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Here Comes Trouble: A Social Directory

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The declining relevance of telephone directories erased 95 percent of publisher RH Donnelley’s market capitalization over the last 12 months. Although Google’s free 1-800-GOOG-411 service may attract some share of the directory assistance business, the crux of the problem lies with the diminished standing of wired telephones in an increasingly crowded communications landscape. The demise of paper directories does not, however, mean there exists a clear alternative to accommodate the growing list of communication coordinates most people juggle. A “social directory” created by merging the telephone directory with the social networking model may provide a way forward.

Given the open-ended nature of the information that gets indexed, search engines remain poorly suited to the task of finding contact information. Success depends on a cleverly structured query; search engines do not, after all, distinguish contact information from other types of information. But while a directory with a relatively finite and narrow data set (e.g. contact information) would greatly increase the probability of success, the process of creating directories still awaits an Internet upgrade.

The standard model for directories fails with respect to mobile phones, email addresses and instant messaging screen names. Posting the Yellow Pages online retains the same city and state search limitations of the paper directories, and the infrequent publishing cycle of directories becomes unworkable at the current pace with which communication coordinates get added and subtracted. Further, the growth in communication options makes it impractical to rely on a single service provider directory. What makes much more sense in our Internet-heavy world is a user-generated directory in which individuals own and update their own listing.

The lack of a directory for mobile phone numbers traces to the fear of unwanted calls. A directory that supports authentication along the lines of social networks solves this problem. Keeping your number secret and employing Caller ID are poor substitutes for actually controlling who can call you. The social directory could implement an invite authentication process like any other social network. People already include some contact information in their social network profiles, but a purpose-built social directory could offer additional communication functionality.

The social directory represents a far more elegant solution than that of spamming friends with requests to update contact information through services like Plaxo. The social directory could make a social circle accessible via clickable links while hiding the actual contact information. Rather than giving out a telephone number or email address to a new acquaintance, users of a social directory would associate their listing with keywords (such as “plumber” or “dog lover”).

As the number of communication options increases, so does the burden of managing contact information, yet Internet-enabled directory options remain lacking. Google’s 60 percent share of Internet searches gives the company both gatekeeper status in the information Internet — not to mention a rich market capitalization. However, Google’s revenue represents less than a third of what the declining telephone directories generate in the U.S. alone. Riches await the infocom company that achieves gatekeeper status for the Internet’s communications applications.

23 Responses to “Here Comes Trouble: A Social Directory”

  1. reader

    It seems that many of you may not have your statistics correct when it comes to yellow page usage and the importance of internet vs the printed product. In my experience those individuals that could be classified as “internet junkies” have a great misconception of how EVERYONE is now plugging into the internet. Research actually shows that Yellow Page usage has stayed about the same in the last five years. The decline came when the internet/Google really started to boom. In the blogs most of the focus for discussion has been on the large phone companies that mainly focus on large cities, coincidently those are the areas where the internet is most frequently used. The smaller independent phone book publishers which service smaller cities and towns have seen growths in their markets. In smaller areas the majority do not find the internet as necessary seeing how small businesses are still forced to compete against large national/international businesses on the web. Consequently the consumers in these smaller areas may have to search through several pages to find the specific business they where looking for- and then again they may not find that business at all! So an hour or more on the internet or ten minutes in the phone book? It is true the purpose of Yellow Pages is to connect buyers to sellers… not so much vice-versa. Hence why we see more phone books without the residential(white) listings. Finding a good online solution is very difficult, it was mentioned how many different lines of communication there are anymore and finding a source that accurately lists all those communication forms is very difficult. That is not the only problem- ensuring the business owner that the majority of the consumers in his/her buying radius are going to hop online and all tune into that great social directory with all of these wonderful listings is unlikely! Not to mention who will be policing this database maintained by the public? What about unforeseen things such as a business closing it doors or someone dying… who is going to update or omit their contact information? There are a lot of hurdles to overcome- I feel there is and will be a solution- but I do not feel a social directory is THE solution. It will just be another muddied attempt, unless you can maintain the integrity of what yellow pages not only does for businesses and consumers but what it does for communities as a whole. People do still take pride in their communities and take pride in supporting local business- you have to find a solution that ties the community together and still connects them to the world!

  2. angryandconfused

    Internet replacements for DA have been around for years. (or rather its toll-free line) predate goog-411 by miles. It’s ironic that suddenly everyone’s taken notice just because google started doing it, now successful businesses have to put up sweepstakes contests or airline ticket giveaways (free411 just started a “411 day” promo) to keep their profile up in the face of unwarranted Google-mania.

  3. well written post!!
    although credibility is big factor as such kind of service will be storing and serving sensitive data like emailids, phonenumbers. but that credibility can be offered by adding social networking aspect. so even innovative startup can really take this up as it involves
    solving some good technical as well as bussiness related problems in innovative way.

  4. @Libran Lover: Two months BEFORE you penned your thoughts on Contact Management Systems, we deployed EnThinnai which includes many of the points you propose. For the past six months, the application has been open for public to try it out. Our final objective is to make that into a multi-server solution. Yes, we imagined the potential and believed enough to develop a solution. Waiting for the billions to roll in. :-)

  5. Dan,

    I agree with and would echo most of the points you make. I also agree it is unlikely that any time soon one of the major yellow page players will focus on finding contact information for people (vs. businesses) as their mission is around connecting buyers and sellers. Lastly, I would echo the points about a “known entity” being best positioned to solve this problem as “trust” is a critical element to get people to register or allow access to their cell number, email address, IM screen name, etc.

    At WhitePages, our mission is fundamentally about solving this problem. We do it today for our 30MM+ users by providing a superior database of people’s address and land lines (we have 180MM US adults in our service while a typical nationwide phone database only has ~90MM) through our simple user interface. We are currently working on extending our already successful business model ($70MM+ of profitable revenue) to address the plethora of existing and emerging contact forms you refer to.

    Stay tuned…

    Max Bardon

  6. Observer,

    Agreed. I should have noted the decline runs between 4 and 6%, so it takes a while for revenue to disappear at this pace. The stock market seeks a valuation that reflects the net present value of the enterprises. This net present value may in fact be less than zero as you note the selling telco’s already extracted all the value by loading these entities up with debt. Add Verizon to your list of companies playing this game. The CEO of RHD noted in interviews the issue of debt is really an issue of cash flow. Indeed, his cash flow is just barely sufficient to cover his debt service, so it will not take much longer for the slow erosion of revenue to threaten bankruptcy.

  7. Great Post, have to agree with Dave in order to get any kind of consumer+local business traction one of the big players (yellow Pages, SuperPages…) would need to further develop the category.

    I don’t think this will happen anytime soon. I think the solution will come from some an innovative startup, perhaps partnering with a bigger player to scale at a later stage.

  8. observer

    While an interesting column with valid points, there is one critical error. It is absolutely true that the value of RHD has plummeted dramatically in the past six months. However, the price plunge isn’t because people have stopped using or companies have stopped advertising in the yellow pages in droves. The paper YP business continues to drop off very slowly, in the low single digit range, annually. The problem with RHD and the other directory companies is that they were the darlings of the private equity world back a few years ago. Anxious to monetize the enormous cash flow generated by these companies, the owners, Sprint, Qwest, BT etc spun off their directories to buyers who saddled the companies with enormous amounts of debt to pay for them. Fast forward a few years and PE folks have moved on but the companies have billions of dollars of debt to refinance, in the middle of a credit crisis. It is not at all clear that the refinancing will be possible – and THAT is why the stock has dropped into the single digits.
    Yellow pages are not a growing business, and are sensitive to economic cycles, but the data suggests that they still have better (more data) than local merchant information than the online folks. For now, and despite the perception popular in technology centers, the economy remains a much bigger impact on growth than web. The web matters here, just not nearly as much as many seem to think.

  9. It feels just great to be in no phone directory after having abolished traditional fixed line long ago. I don’t feel like using opportunities. Life is much quieter since telemarketers don’t find my number and annoying PR agencies have lost it.

    When I feel that someone should have my phone number, I tell him. Until now nobody got mad because he could find me in the White Pages. I have great Google position with my name anyway.

    Sorry, I don’t need to be in any phone directory. Today they are only useful for telemarketers.

  10. Dan:

    Interestingly you point out many of the features of directory as implemented in EnThinnai. I am not sure whether you know of them or not. For whatever reason, GigaOm has decided not to review it. But your Chairman and CTO know in full detail.

    But I disagree with you that there could be a single or a handful of gatekeepers. EnThinnai shall endeavor to facilitate that individuals maintain their own directories and do not require an external gatekeeper.

  11. This will be solved with the Semantic Web. When contact information can be discerned through traversing and disambiguation of a contextual taxonomy directly to a person’scompany’s information.

    The key will be properly organizing, and managing this information.

    I agree somewhat with dave’s comment about the credibility of the builder. But only to the extent that a companys credibility should align with the amount of resources they can focus on solving this sort of problem.

  12. very well put! “Google’s revenue represents less than a third of what the declining telephone directories generate in the U.S. alone” – i love common sense comparisons…remember the dotcom gogo days (?), “a supermarket with average 2 percent margins would have to do X hundred million to even come close to our paltry revenue but 85% (fantasy) margins..cost is linear, yadda yadda…

    the real trick in this idea is the credibility of the builder – it can NOT be some unknown startup, that will just never attract anything beyond gigaom/techcrunch/twitter/backpack/facebook/etc users…too narrow, too myopic a view for any ‘startup’ types coming from outside, feels like it will have to be a yellow pages scale broker with established data sets building on top of open apis (open social too, but that’s still narrow)…