Sure, I love user generated content, but can it ever pay the bills? I don’t think so. At least not in Yelp’s case. Here’s why:
Yelp caters to the wrong person. If you’re after advertising dollars, it’s not part-time, unpaid writers that you should cater to–it’s small business owners! And small business owners HATE free-for-all commenting on their wares or services. I worked a lot with restaurant owners while running and know they really want to put a hurt on the Yelpers of the world. Sure, they could police all the social sites and try to counter each negative remark–but anyone who knows small business owners knows they don’t have a extra minute in their day to cater to non-core activities.

Can there be a balance?

Maybe. But there would have to be two different sites–probably owned by two different companies. For example, there should be one site that provides factual info (name, address, phone, hours, pics, menu, directions, ‘official review’…) and one for reviews from the masses… and they could link to each other. Perhaps Google and Yelp can do that if they make up. What do you think?
It’s also crossed my mind that Yelp should focus more. Perhaps they should just be working on restaurants or just hair dressers or mechanics. Isn’t it easier to own expertise in a specific market rather than every market? Or, perhaps they can make Yelp channels… maybe hire some coaches to get folks to write more constructively… Just some ideas Yelp… in case you’re listening.