Q&A Site ChaCha Cancels UK Business After Poor User Take-Up [Updated]

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Can a reasonably successful, U.S.-based mobile content brand find equal success for its English-language service in the UK? It’s a question that could have been asked on the Q&A service ChaCha, and unfortunately it looks like the company has figured out the answer the hard way.

ChaCha, which launched in the UK in September 2011, has now quietly shut down operations in the country after failing to find enough people to use the service to make it cost-effective.

The company alerted its Guides — the people who get paid to answer questions from users — of the change on April 19, and noted that it would be shutting up the service on the next day. Sure enough, the URL for the UK site is not longer active.

ChaCha, which has been around since 2005, is primarily based around users sending questions in the form of text messages to a shortcode and receiving a text message in reply. It is one of the bigger — perhaps the biggest — Q&A sites of its kind, in March reporting 2 billion questions asked and answered, with 40 million unique users of the service.

It also has an impressive funding track record. To date, it has received $75 million in backing from investors including Amazon’s Jeff Bezos, Qualcomm and Rho Capital Partners, among others.

But this could be one case of when it’s not always best to be an early mover — or at least a lesson to early movers that they need to make sure they can change with the times, and in this case the rise of very capable smartphones.

Q&A has moved on a lot, with apps like Apple’s Siri, Evi, Iris, Vlingo and others offering a similar ability to answer questions but with many more features like voice response, integration with maps and more.

Ironically, one other chapter in ChaCha’s history involved the company launching a legal attack against HTC when the handset tried to launch an Android smartphone, branded ChaCha, in the U.S. (Its name eventually got changed to Status.)

ChaCha, of course, has the added benefit of working on any device — not just a smartphone — but it looks like its basic business model was focused on scale that it just wasn’t getting on that product: the idea in the UK was to disrupt the Q&A space by offering users the service at the same price as a regular text message. Other services make money by using the premium SMS channel (those texts can cost up to £1.50 here). So: accepting a much thinner margin on those texts, in exchange for a higher volume of usage and potentially the promise of selling sponsorship or advertising against that.

“Our mission was simply to provide quality answers at 1/15 the cost of the current competition. After months of direct advertising, branding events, marketing advice from UK leaders, and initiatives designed to help spread the word socially, we’ve found that adoption rates for new price-competitive services are quite low in the UK,” VP of operations Doug Gilmore writes in the letter.

Although the letter promises that ChaCha would pay Guides any outstanding balances owed by April 20, there seem to be users that are still complaining on the MoneySavingExpert forum, on a thread about the closure, that they that they have yet to be paid.

We’ve reached out to ChaCha to try to get some more details, and will update the story with whatever interesting facts that we learn. In the meantime, the letter below.

Update: ChaCha’s spokesperson has responded to say that “The final payment to the Guides is completed, and we apologize to them for the delay in payment.” She also notes that ChaCha “found it difficult to reset expectations” in a market that had already grown “wary of gouging price structures” and Q&A services. She also notes that currently the company’s iPhone and Android apps are growing faster than currently have much better engagement than the SMS-based service currently has.

Dear UK Guides,

It is with a heavy heart that I announce ChaCha will no longer be offering our service in the UK and plan to stop incoming and outgoing texts on Friday, April 20th, 2012. This pains us because of all the hard work and dedication you have all contributed to the ChaCha service in the UK.

ChaCha began its UK service 9 months ago as an alternative to similar text-based services which charge premium rates for Q&A. Our mission was simply to provide quality answers at 1/15 the cost of the current competition. After months of direct advertising, branding events, marketing advice from UK leaders, and initiatives designed to help spread the word socially, we’ve found that adoption rates for new price-competitive services are quite low in the UK.

Any and all success we have had in the UK can be attributed to you, our Guides, who provided quality answers and helped us spread the word about the service. We would like to thank you for your service and support during the last 9 months.

Please note that we will process any and all remaining Guide funds from your ChaCha accounts and transfer those on Friday, April 20th.

With Warmest Regards-

Doug Gilmore – VP of Operations ChaCha Search Inc.