, and Usenet, and feeling isolated as a
relative newcomer to San Francisco, Craigslist founder Craig Newmark decided to
create something similar
milar for local events.

The first postings debuted in early 1995. The initial technology encountered some
limits, so by June 1995 majordomo had been installed and the mailing list "craigslist"
resumed operations. Most of the early postings were submitted by Newmark and
were notices of social events of interest to software and Internet developers living
and working in San Francisco.

2. Bill Gross

He was the founder of the Idealab and GoTo.com, Inc which the first company to
successfully provide an Internet search engine which relied upon sponsored search
results and pay-per-click
click advertisements. Citysearch was founded in September 1995
by Jeffrey Brewer, Caskey Dickson, Brad Haaugard, Taylor Wescoatt, and Charles
Conn. The idea, initiative, and seed capital came initially from Bill Gross.

Currently the major players in this sector are:

City Guides Praxis Business School

Major Global Players:

Craigslist – www.craigslist.com
Craigslist is a central network of online communities, featuring free classified
advertisements (with jobs, internships, housing, personals, erotic services, for
sale/barter/wanted, services, community, gigs, resume, and pets categories) and forums on
various topics.

The service was founded in 1995 by Craig Newmark for the San Francisco Bay Area. After After
incorporation as a private for-profit
profit company in 1999, Craigslist expanded into nine more
U.S. cities in 2000, four each in 2001 and 2002, and 14 in 2003. As of September 2007,
Craigslist had established itself in approximately 450 cities in 50 countries.

As of 2007, Craigslist operates with a staff of 24 people. Its sole source of revenue is paid job
ads in select cities ($75 per ad for the San Francisco Bay Area;
Area; $25 per ad for New York, Los
Angeles, San Diego, Boston, Seattle, Washington D.C., Chicago and recently Portland,
Oregon) and paid broker apartment listings in New York City ($10 per ad).

The site serves over nine billion page views per month, putting it in 47th place overall
among web sites world wide, ninth place overall among web sites in the United States (per
Alexa.com on August 21, 2008), to over thirty million unique visitors. With over thirty million
City Guides Praxis Business School

new classified advertisements each month, Craigslist is the leading classifieds service in any
medium. The site receives over two million new job listings each month, making it one of
the top job boards in the world. The classified advertisements range from traditional
buy/sell ads and community announcements, to personal ads and even erotic services.

In December 2006, at the UBS Global Media Conference in New York, Craigslist CEO Jim
Buckmaster told Wall Street analysts that Craigslist has little interest in maximizing profit,
instead preferring to help users find cars, apartments, jobs, and dates.

The company does not formally disclose financial or ownership information. Analysts and
commentators have reported varying figures for its annual revenue, ranging from $10
million in 2004, $20 million in 2005, and $25 million in 2006 to possibly $150 million in 2007.
It is believed to be owned principally by Newmark, Buckmaster, and eBay (the three board
members). eBay owns approximately 25%, and Newmark is believed to own the largest
stake

Citysearch- www.citysearch.com

This site was developed by Bill Gross of Idea Lab in the year 1995. Gross' company, Idealab,
created a slew of Web businesses in the 1990s, including pay-per-click advertising pioneer
GoTo.com. Citysearch.com was one of the initial starters in this business of online search
engine for city. Citysearch.com, now a part of InterActive Corp., established the category of
local online community directories. eToys demonstrated the tremendous potential for
online consumer retail and became one of the most recognized brands during the early days
of e-commerce.

It is a part of media and adverrtisement business of Interactive Corp. It is a network of local

city guide website that offers primarily content for major cities in US and abroad.
Information about city’s art, entertainment event, bar and restaurant, recreation,
community activity, business etc

Revenue model for citysearch.com: The revenue for citysearch.com is only from Media &
Advertisement sector. The local advertising is offered through a pay-for-performance
model where the local businesses pay for the number of consumer connections made. It is
measured through:

1. Visit to City search profile pages of the business

2. Or, traffic directed to their website through cityserach.com (Different from add)
3. Call made to the toll free number of the business.

It also support online local transaction, including hotel reservation and match making,
ticketing and travel related services through affiliations with leading e-commerce website.

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Citysearch.com also gets a fee on per click or a revenue %, as applicable for consumer leads
sent to the respective websites.

Advertisement revenue primarily through the display of paid listing in response to the
search.

1. Sale of online advertisement for both local and national

2. Transaction fee from affiliated partners
3. Self enrolment
4. Enhance listing in search results
5. Targeted Email
6. Sponsorship package

Citysearch.com

■ Leading local search and directory company with 15.9 million business listings nationwide

■ 12 million unique monthly users (comScore Jan 08)

■ Approximately 500 user reviews submitted daily; over 600,000 currently in

Citysearch.com’s database

IAC

• IAC was named the #1 Most Admired Company two years in a row in the Internet
Services & Retailing sector by Fortune magazine
• With 155 million unique monthly users, IAC’s network of sites would rank as the 9th
largest in the world (comScore Jan 08)
• IAC stock grew over 180% between 1995 and 2007, outpacing the Nasdaq composite
index and the S&P 500
• IAC is the 4th largest buyer of online advertising in the U.S. (Nielsen Online
AdRelevance, Jan 08)

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Yelp – www.yelp.com

Founded in July 2004 by Jeremy Stoppelman (CEO) and Russel Simmons (CTO), Yelp is an
online urban city guide that helps people find cool places to eat, shop, drink, relax and play,
based on the informed opinions of a vibrant and active community of locals.

Yelp is a more prominent city guide in the San Francisco Bay Area, Chicago, New York,
Boston, Los Angeles and Seattle. But now they are also in other parts of the U.S. and Canada
too.

The revenue models for Yelp include advertising revenue and selling merchandise from
their Yelp Store.

Demographics – Major Players

If we look at the demographics of the three major players in the sector, we find consistency
in all. We see that majority of the visitors from US cities and they show the same
demographic traits as shown below.

Demographics Craigslist Citysearch Yelp

Global Traffic
11 87 79
Rank

Global Traffic
1.13 Bn 9.9 Mn (US only) 11.3 Mn
Count

Major visitors
US US US
From

Male-Female Male-Female
Gender More Female
(Both) (Both)

Age 18-49 18+ 18-49

Education College Grads College Grads College Grads

Economic Strata More Affluent Affluent More Affluent

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Market Analysis on Online City Guide Websites:

The Porter’s analysis can provide insight into both your online and offline competitive
environments. In any industry there are five forces that influence what happens within the
industry. This together make up the business environment. By studying the structure of and
dynamics between these forces in the online industry we will try to discover opportunities
for improving upon the marketing strategies.

Five Forces in the Online Industry:

Threat of susbstitute (Low) Bargaining power of buyer (High)

Like tourist guide, Just dial services, T.V • Many sites have developed in this
• No common platform for all the similar context.
services offered
• Main business of these websites and
the target group are different.

Competitive Rivalry
in Web 2.0 Industry

Bargaining power of supplier (High) Threat of new entrants (Moderate)

• Technology easily available
• Low capital investment
• Access to distribution channels

1. Threat of new entrants:

Off-line competitors as well as new companies entering the industry via a Website.

ü Technology easily available as most of these are developed in open source

ü Low capital investment
ü Access to distribution channels: In web 2.0 were the site provides information to the
user and based on the experience spend over the website the user participates in
the site by writing blogs, reviews, rating etc. This is a differentiating factor in most of
the websites.

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3. Substitutes for products offered:

Other means and sources like tourist guide, Just dial services, T.V provides the same
set of services as these websites provide. But all this has some constraints:
ü No common platform for all the services offered in websites. ( Providing information
to making the transaction online)Most of these sites may only provide the
information or may only help in transactions
ü Main business of these websites is through advertising revenue so they provide free
services to the user. Thus these websites are threat to the traditional business.

4. Bargaining power of the suppliers:

Those companies that supply to the similar kind of products (or parts if you are a
manufacturer) and/or services and other suppliers are the Web hosting, software,
and other vendors that supply Web-enabling technology. The power of suppliers
tends to be a reversal of the power of buyers.

ü The switching costs are low.

ü There is a possibility of the supplier integrating forward e.g. Brewers buying bars.

Customers are fragmented (not in clusters) so that they have little bargaining power e.g.
Gas/Petrol stations in remote places.

5. Bargaining power of the user:

Visitors, potential visitors and advertisers to the Website are also the suppliers in
terms of user generated content in the websites through blogs, review, rating etc.

ü This is high as there are many sites which have developed in this similar context.

5. Existing companies:

ü This is most likely to be high where entry is likely; there is the threat of substitute
products, and suppliers and buyers in the market attempt to control. This is why it is
always seen in the centre of the diagram

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Taxation Policy

As the Internet began to grow and become more critical to the economy of the United
States during the 1990s, so did the efforts of state and local governments to tax Internet
access. Almost as fast as Internet access could be deployed, states rushed in to create new
taxes. In Connecticut, it was a Sales and Use Tax; in Hawaii, a General Excise Tax; in New
Mexico, a Gross Receipts Tax; in North Dakota a Sales Tax; in Ohio an Electronic Information
Services Tax; and so on.

In 1998 the congress recognized the importance of universal access to broadband to the
future of America and the damage caused by the states and localities. Thus the Congress
elected to protect Internet access from taxation through passage of the Internet Tax
Freedom Act. Later the State legislators and governors enacted similar tax bans in many
states in the years following the Internet Tax Freedom Act.

Like any other commodity, Internet access is price elastic. That is, the willingness of
consumers to purchase the product decreases as the cost goes up, particularly among
working-class Americans with limited disposable income. Virtually all studies done to date
show that broadband service is highly price-elastic, including the research by the Pew
Internet and American Life Project and the seminal 2005 University of Michigan study
clearly show that income levels are the second leading determinant of broadband access
utilization in the US population. Any increase in cost due to taxation would therefore
significantly affect broadband utilization. Likewise, small service providers that do not have
large internal tax compliance departments would have to bear this as an additional cost,
further driving up the cost of their services or driving these competitors out of business.

Thus the current moratorium prohibits three things: state and local taxation of Internet
access, multiple taxes on a single e-commerce transaction, and taxes that discriminate
against online transactions as this could damage internet-based commerce, a critical and
growing component in the economy.

Privacy

These sites collect personal information from various sites that can identify the user. In this
process they take the help of their partner site to analyse the user’s behaviour with the help
of cookies and web beacon assigned to the particular computer. On one hand it increases
access to website by giving a personalizing one’s online experience and on the other hand it
intrudes in one’s personal space. Moreover these websites share the personal information
of the user with

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• Service providers, such as credit-card payment processors

• Other partner businesses;
• Other businesses with which we carefully select to offer products, services, and
promotions through their website or offline; and
• Other third parties in limited circumstances, such as complying with legal
requirements, preventing fraud, and protecting the safety of our users.

Copyrights

All the content in the Web site are the proprietary property of the website. One is
authorised to retain a copy of pages of this site for his/her own personal use but shall not
duplicate, download, publish, modify, or otherwise distribute the material on this Site for
any commercial use. The Website includes discussion forums or review on its products. The
information gathered from such forum about the user can be used for commercial purpose
by the websites. The website has no control over information provided by the user
generated content through review and rating.

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The Indian Story –

Some of the Indian players in this sector are:

Sulekha - www.sulekha.com
Sulekha.com is one of the most popular Indian Internet media companies reaching and
connecting millions of Indians in 24 cities in India, US and also now present in other cities
beyond India and the USA.

Sulekha.com is headquartered in Chennai in India and Austin in North America. Sulekha.com

has offices in Mumbai, Delhi, Hyderabad, Bangalore and New York.
Sulekha.com has received investments from Indigo Monsoon Group and Norwest Venture
Partners.

What makes Sulekha.com distinctive is that it is entirely member-generated with tens of

millions of pages of content and commerce created by millions of its members. This
unexampled emotional loyalty of its members has won Sulekha.com rare media acclaim.

Social Media: Sulekha.com is the largest and most popular social media site to express,
review and share in the form of Blogs, Photos, Videos, discussions in multiple explosively
popular areas of interest such as Movies, Travel, Food, News, Cricket and more.
Sulekha.com members also build their personal networks through Sulekha.com's powerful
social networking substrate.

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Local Commerce: Sulekha.com is the largest and most popular local commerce site in India,
uniquely integrating Classifieds and Yellow Pages. With millions of listings and users every
month, Sulekha.com offers unmatched value across multiple areas such as Real Estate,
Cars/Bikes, Personal Finance, Tours/Travels, Coaching/Training, Jobs, Food/Dining,
Education, Events and many more. Sulekha.com is also the largest online ticketeer for Indian
events and movies in North America.

Global Presence and Local Reach: Sulekha.com is unparalleled in the breadth and depth of
services at a local level in 25 cities: Bangalore, Mumbai, Chennai, Delhi, Hyderabad, Kolkata,
Ahmedabad, Pune in India; New Jersey, New York, Bay Area, Chicago, Los Angeles, Atlanta,
Dallas, Washington DC, Austin, Seattle and more in US; Toronto in Canada and London in
UK.

Sulekha.com Online and on Mobile: In addition to powering local commerce online,

Sulekha.com powers Yellow Pages and Classifieds on three of the biggest mobile operators
in India: Vodafone, Reliance and Airtel. Sulekha.com also powers Classifieds for Sify.com and
Indian Express.

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Future Trends in Web 2.0 City Guides

Some of the future trends that we have identified in this sector are:

1. Virtual Tours:

A virtual tour (or panoramic tour) is a simulation of an actually existing location, usually
composed of panoramic images, a sequence of hyperlinked still or video images, and/or
virtual models of the real location. They also may use other multimedia elements such as
sound effects, music, narration, and text. As opposed to actual tourism, a virtual tour is
typically accessed on a personal computer or an interactive kiosk.

2. GPS on Mobile:
This feature would help the user to directly get the direction for the particular place on his
mobile phone and hence this would help him while he is travelling

3. Video Ads:
As the products and service providers give their ads on these sites and with the coming up
3G technology, video ads would make more sense since this would enable the user to get a
feel of what a particular shop/restaurant would look like

4. Consolidation:
Also in the developing countries like India where we have city guides for particular cities and
not a single point, the industry may see a consolidation where the small players from each
cities would integrate their databases.

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Bibliography:

www.craigslist.com

www.citysearch.com

www.yelp.com

www.sulekha.com

www.wikipedia.org/wiki/craigslist

www.alexa.com

www.quantcast.com

www.spyfu.com

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www.praxis.ac.in

2007 - 2009

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