While Angie’s List continues to reject acquisition offers, the home services marketplace is taking a big step to boost its online audience, and hopefully the number of people using it to find their next carpenter or masseuse.
Today, the company is announcing that it will drop its membership fees, in favor of a freemium model that will make it cost nothing to browse the listings and write reviews. The new pricing structure — which has yet to be revealed, but will include extra services that will still be charged beyond basic browsing — will be turned on this summer, CEO Scott Durchslag told TechCrunch in an interview.
The news is the centerpiece of a new growth plan that Durchslag will be laying out today at the public company’s investor day in New York.
Up to now, Angie’s List, which is active only in the U.S., has charged users a sliding scale of joining fees and monthly usage charges, depending on whether users were looking for home services like plumbing or health and wellness listings (one sample price list, which varied depending on locale, is here).
Typically, for members to join today the most common price is $9.99/year. Contractors (service providers in Angie’s List terminology) are listed at no charge but can pay to advertise themselves more prominently.
But as Durchslag — who joined Angie’s List from running Best Buy’s online business in September 2015 — described it to me, the basic problem is that Angie’s List today is a major traffic generator, with people coming to the site in search of contracted service providers, but the vast majority of those people were not getting past the site’s home page because of the paywall.
“We get over 100 million visitors each month, but 90% of them have been bouncing because of the reviews paywall,” he said. “We expect to see traffic explode with the change.”
The change comes during a key time for the company. Angie’s List was founded back in 1995, well before the rush of companies that have sprung up in the “on-demand economy”.
But that wider trend of consumers using the Internet and smartphones to quickly find and hire people to do jobs for them has bred a sea of rivals to the older business — both in terms of being a go-to place for consumers to find what they need, and contractors using the platforms to market themselves.
Today, Angie’s List competition includes the likes of Amazon Home Services and Facebook, as well as a number of startups like Thumbtack, Handy, Porch and vertically focused offerings at the other end of the spectrum like StyleSeat and Doctor on Demand.
With these startups removing paywall barriers and simplifying how it lets contractors post their availability and users order and pay for services, this has an impact on how legacy services are able to attract users, pushing them to innovate or become irrelevant.
Currently, Angie’s List has around 3.3 million members, but gross paid memberships added, according to its full-year earnings for 2015, were down by 17%. On top of this, revenue per paid member has been dropping, which Angie’s List says is a result of tiered pricing that it introduced.
In the midst of this, there are also some attempts at consolidation. Angie’s List received an unsolicited acquisition offer from IAC last year. The company quickly rejected the $512 million bid, but there are reports that IAC, which owns competing service Home Advisor, will not give up quite so fast.
Durchslag says the also plans to expand into other categories of services and more options for monetizing its customer base, but not until it has nailed its current business. “We need to earn the right to do that based on Ebitda growth,” he said. “I want to do home services really well before taking on more categories, and I want to do that before going into international markets or going into other customer categories like small businesses.”
The company also put out revenue projections: it expects to be making $750 million by 2020 and to grow adjusted EBITDA to $150 million over the same period.
But in 2016, the expectations will be more modest, in part because of the investments it’s making in new technology and the switch in business model away from membership fees. It expects full-year revenues of $345 million to $355 million, with adjusted Ebitda of $31 million to $35 million, with free cash flow to be break-even.