| SAN FRANCISCO, June 19
SAN FRANCISCO, June 19 What types of online
information services can make money by charging fees rather than
relying on advertising?
That's the sort of question that one might put to the
business-oriented question-and-answer service Pearl.com.
And the answer might be ... business-oriented
question-and-answer services like Pearl.com, which just raised
$25 million in a new funding round led by Glynn Capital, with
participation from brokerage mogul Charles Schwab, lawyer Larry
Sonsini and others.
Formerly know as JustAnswers, Pearl.com already boasts more
than $100 million in annual revenues, said founder Andy Kurtzig.
The company is pushing forward with a fee-for-service approach
in a niche populated by both free and paid service.
The category leader, Yahoo! Answers, uses the freebie model,
and had 53.6 million unique visitors last month, according to
consultancy comScore. But that is down from 68.6 million users a
year ago, a testament to the increasing amount of competition in
the area. Pearl chalks up 7.4 million users, up from 4.7 million
a year ago. Quora, a free site with 1.7 million, is among the
fastest-growing of the sites, with over three times more users
than a year ago.
Many seem to be carving out a niche within the sector. The
top questions on Yahoo! Answers involve family and
relationships; at another free site, ChaCha, users want to know
about entertainment. Answers typically come from fellow
Quora, by contrast, tends to solicit opinion. One of last
year's most popular questions drew on a much-discussed new book
on childrearing, "Battle Hymn of the Tiger Mother," to ask if
author Amy Chua was correct in her assumption that Chinese
parenting is superior. Many questions deal with technology, such
as why different inventions succeed and fail, or backstories on
current Silicon Valley gossip. Industry experts often jump in-as
author Chua did.
Quora's founders haven't identified a business model, and
the $50 million in funding they just raised from Matrix Partners
and others means it will be some time before they have to.
Co-founder Charlie Cheever says the cash will go to building out
the company's team.
Questions on Pearl tend to be more practical, with
technology support and legal the most popular categories,
closely followed by health and car maintenance. Pearl taps into
its network of experts who answer online for a fee the user
agrees to in advance, and that Pearl says is fully refundable if
the user isn't satisfied with the result. The average fee is
That's enough to earn a handful of lawyers and doctors who
contract to work for Pearl $40,000 a month, Kurtzig said. Most
respondents earn far less. One lawyer who declined to be named
due to the sensitive nature of the questions he responds to said
he makes as much as $15,000 a month, mostly during down time at
his law firm.
He mostly answers contractual and general legal questions,
but on one occasion was asked "What are the states where I can
legally marry my sister?" The answer: none.
The company vets all its experts, including running
background checks and making sure licenses are up to date, a
spokeswoman says. Users have the option to subscribe to a
monthly plan that allows for unlimited questions at varying
rates depending on the category, usually around $30-$40.
Other companies are taking different approaches in finding a
nonadvertising revenue stream. Mancx, for example, seeks to
provide business answers-with an average pricetag to users of
$250, it says on its Web site. Popular questions include
referrals for services in other states or countries that the
users might not be familiar with, or how to put together a
business plan for a certain type of industry.
Others provide answers in very specific areas- Support.com
for computer help, for example, and Hotmath.com for students
needing help on math-homework questions.
Advocates for fees say it helps ensure more trustworthy
answers, avoiding the self-promotion that often occurs on free
sites. Boosters of the free sites counter that when it comes to
professional advice, respondents answer for the sake of
improving their reputations, an incentive to provide the best
Pearl's Kurtzig doesn't think of his site as a
question-and-answer site, classifying it instead as professional
services, an area he sees as ripe for online growth. He sees his
competition not as other sites, but real-life appointments, such
as visits to doctors, lawyers, and mechanics.
"I see the professional services sector playing out just
like consumer goods did over the last 15 years," he said. U.S.
online retail sales totaled $162 billion last year, according to
comScore, compared to almost nothing 15 years ago, when the
Internet was in its infancy and people mostly visited physical
stores for purchases.
So far, Pearl has been just about breaking even, with
revenue going into expansion. Kurtzig plans to use his new
venture money to grow faster internationally, and perhaps
provide a cushion should the global economy take a nosedive.