Interesting view on Tumblr/Yahoo deal

Yahoo, Tumblr, and the Loyalty Factor - Ben Gomes-Casseres - Harvard Business Review: a blog post analyzing f some of the strategic issues underlying the Tumblr/Yahoo deal: 

"...Still, after the initial shock subsides, can Yahoo count on Tumblr users staying on? That is probably how the investment bankers framed it — as a question of switching costs, lock-in, network externalities, and the like. Where are these users to go? There is no equivalent forum of this type, richness, and network size (at least not yet). It would seem that the 18-24 year-old demographic that Yahoo is pining for does not have an easy exit choice...." (from:

Ben Gomes-Casseres - Harvard Business Review)

He also mentions a book - Exit, Voice, and Loyalty (Hirshman) - that seems to have anticipated some of the lock-in, churn and loyalty challenges that subscription based online services of all kinds face, way back in the 1970's. Seems like an interesting book, well worth reading: 

"Mr Hirschman’s most famous book, “Exit, Voice and Loyalty: Responses to Decline in Firms, Organisations and States”, remains as suggestive today as it was when it first appeared in 1970, for managers and policymakers as well as intellectuals. Mr Hirschman argued that people have two different ways of responding to disappointment. They can vote with their feet (exit) or stay put and complain (voice). Exit has always been the default position in the United States: Americans are known as being quick to up sticks and move. It is also the default position in the economics profession. Indeed, when his book appeared, Milton Friedman and his colleagues in the Chicago School were busy extending the empire of exit to new areas. If public schools or public housing were rotten, they argued, people should be encouraged to escape them." (from: The Economist)

 

 

 

Posted on May 20, 2013 .