Web Hosting Directories explained - the good and the bad
Web hosting directories list web hosting companies. The purpose for creating such lists is different, depending on which side of the fence you are. In 99% of the cases, from the owner's point of view, the directory's purpose is to generate revenue. Sure, that's not what the owner would to tell you if you'd ask directly, but that's the truth anyway.
What the owner will tell you is that the directory is there to help you find the hosting company that best suits you. That's also true. Unfortunately though, very few hosting directories do more than simply managing a database with hosting companies and their plans (in terms of real usefulness).
Wrong focus and hidden suggestions
What most directories do is focus on diversity, lacking something that is much more important than that: quality. They're often proud that they list lots of companies and showcase such numbers as an achievement, suggesting that they're one of the most comprehensive directories on the net.
While that may be true, it's of little relevance for the searcher. Not that the average person looking for hosting realizes it. Most people select their host based on price and features, and the directories also often suggest (more or less directly) that price, space quota and the amount of data transfer are the most important factors when choosing hosting.
No, they're not saying that in an obvious way, but they may say something like "choose the host that fits your budget". That's something obvious for most people - they would buy something within their budget anyway, but stating that in the right places, makes people price-aware rather than quality-aware.
Often the first field that the searcher has to complete in the form when searching for hosting is the price. While this doesn't mean that the directory really suggests price as being the most important factor, it does help to further confuse the unaware searcher what the shopping process is really about.
Most of us look for the best possible deal; our budgets are limited and we all like great deals. If the directory really wants to help people find the best host for their needs, a highlighted line advising to check the quality of the host before buying should be placed on top of that form. When you see a hosting directory that does that, please tell me about it! Instead, what most "top hosts" do is to simply sell, meaning they take the potential hosting customer through a sales process devised to push him/her to the host that is "top". For if there is a best host that happened to be also very cheap, why would anyone choose the second best one?
Many directories have an article that explains how to search for a host. Usually it's a short guide that instructs people how to use their site and explains a few hosting related terms. While most directories do a good job at explaining these terms, they completely miss to acknowledge the fact that more important than what the hosts promise is what the hosts actually provide.
The fact is that an experienced web hosting shopper will always care more about the reputation of the company than about the price and incredible features such as unlimited-this-and-unlimited-that. This is what a good directory should tell the visitors. There are reasons for not doing that though:
Determining Advertising and Affiliations
Hosting directories usually make money out of selling advertising space on their website. Because these directories usually have a very targeted audience, quite a few web hosting companies are interested to advertise their services in them.
Obviously, most people visiting web hosting directories look for a host. If a host succeeds in getting the attention of the visitors, it could secure sales. However, the owner of a directory has little reason to increase/enhance the visibility of a company unless s/he receives something in exchange.
If most pages contain banners linking to the same companies over an over again, most likely the banners are there for a reason other than simply their looks. Usually the hosts pay, one way or another, to be listed there.
They either pay a monthly fee to be there or they have affiliate programs. In the hosting industry, an affiliate program usually works like this: if you click on that banner and then buy a package from the host within a predetermined time frame that can vary from instantly to a year or even more, the directory gets a monetary reward, otherwise known as a commission.
There's no problem with either practice (ads or affiliation). However, there are certain differences that I would like to point out here. Pure ads should be listed as such. Just like TV ads, they should be acknowledged as ads and clearly separated from the rest of the content.
Broadcasting companies do not particularly endorse the companies that advertise through their channels and a website should be no different. Ads are ads and should be clearly marked as such (in my opinion). Affiliate programs are different though (again, in my opinion). I see them as having more of a personal touch and they usually do have one, but if the affiliate banners are listed as just ads without any special recommendations, that's OK too.
What I don't like is when certain implied recommendations are used, such as the "featured hosts" category. It's OK to have "featured hosts" as long as you clearly explain what "featured" means. Does it mean that those are the better ones, were they hand-picked or are they simply companies that pay (one way or another) to be listed in that category?
If the directory's owner/webmaster/whomever doesn't believe them to be better than the others, this should be made clear. Otherwise the directory risks to deceive its visitors, making them believe that those companies are special in some way, when in fact there's nothing special about them.
Worse even are other kinds of websites: the ones publishing fake or edited reviews and ratings.
Reviews and ratings
Although web hosting directories sometimes collect reviews and/or ratings from their visitors, so this applies to them too, usually there are websites specialized in this kind of things. Between me and you: these specialized websites are - more often than not - specialized in sending customers to the highest bidder rather than educating the customer and referring him/her to hosts that are indeed better than most.
The unfortunate thing about the websites that collect reviews and ratings is that it is too easy for the owner to mess with the results. The owner can delete a comment anytime and/or modify the ratings statistics. You just have to trust him/her.
No, there's no problem with trusting another human being. Unfortunately though, when I see so many people constantly complaining in forums about certain companies and then I see the same companies getting 5 stars out of 5 "based on customer reviews", that really makes me wonder about the credibility of the website that publishes that.
Lists of Top hosts
Most such "Top Hosts" websites usually list only hosts that pay huge commissions for every referred customer. Because most such highly rewarding affiliate programs are run through Commission Junction, it can be easy at times to determine if they are trying to do a good job or they're just looking to get as much money as possible.
To determine that, all you need is a browser, which most likely you already have if you're reading this. I'll explain you what you have to do: first hover the mouse cursor over the link that points to the host's website. Look for this domain in the link: www.qksrv.net. It's used by Commission Junction to track referrals. Don't know where to look? At the bottom of the browser window, in the status bar.
If you simply hover over the link though, it is possible that you're not shown the real target of the link because they use Java to hide it. It doesn't matter if Java means nothing to you. Just right click on that link, select properties and you should be able to see the real target. Try it on more than a single link on that particular site. If the vast majority (most often all) point to www.qksrv.net, that should be a huge warning sign.
An update: Recently CommissionJunction changed things a bit, switching from using www.qksrv.net to using a number of domains. New "top hosts" sites will most likely use these new links. The common thing about them is that the domain makes no sense, it's some gibberish like www.joyodhg.com (just an example), so they should still be easy to spot. If you're unsure, just type that domain (say www.joyodhg.com) in your browser. If you're redirected to this URL http://www.cj.com/qksrv.jsp then you've just identified a Commission Junction affiliate link.
I know this kind of websites all too well, and I easily realize if they're trying to make a buck regardless of the consequences the visitor might have to suffer. I came to know the hosting industry and I know many of the hosts that are bad and yet artificially popular. When I see several such hosts listed as "top hosts", I initially feel like laughing in disgrace. My smile freezes though when I think about the people who are misled.
As I said above, there's nothing wrong with being affiliated and there's nothing wrong with Commission Junction either. It's a known fact that the web hosting companies running their affiliate programs through Commission Junction offer among the highest affiliate commissions in the hosting industry, but, unfortunately, this doesn't make them very good hosts at the same time.
The real problem is not that most of the "reviews websites" list only companies they're affiliated with, but that they don't rank them based on the quality of the service (although they claim to); they rank them based on the size of the commission (which is sometimes negotiated). The companies offering the highest commissions get the top spots.
A while ago, I investigated the hosting companies from Commission Junction myself. Out of over 20 companies, only 2 proved to be quality web hosts according to what real people (their customers) said about them. It's true that there wasn't much to be found about most of them, however, what's really worrying, is the fact that excepting one company (which is very good indeed), the companies that are usually listed in the top 5 are really bad. In fact, there are so many negative reviews about them out on the net (real, honest reviews) that they would easily classify to be listed in any "top 10 worst web hosting companies".
Most people working in the hosting industry and most web hosting company owners would tell you that most directories and other related websites are of little or no value.
The search feature of some web hosting directories can be useful though in finding company names, especially when the database is up-to-date.
Another good use of hosting directories is to find companies that offer certain features that are not very common such as JSP, Cold-Fusion etc. Some hosting directories also help you find hosts in certain states or countries, and this can indeed be useful as well.
Other than that, I see little use for the typical hosting directory. Only a few of them have a credible review-collecting system, truthful "top hosts" etc. Most are just cluttered with flashy banners and buttons flashing "Click me! Click me!" until your eyes hurt.
For you to be safe, my advice is to use the directories for what they're good at: finding companies that offer what you're looking for in terms of features and price. After that, you need to do your own research to discover which companies really deserve your trust.