Genius is trying to make its annotation system into a real business

The challenge for Genius is despite its potential to “annotate the world,” the site is mostly used by people looking for Tupac lyrics or the words to other songs. Such traffic has historically not been valued very highly by advertisers. Visit many lyrics sites and you’ll get bombarded by low-rent network and exchange ads.

Genius, with its trove of $56.9 million in venture backing, including a round from rapper Eminem, has been able to avoid this approach so far.

“Lyrics are the biggest market failure in the music industry; they possess the emotional resonance and shareability of music videos, and yet today they’re monetized at a fraction of the effectiveness and elegance,” Shapiro told Digiday. “We’re looking forward to working with partners who want to reach this audience and enhance that experience.”

Genius will also need to grow its audience. The site claims 40 million monthly global visitors, but comScore puts its U.S. audience at under 12 million, not very large by today’s outsized standards for Web properties.

In another sign that Genius is trying to build a business, the website said it’s adding a “report abuse” button after a micro-controversy erupted online over the ways the service could be used to fan flame wars

In a letter published yesterday, CEO Tom Lehman responded to Katherine Clark, a Democratic congressman from Massachusetts, over concerns that the extension could lead to online harassment and abuse because Genius’ extension allows anyone to add comments to any website.

“Like every platform that enables commentary, it has the potential to be misused,” Lehman wrote. “However, we want to be clear that Genius does not enable abuse. This is a false narrative that has taken hold on Twitter and other outlets.”

Genius is now adding an abuse reporting button to its software “that allows anyone to report abuse by clicking a single button any annotation” in addition to @-tagging a moderator, which Lehman said has so far “worked effectively.” The move should calm concerns that it could be use to enable abuse or harassment, a feature on the Internet that Twitter and Facebook struggle with as its user base expands.

The Brooklyn-based startup originally launched as Rap Genius in 2009, but dropped the rap part of its name two years ago in an effort to expand its annotation to topics that isn’t music, like news and literature.

Over the past few weeks, Genius has been embroiled in some backlash, or as Lehman called it a “false narrative,” started by people on Twitter over a blog post from TED Talks’ social media manager Ella Dawson titled “How News Genius Silence Writers.” In it, Dawson wrote that because that the Genius extension can be added to any website, seeing annotations is “like discovering graffiti over some of my most personal work” and lead to harassment.

The post rolled through the social media garnering support and backlash. On one side, a Slate writer agreed with Dawson that Genius hasn’t considered a “very real potential for abuse” in its growth plans. But as Gawker pointed out today, people have been using social media using it to add commentary and annotate writing on the web for years.