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Angie's List, the online local business reviewer, will offer services for free

Increased competition and sluggish membership rates are forcing the pioneer of online business reviews to try a new model to attract more users.

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Rich Pedroncelli/AP
A plumber installs a kitchen faucet on a home under construction in Sacramento, Calif., in 2013.

Angie’s List, the 20-year-old, membership-only business review site first imagined by Angie Hicks while she was looking for a contractor in suburban Ohio, wants to turn itself into a 21st-century, digital reference guide and e-commerce platform.

To do that, the company needs to convince a lot more people to come to its website in search of local landscapers or appliance repair experts, so starting this summer, Angie’s List will become free, said Scott Durchslag – appointed CEO of the company six months ago – on Thursday, before the company's meeting with investors and analysts.

But free won’t pay the bills, so Angie’s List also will launch a tiered-membership model this summer. People will be able to view ratings of local businesses and read reviews for free. Otherwise, they will have the option to buy an annual silver subscription for $24.99 or a gold subscription of $99.99, which will include options such as access to an emergency service hotline and fair price guarantees, reports USA Today.

Angie’s List hopes to turn the millions of people who come to its site in search of responsible local businesses – and then leave as soon as they see they have to buy a subscription – into paying customers, as many other online service sites try to do.

“The reviews paywall served the company well for the last 20 years, but looking ahead to the next 20 years – millennials are not going to pay for reviews,” said Mr. Durchslag to USA Today.

This is part of the reason that the Indianapolis-based company has had only one profitable year – 2015 – since it went public in 2011. The rate of new memberships has been sluggish until recently, in part, thanks to growing competition from services such as HomeAdvisor, Thumbtack, Porch, and Houzz.

Angie’s List says it has around 3.3 million members, and millions of visitors a month, though many don’t use the site because they don’t want to pay the membership fee to do so.

“We get over 100 million visitors each month, but 90 percent of them have been bouncing because of the reviews paywall,” Durchslag told TechCrunch. “We expect to see traffic explode with the change,” he said.

Improving the website, refreshing its brand through a new marketing campaign to highlight the company’s service quality guarantee, plus introducing premium offerings for Angie’s users to buy, will double the company’s revenue, Durchslag promises, from between $345 million and $355 million this year, to $750 million by 2020.

“Put simply, we must reignite revenue growth,” Durchslag, the former head of Best Buy’s online business, said in a recent quarterly earnings call.

In November, IAC/InterActiveCorp., a company that owns About.com, Ask.com, and Dictionary.com, offered to buy Angie’s List for $512 million. But the review site rejected the offer because it undervalued the company, reported The Wall Street Journal. Angie’s List said that it wants to strengthen its business before considering potential mergers.

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