Yik Yak and the Network Effect
Yik Yak is an app that allows users to share gossip and information anonymously to their local network. In 2014, it was one of the most popular apps on college campus. It had a valuation around $300 million dollars and was able to close a $61 million Series B round in investments. However, its popularity has been declining. In 2014, Yik Yak peaked at the No. 3 overall position in the US iOS charts. In 2014, it reached No. 109 and in 2016, it only reached No. 447. However, that peak has dropped every year. As reported by Business Insider, one junior declared Yik Yak “three-quarters dead” and others reported using the app “Maybe my freshman year, otherwise no”.
Yik Yak’s decline in popularity is related to the Networks Effect and Information Cascade. Since Yik Yak is a social app that allows users to share information, its value depends on both the user’s intrinsic value for the app and the number of users using the app. As more users started using the app, its value began to rise and it quickly became the hub for college gossip and news. Thus, there was a direct benefit to each college student since they were able to obtain current news about their college, causing more people to follow the crowd and download the app. However, rather than Facebook and Twitter, which allows users to develop an interesting narrative, with the cover of anonymity, repetitive comments and jokes were prone on Yik Yak. The app did not further user’s interest, causing its usage to decrease. As less users begin to use the app, Yik Yak’s value declined. Current users observed that the app was worth less than their value and the fact that less of their peers were using app indicated to others that the app lacked value. Thus, due to the network effect and the information cascade, less and less people used the app.
http://www.businessinsider.com/yik-yak-losing-popularity-in-colleges-2016-9