Bait and Switch of a New Kind

A lot of us around here were *annoyed* when we got notice from LookSmart in April that they were changing what we had purchased for ourselves, and on behalf of some of our clients. We had bought their one time pay for inclusion package. We received a notice that our purchase was arbitrarily being changed, without our consent, to a pay per click program. Graciously, LookSmart was crediting our account with an opening balance of $15.00 against our initial investment of $199.00. When this “free” credit gift was used, we could pay an ongoing fee, or face being unlisted. We looked at the issue from a moral, and a business perspective. From a moral question, we could not pay their fee.

From a business perspective, we considered what our view of the value of LookSmart’s service had become, with respect to its declining reach vis a vis the other engines, and decided to give it a pass. We recommended to our clients, some of whom were mad at us for LookSmart’s change, to not pay any ongoing fees. We do not believe that the cost justifies the fee, and more importantly, we feel this tactic is morally wrong. We all understand the LookSmart is looking for new and better revenue stream, just as any responsible company would. However, if a contract with your client is not respected, don’t go back for seconds. It’s one thing if there is a business issue that arises, or a dispute with regards to delivery of product or service. It’s another thing for one Party to just change its mind, and arbitrarily amend an agreement without the consent of the other Party. I was not displeased to see that many other individuals and companies in the industry agreed, and echoed my sentiments. The action LookSmart took has justifiably caused a great deal of outrage and consternation among LookSmart customers. These customers feel betrayed by the company, and how it is demanding additional money from them. I’m sure that many of them have not opted to continue with LookSmart’s new program.

As mentioned in our News articles above, Looksmart is being sued because of its actions, on the grounds of breach of contract, and fraudulent business practices. If the case is approved it will be a Class Action lawsuit on behalf of all companies affected by this amendment of the contract.

On July 11, 2002, (we’re not just up to date on the latest search engine algorithms) Looksmart announced that it had “heard” from “past customers like you. We listened, and in response we’re announcing a change. Now, we will automatically credit all past Express Submit and Basic Submit customers with 100 free clicks per listing each month through December 11, 2003.” An attempt to mollify their detractors? Yes. An admission that what was done was was wrong or not acceptable?

No. They are still are forging ahead with the same change, just ‘giving’ us more months of limited free clicks. It’s kind of like saying to someone; “Sorry I know we agreed that I would renovate your home, but instead I decided that I would be best served to tear it down, so as to improve the view from my lot. But since you’re unjustifiably upset with my action, I’ll give you a discount on the construction cost of a new one, which I will build to suit my needs and wants better.”

Will this court case be successful? I couldn’t begin to comment on that. I’m sure enough lawyers have read the contracts to have arguments on both sides. If it is successful, I applaud the courts. I fully support LookSmart’s right to change revenue models, and offer new programs. I think that it is smart for any business to look for new and better ways to improve revenues. I do not support their decision to unilaterally amend any existing contract with them, nor do I believe that their action is morally right. If Looksmart prevails, I believe it sets a terrible precedent for the rest of the industry.