How do the economics of privacy impact a privacy policy?

The story of Tumblrs journey from connectedness to connectivity.

Master thesis submitted in partial fulfillment of the requirements for the
degree of Master of Science in Communication Studies

Maccarini Emilie

Student number 97222
Academic year 2013-2014

Promotor: Prof. dr. Pieter Ballon


















Faculty of Economic and Social Sciences & Solvay Business school

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ACKNOWLEDGEMENT
I would like to express my gratitude to my supervisor Prof. Dr. Pieter Ballon for the
invaluably constructive criticism and friendly advice through the learning process of this
master thesis. Furthermore I would like to thank Prof. Dr. Jo Pierson for introducing me to
the topic as well as his guidance along the way. Also, I would like to thank my mother and
father, for proofreading and assisting me when I needed it, my best friends and my loved
ones, for keeping me sane and supporting me throughout the entire process.
Thank you.

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TABLE OF CONTENTS
ACKNOWLEDGEMENT ................................................................................................................ 1
LIST OF TABLES, FIGURES & APPENDICES................................................................................... 4
ABSTRACT ................................................................................................................................... 5
INTRODUCTION .......................................................................................................................... 7
LITERATURE REVIEW ................................................................................................................ 11
1. The economy of social media ........................................................................................ 11
1.1. The platform economy: from supply chain management to ecosystem
management .................................................................................................................... 11
1.2. The role of data in the ecosystem ......................................................................... 13
1.3. The economics of privacy....................................................................................... 15
1.4. A market for personal information ........................................................................ 16
2. The role of social media in society ................................................................................ 17
2.1. Social media as the equalizer ................................................................................. 18
2.2. Social media as a new sphere of sociality .............................................................. 22
2.3. Social media as unpaid labour ............................................................................... 23
2.4. Social media as the end to privacy ........................................................................ 25
3. Conclusion ..................................................................................................................... 29
CASE STUDY .............................................................................................................................. 31
Phase 1: disassembling the micro system ................................................................................ 31
1. Technology: blogging made easy .................................................................................. 32
1.1. Data and metadata ................................................................................................ 33
1.2. Algorithm and protocol .......................................................................................... 33
1.3. Interface ................................................................................................................. 35
1.4. Default .................................................................................................................... 36
2. Users and usage: the power behind Tumblr ................................................................. 38
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3. Content: Tumblr, home of the creative minds .............................................................. 42
Phase 2: reassembling the ecosystem ..................................................................................... 44
4. Ownership: Tumblr. + Yahoo! = !! ................................................................................. 44
5. Governance: One Terms of Service and two privacy policies. ...................................... 48
5.1. The national rulings ................................................................................................ 48
5.2. Yahoo and Tumblr versus user privacy .................................................................. 49
6. Business model: getting the balance right .................................................................... 52
7. Conclusion ..................................................................................................................... 55
GENERAL CONCLUSION ............................................................................................................ 59
BIBLIOGRAPHY .......................................................................................................................... 62


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LIST OF TABLES, FIGURES & APPENDICES
Figure 01: Model of labour on social media (Fuchs. 2014) p. 23
Figure 02: Disassembling platforms as Microsystems (van Dijck. 2013) p. 31
Figure 03: The Tumblelog p. 34
Figure 04: Sliding blogs, the newest feature on Tumblr p.35
Figure 05: Default settings on Tumblr p.36
Figure 06: Mock up by a user about what Tumblr would look like after the Yahoo deal (Bilton
& Perlroth. 2013) p. 40
Figure 08: Users showing appreciation for the decisions that Tumblr has made p.43
Figure 09: Graph of mobile use of websites by ComeScore (Yarow & Carlson. 2013) p. 46
Figure 10: Look of the policy update from the 27
th
of January p.50


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ABSTRACT
While transitioning from web 1.0 towards web 2.0, a whole new economic logic has
emerged. This phenomenon is equally illustrated by the economics of privacy, which is the
field of economics that is concerned with the study of the use of personal data to create
revenue. Researchers differ in opinion about what this is doing to sociality. van Dijck has
labelled the shift in sociality as the shift from connectedness to connectivity. In this research,
Tumblr is analysed following the analytical model designed by van Dijck to find out what the
shift in sociality entails.
First quest: are Tumblr users empowered or disempowered? In theory, the power of the
user lies in everyday practice, and thus they can modify structures. Indeed, Tumblr users
were very vocal about the Yahoo takeover. As of today, Yahoo has not yet implemented
anything that majorly upset users. However, Tumblrs Terms of Service did cause some
protest.
Secondly, is Tumblr turning into a new public sphere, another private sphere or a different
corporate sphere? Social media can be all of these spheres, which is why studying sociality
online is so hard. On Tumblr, there is the possibility to interact with other users, which are
aspects that resemble the private sphere. Despite there not being a comment section, users
can discuss topics by using tags and reblogs, which is resembling the public sphere. As for
the corporate sphere, Tumblr is more than just a creative technology, even before Yahoo
arrived. However Yahoo fuelled the search for a coherent business model.
Thirdly, how about the user generated content that supports Tumblr? Social media
platforms are not the real end product, and the reason why Tumblr has such a large user
base, is the content. On Tumblr, bloggers are encouraged in every way to create content and
interact with each other. An example of this is the new sliding blogs feature, that keeps users
on the dashboard for a longer time. This means the bulk of the value is generated by the
users, so any profit made is indeed unpaid labour.
Lastly, some researchers fear that privacy is a long lost cause. Others say there is merely a
change in the importance of privacy. In any case, Tumblr users are not obliged to provide
any personal information about themselves, nor is this likely to change in the future since
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Tumblrs identity is based on anonymity and freedom of the user. However, this is
challenging Yahoos endeavour to make money, since advertisers care about offline
identities.
In conclusion: yes, Yahoo has helped Tumblr to turn the corner and embrace connectivity.
Tumblr has changed over the years, but the Yahoo takeover has been the most radical
change yet. This takeover influenced all aspects of Tumblrs workings: the technology, the
users and their usage, the content, the ownership (evidently), the governance and their
business model. For now, the site continues to struggle for revenue. This is an issue that
Yahoo and Tumblr will undoubtedly tackle in the following months.
Number of words: 22 180

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INTRODUCTION
Social media locate themselves at the centre of our everyday lives. Because people spend a
substantial amount of their time on such sites, the social sciences have been concerned with
the impact social media have on our daily lives. One set of researchers looks into the impact
of this on our social lives, with studies looking into how users are interacting or studies on
how identity is formed online. Another set of researchers looks into the impact on the
organization of society, with studies about the power of social media in a political campaign
or the role of social media in revolutions. These questions asked today within the social
science are often uncritical, and lack interest in the behind the scenes of social media. The
impact of software or economics on the running of social media are rarely questioned. As
Bucher (2012) states:
Social Networking Sites are not empty spaces upon which sociality and
subjectivation simply occur. (p.12)
Social media are not made up out of thin air, they are carefully constructed, with an
intended purpose. Therefore, this thesis will focus on the conditions that allow social media
to function and how they come about. The wheelwork lays out the rules of the game called
sociality. In other words, it is important to understand what a social network will allow and
will not allow when looking at the actual practices amongst users. And it is equally
important to understand how these users are modifying the structure they operate in. With
the idea of the mutual shaping of conditional structures and everyday practice in mind, the
main research question in this thesis will be:
How do the economics of privacy impact a privacy policy?
This question is to be understood in a broad sense, where the economics of privacy are to be
seen as the structure and a privacy policy as the result. On the web, an economic revolution
has been happening over the past decade. After the internet bubble that ended Web 1.0,
the internet industry collectively looked for new ways to make money. The emergence of
Web 2.0, or the era of the social media, is not so much about technology changing, as it is
about change in the way people look at the web (OReilly. 2005). The web is now seen as a
participatory platform with new ways of doing business. The majority of business models
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online rely on the end-user, and more precisely on trafficking data these users generate. This
is not a new concept, as personal information and economic practices have always been
interwoven. However, todays online economic activity is redefining how such information
can and should be treated. A customers personal preferences are now worth just as much
as any currency, causing there to be a market for personal information. The science of
monetizing data has been named the economics of privacy, as when talking about personal
data, the notion of privacy is always lurking around the corner. The economics of privacy
raise both economical and moral challenges. One of the economic challenges is, that
because personalized advertising is such a lucrative area of business on the web, fraudsters
are easily inclined to misuse the information collected by firms in order to generate revenue
for their own, using methods of malware and phishing. (Vratonjic. 2013) The economic
threat in this is that it undermines the trust in an online advertisements business model.
Next to direct economic concerns, there are also moral concerns for society. These include
the consumers risk to identity theft, the extent of price discrimination, etc. The main aim of
the economics of privacy is to explain how personal information can be valuable and how
this notion affects markets, both off- and online. However, there is no real agreement upon
what does belong to the field and what doesnt. In other words, the limits of the field are not
clear. In addition, this is a fairly recent field within traditional economy and literature about
the subject is dispersed and incoherent at times. The existing research within the field is
scattered and no real common grounds or typology can be found. Therefore, the first sub-
research question in this thesis is concentrating on finding out more about the economy of
privacy as a field. The aim is to define what economics of privacy stand for, to define the
limits of the field as well as to offer an overview of important concepts and ideas present in
this theory. This is all synthesized in the question: What are the economics of privacy?.
Once this is clear, it is time to look at how this economic principles can be useful in
explaining social media practices. In other words: can we notice any social changes following
the economic change towards the economics of privacy?. According to Jos van Dijck (2013),
changes are happening in the way social relations are being constructed on the web. In her
book The Culture of connectivity van Dijck describes what she calls the shift from
connectedness to connectivity. With the shift from Web 1.0 to Web 2.0, the understanding
of the web changed from an endless source of information to a participatory space, where
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people could connect and social relations would thrive. Optimistic researchers believed that
the social relations formed online would be identical to those that took place in real life,
because the internet was merely seen as a new canal, a new infrastructure, upon which
relations could be built. People would connect to each other without intermediary, there
was direct connectedness. van Dijck nuances that view, and focuses attention on the way
social media operate. Social media are indeed media, which means that the communication
which it is mediating, is affected by the way in which the medium functions. van Dijck states
that previous research has simply forgotten to look into those mechanics. Economic interest
will influence the way platforms function. Code might be law, as Lessing stated, but even law
is contextual. Therefore van Dijck states that instead of connectedness online, what we are
seeing is better described as connectivity, which is mediated connectedness.
The model designed by van Dijck tries to offer an analytical framework for understanding the
different aspects of connectivity online. It consists of two phases. In the first phase, the aim
is to disassemble the micro system. By this, van Dijck means that an understanding of the
platform itself is crucial to understand the way it functions. In the second phase, the aim is
to reassemble the ecosystem and in that second phase, the platforms surroundings are
sketched and the relationships between different stakeholders are exposed. When used
together, the model proposed by van Dijck (2013) offers an insight in how human
connectedness is transforming into automated connectivity. The aim of this thesis is to test
whether or not the model designed by Jos van Dijck can also be applied to companies who
are just finding their place in this new media ecology and whether those companies then
generate similar results to the results van Dijck herself has come up with.
For this, Tumblr is an ideal candidate. Tumblr caught my attention because in 2012, people
spent about 89 minutes per unique visitor on the site. That is second only to Facebook,
where people spent a whopping 405 minutes per unique visitor. Users spend a huge amount
of time on Tumblr, and in economic terms, attention is money. Next to this, Tumblr also has
a large user base, containing 300 million monthly unique users in 2013 (Arthur & Halliday.
2013). Thus Tumblr is to be considered as a micro blogging platform with a large user base
and a hip feel, but until 2012, it was strictly non-commercial. This caught the attention of
companies, Yahoo amongst others, who were interested by a takeover. When Yahoo finally
did take over Tumblr, this was labelled as a huge risk for the internet giant. The goal of
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Yahoo was to transform Tumblr form a large, but unprofitable micro blogging site into an
added asset for the Yahoo family. Looking to increase the revenue Yahoo stated that it was
going to increase personalized content on the site, so that the service could become
economically viable. Many of the users of Tumblr however feared this would compromise
their freedom and anonymity on the site. Yahoo was trying to reach the hip, young audience
of Tumblr, but risked to lose their trust in the service by taking intrusive measures. The
whole business world was keeping a watchful eye on Yahoo. Whether or not the company
manages to monetize on the vast user database of Tumblr will determine the future success
of the service. This thesis is based on the assumption that because Tumblr is transitioning
from a non-profit platform to a commercial platform, the impact of the economics of privacy
on the functioning of a service will become clear as it is happening. Therefore, the last
research question is:
Can the shift from connectedness to connectivity be observed as Tumblr evolves under the
strategy of Yahoo?
As mentioned before, the framework of van Dijck will be used to answer this question. This
framework consists of 2 phases and 6 subcategories. In phase 1, Tumblr as a service will be
explored. Subcategories inquire upon how it functions (technology), what it hosts (content)
and who is using it for what purposes (users and usage). In phase two, the relation between
Tumblr and Yahoo will be further examined. Subcategories include how ownership is
articulated (ownership), what agreements the two companies have made (governance) and
what strategy and business model Yahoo envisions for Tumblr (business model).

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LITERATURE REVIEW
This thesis is in search of the economic changes and social changes that can be perceived
online. As other researchers have described, the web hasnt always been organized in the
same manner. When the web just started out, it was designed as a military tool and
consequently by no means a commercial one. A fast forward to Web 1.0 quickly takes place,
the era where the commercial world starts to explore the internet. These pioneering
economic models are based on advertisement and banners. The belief in the online world
skyrocket. This era is characterized by optimism and the belief that the internet will
transform society profoundly, mostly for the better. This optimism is called to a halt when
the model collapses into the bubble burst. Economic endeavours online went bankrupt and
along with them, the belief in a commercial internet plummeted (van Dijck. 2013). OReilly
(2005) describes the changes that the web undergoes in detail. From the ashes of Web 1.0
arises Web 2.0, an internet that is based upon the idea of participation. New ways of doing
business based on co-creation and data generation quickly follow. This brings us to today, an
era in which the worlds largest media corporations are internet based and people spend a
significant amount of their time online (OReilly. 2005). Several social scientists (such as
Deuze, Fuchs, van Dijck) state that this is reason for concern, because the shared optimism
about the successes businesses have online has overshadowed the critical questions about
the impact of this process on society (Fuchs. 2014). In what follows, I will further explore the
ideas of these authors. Firstly, I try to get an overview of the economic changes that are
happening. I will take a closer look at the economics of privacy, which is the field of
economics that is concerned with data industries. Secondly, I will identify and evaluate the
claims made by prominent critical authors about the changes they could observe and the
role social media is playing in society as a result of these economic changes.
1. The economy of social media
1.1. The platform economy: from supply chain management to ecosystem
management
Where Web 1.0 suffered from failing economics, web 2.0 has rapidly developed a different
economic logic (OReilly. 2005). Rather than relying on traditional concepts of advertisement
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and banners solely, Web 2.0 relies on a holistic approach called the platform economy (van
Dijck. 2013). A platform economy is a structural economy where all parties in a certain field
benefit of each others wellbeing (Varian. 2002). In the value chain of a traditional economy,
all parties are separated. The emphasis is on generating as much money for your business by
minimalizing costs paid to the previous shackle. However, this no longer makes sense when
thinking of the economic field as an ecosystem. In an ecosystem, when one party thrives, the
other thrives too. No longer is the mantra each to its own, but all parties in the ecosystem
must share. This sharing can go from information sharing to revenue sharing (Varian, 2002).
In the media, this change was especially prominent, because media goods have different
characteristics from regular goods. Media are what is called a public good in economic
terms. A public good is a good that is non-excludable and non-rivalrous, and in the case of
media goods, they are also immaterial. A non-excludable good is a good that is free on offer,
e.g. air. Therefore creating scarcity is often difficult, having the underlying characteristic of
the good being non-rivalrous. A side effect to these goods is that they often come with
externalities (Varian, 2002). An externality is an advantage or disadvantage that is not
reflected in the price of the good because the advantage/disadvantage to society is larger
than the advantage/disadvantage to a single consumer (Azam. Sd.). This means that the
consumer will not be considering this advantage/disadvantage when articulating demand. As
externalities are social concerns, businesses tend to not take them in to account unless they
are obliged to. Positive externalities can be anything ranging from increased social cohesion
to emancipation. Negative externalities range from apathy to overconsumption and even to
increased violence in society. One of the most prominent negative externalities of the data
sharing economy is the loss of privacy (Acquisti. 2004a). When a firm sells information to a
third party, the firm does not calculate into the price the fact that this might harm the
consumers when selling this information to a third party. They do not do so, because if they
would, personal information would become so expensive that no third party would want to
buy this information (Varian, 2002.)
When looking at the platform economy from the viewpoint of social media, there is a
preliminary remark to be made about the nature of social media. Social media is an all-
purpose word for any online platform that provides a space for interaction. Giving an
overview of all different platforms and what they are capable of, is impossible. Dividing
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social media up into categories of platforms with different characteristics is not. van Dijck
(2012) lists four different categories, namely social networking sites (SNS), user generated
content sites (UGC), trading and marketing sites (TMS) and play and game sites (PGS). SNSs
focus on human connectedness and bringing people into contact. UGC sites focus on
creating a space where content can be created, distributed and shared freely. TMSs focus on
bringing sellers and buyers into contact with each other. PGSs focus on providing
entertainment to their users. One needs to look at the primary intent of the platform to
distinguish which category the platform belongs to (van Dijck. 2012). However, there is no
clear cut guide as how to categorize a platform and some platforms fit in more than one
category. Different categories of platforms have different ecosystems and different
relationships between the platform owner and the users.
The demand for social media is varying, unpredictable and dependant on the consumers
time to spare. Therefore, any pricing mechanism is broken and when a pay wall is installed,
there are free-riding issues. To solve that problem, most social networking sites have moved
away from pay models and towards models of personalised advertising and data sharing
models. Jenkins and Deuze (2008) call this move the commodification of the gift economy.
What they mean is that users feel like they are being given the use of the platform for free,
as they do not pay directly for any of the services. A gift economy is just that: giving goods
away without asking for compensation. However, this is not what is happening online. What
is happening instead is that users are (unknowingly) trading information about their selves
and receiving the use of the platform in return. This is not a gift economy, as the platform is
capitalising the information received from the user. In what follows, the role of data in this
economy is further explored.
1.2. The role of data in the ecosystem
Data collecting is not new, but collecting and analysing data is significantly easier in an online
economy. Whereas earlier the societal benefit of using personal information in business was
limited, the sharing of information across firms is making the whole economic system more
efficient (Chellappa & Shivendu. 2007).
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In the information age attention is becoming a more and more valuable
commodity, and ways to economize on attention may be quite valuable.
(Varian. 2002, p. 128)
Digitalization has created advanced possibilities for the use of data, both in positive and
negative ways. The HTTP protocol introduced the cookie system that made storing unique
identifiers of information a de facto standard. Next to cookies, other data gathering methods
include the storing and tracing of IP addresses, credit card numbers and direct user
authentication (Acquisti & Varian. 2004). With the internet also came low cost technology
for handling and transferring data. It is not surprising that lowered cost to use information to
benefit society also means lowered cost for fraudulent or harmful use of information. Thus,
privacy concerns increased (Varian. 2002, Kahn, McAndrews & Roberds. 2000), which
plummeted customer trust (Harold.2006).
So how is this data used to personalise our services? Online personalization occurs in two
places. Firstly, there are information-goods that are tailored to the users preference, for
example Facebook tries to offer the services their users want by inserting an algorithm of
posts shown. Secondly, there are services that accompany the selection and purchase of
another good, e.g. advertisements and promotions. (Chellappa & Shivendu. 2007) Previous
research has stated that knowing the customer leads to personalized services, which benefit
the customer. However, these studies do not distinguish between a persons likes and
dislikes on the one hand and a persons identity on the other hand. It might be so that
markets can provide Pareto optimal conditions when taking the online identity of the
consumer into account. The research of Calzolari and Pavan (2001) found that companies
who share customer information will decrease the information asymmetry between buyer
and seller while Taylor (2002) found that a company that faces a strategic customer, i.e. a
customer who finds out when it is the best time to buy, will automatically protect customer
privacy. So the market will assess the situation and react either against privacy or in favour
of privacy. This seems to support the classical economic view that a market will
automatically produce optimal conditions, also towards privacy. However the flaw in this
logic lays in the fact that privacy is considered as an aspect of economical context, rather
than as a moral right, Acquisti (2004a) says. While markets regulate online privacy without
intervention, the offline privacy is not safeguarded. So while it is true that trading online
15

identity can generate benefits, protecting offline identity will not affect this: even more so,
plenty of economic reasons can be found to protect the offline identity of the customer
(Acquisti. 2004a). The area of economics that is concerned with making up the balance
between the privacy of the user and the profit companies make from the use of data is
called the economics of privacy (Acquisti & Varian. 2004, Acquisti. 2004b).
1.3. The economics of privacy
There is a long tradition of economic interest in information asymmetry in markets (Acquisti
& Varian. 2004). The use of data for computer matching became economically feasible in the
early seventies as a result of the technology that became available at that time (Clarke &
Stevens. 1995). This marked a second wave of research within the field of economics of
privacy that peaked in the eighties (Acquisti. 2004b.). One of the more crucial technologies
at that time was computer matching. This means that searching for a set of properties in a
database of personal information to find persons of interest was now possible (Clarke &
Stevens. 1995). Even though economists have been interested in privacy and personal
information since the early eighties, only recently more concrete models of how such
economies work have been developed (Acquisti. 2004b). Part of this is because users have
become more and more aware of what is happening on the web and have been speaking up
against certain practices (Streifield. 2001).
When the economics of privacy just started out, there was an assumption that there are
intrinsic controls that naturally belong to the market who are preventing excessive sharing of
information. The belief was that businesses had to comply with ethical rules, because they
are forced to do so by the market. This idea was first introduced by Westin (Westin. 1967,
1971; Westin & Baker. 1974, in Clarke. 2009) and became widespread when it was picked up
by the renowned neo-liberal economist Laudon in 1993 (Clarke & Stevens. 1995). Laudon
slightly altered Westins original idea and came up with a system for a market of information.
His argumentation was that, if the problems in the market of personal information originate
from an inherent information asymmetry, then regulating this market so that all transactions
have to be explicit would return the power to consumers. In Laudons concept of the market,
no information about the user can be bought or sold without the users consent. Following
Loudons vision, this market should be primarily self-regulated once it is in place, because by
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then it would be in the interest of firms to disclose their practices. Firms who would not do
so would be punished later on by angry users who would no longer do business with those
firms (Clarke & Stevens. 1995.). Laudon (1994, in Clarke & Stevens. 1995) goes on to say that
the gain from buying and selling information would be profit for the consumers, since they
have enough bargaining power to make the revenue flow back to them. Clarke and Stevens
(1995) disagree on this point with Laudon and point out the need for extrinsic control. More
recently, there has been more close attention to the benefits of maintaining privacy for
companies (Gellman 2002, Pollach. 2011)
1.4. A market for personal information
The relationship between personal information and markets has always been close. When
the shopkeeper knows you as a person, knows what purchases you have made before and
suggests other items based on his or her previous experience with you as a customer, this
will usually be perceived as a pleasant shopping environment. In the past decade, a market
for consumers personal information has developed. This market is growing rapidly because
technology is making it increasingly easy to collect and analyse user information. The
strategic importance of such information is blatantly obvious in this era of Googlenomics
(Chellappa & Shivendu. 2007). Pollach (2011) states that in an online economy, personal
information is equally valuable as hard cash. Chellappa and Shivendu (2007) disagree and
state that the online market for personal information of consumers shows little to no
similarities to a basic buyer-seller market. They compare the privacy market to barter trade,
where both parties swap something that they own in return for something the other owns,
regardless of the value of those items.
The market for personal information came into existence, because three vital conditions
were met. Firstly, personalization technologies developed to a point where data can easily
be manipulated to tailor a service or good exactly to the needs of an individual. The marginal
cost of small innovations dropped to the point it was not much of a hassle to provide slightly
improved services to consumers. Constant innovation became the rule. Secondly, consumers
understood the convenience of having services personally tailored to their needs. And
thirdly, the vendors access to information is valued more and more in an online economy.
Whole business models focus on offering tailored content (Chellappa & Shivendu. 2007).
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Gellman (2002) mentions five data practices that influence our daily lives, namely the
collection, maintenance, use, disclosure and processing of information. Companies do not
directly benefit from the first three practices. It is only when they engage in the latter three,
being usage, disclosure and processing of information that they find other, indirect benefits.
The obvious benefit is gained through disclosure of processed information, by selling user
profiles to third parties. But, as mentioned earlier, using user data to improve ones service
increases user satisfaction, which increases the platform value (Chellappa & Shivendu.
2007). A service that is tailored to one consumer and is of a higher value than a non-tailored
offer is conceptualized as a personalized enhanced service in the research of Acquisti and
Varian (2004). A personalized enhanced service demands repeated interaction. This is fairly
straightforward, because the merchant needs to be able to predict consumer behaviour. This
can only be done if the prediction can be based on previous encounters with the consumer.
Such a service is low in marginal cost to the merchant and high in value to the consumer. The
more interactions the consumer has with the merchant, the higher the value to that
consumer, because the merchant learns to better predict the wishes of the consumer. Often
list-prices, i.e. the retail price of the offer, are public and discounts are personalized.
(Acquisti & Varian. 2004)
2. The role of social media in society
Now that a light has been shed on the economic shift that has taken place, it is time to look
at how this is affecting sociality on social media. Social media are often wrongly looked upon
as mere technology, while in fact, they are techno-social systems (Fuchs.2014). In recent
years, the use of social media has drastically increased and researchers have pointed out
that social processes are taking place online.
In an information society the self is expressed, defined, and affected
through and by information and information technology.
(Acquisti. 2004b, p. 22)
But why are social media called social? Fuchs (2014) points out that social media enable
sociality. Sociality is defined in the Merriam Webster dictionary as the tendency to
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associate in or form social groups.
1
Understanding the components of sociality is crucial to
comprehend why social media enable sociality. Fuchs (2014) lists information creation,
communication, collaboration and community forming as the different components of social
activity that make up sociality. Social media are considered social because they enable all
components of sociality. Content is being created by a user of social media. Through this
content, they are able to communicate and collaborate with other users. Repeated
communication and collaboration leads to community forming online. Because social media
make all 4 facets of sociality possible, the possible impact of these media on sociality is also
large. This is why in what follows, this thesis will pay attention to the role of social media for
sociality. There will be special attention to the authors that perceive changes as a
consequence of the economic changes that have been taking place online.
2.1. Social media as the equalizer
Over the past years, change has been taking place in the media landscape, with digitalisation
as a catalyst. Earlier, media companies were distributors sending out content to absorbing
consumers. The landscape was dominated by a few bigger players who were homogenizing
culture. Now, the landscape can be considered as a hybrid media ecology, where different
sources and different types of content all find their place. Each of the players is trying to
fulfil their own needs and reach their own goals, but all work together to help shape the
media environment (Jenkins & Deuze. 2008). With the rise of web 2.0, researchers believed
that the time of the controlling media corporations had gone. Instead they envisioned a
future where the user was in control. Castells has labelled this shift away from one-way mass
media as a shift towards mass-self communication (Jenkins & Deuze. 2008)With mass-self
communication, the power to create, select and distribute content lies with the user. This
idea of user empowerment is reinforced by the belief in social media as a liberated platform
in the free space that is the internet. With the integration of social media into everyday life,
the users manifested themselves as regular contributors. In addition, social media reduced
the barrier to participation to a minimum (Pierson & Mante-Meijer. 2011). This view,
however, is largely based on beliefs in technological affordance and does not take into

1
www.merriam-webster.com, consulted on 11/07/2014
19

account that there are contextual factors that inhibit this reality. Social media are layered, in
the sense that they have a technological level at base, but they also are home to other
layers, such as social constructions. In practice, the shift towards digitalisation on a
technological level goes hand in hand with the economical shift towards the economics of
privacy, as described earlier. So instead of seeing the user as entirely empowered, it is more
accurate to talk about the mutual shaping of the layers of social media. What this means is
that social media are in essence a technological artefact. But this artefact did not emerge out
of thin air. Every artefact is a social construct, in the sense that an artefact alone cannot exist
or be meaningful without a social understanding of its functions. Social media are supposed
to be social: they help us stay in touch with friends, make new friends and broadcast our
own lives. As such, social media do contain certain possibilities for empowerment at the
level of the artefact. But as said before, the artefact is set within a structure. This structure
has constrained social practice on social media (Fuchs. 2014), as any corporation has an
interest in keeping on top of their clients. It would be equally wrong to state that the user
has no power at all. As Anthony Giddens (1984) describes, media are controlled by two
forces: a conservative force, under the form of structure, and a force towards change, under
the form of action. The power of the user lies in everyday practice, by doing so, users can
modify the structure present around them.
Thus social media are not the arena of the users alone, but they also exist within the
economic context (Pierson & Mante-Meijer. 2011). When stripped down to the basics, the
main aim of a social media platform is not to empower users, but to survive. In order to do
so, platforms need to generate profit. Jenkins and Deuze (2008) recognise these two forces.
Media can be seen as the key drivers and accelerators of a growing
integration between culture and commerce. (Jenkins & Deuze. 2008, p 5)
On the one hand, there is the commercial force that is driving media corporations. On the
other hand, there is the cultural force that is the domain of the user. Sometimes these forces
reinforce each other, but other times, both forces stand face-to-face. When the user takes
up the role of value creator, where they create the content for the platform and are
generating and sharing data, they are both obeying commercial force as well as creating
culture, through means of their content. However, when the users want to protect their
20

integrity or privacy and refuse to generate value or share data, they are working against the
commercial logic. Critical voices have pointed out that users are not really free on the web.
They are constrained by what the platform will permit them to do. Fuchs (2009) points out
that this has led to the users taking up the role of a labourer. The aim of a company is to
manage both their linearity as their liquidity. Linearity is when a company produces familiar
content and relies on pre-marketed material. Liquidity refers to the engagement of an
audience. To be a successful company, they need to make sure the content offered is new
and exciting enough. Consumers are no longer satisfied with a status-quo, they want to
participate and to have their say in the on-going innovation. The people formerly known as
the audience are creating new value themselves, Jenkins and Deuze (2008) say. They call
this move the beginning of participatory culture. This means that culture is more and more
shared, and more different actors can weigh in on what is considered culture. However,
currently, there is uncertainty about the terms of participation (Jenkins & Deuze. 2008. p.
11). Instead of participatory culture, they observe a melting pot of corporate and social
culture, or convergence culture for short. In this convergence culture, there is indeed more
room for individual action, but at the same time, the boundaries of commercial practice also
blurred. Some researchers have stated that the way sociality is organized has changed as a
consequence.
2.1.1. The Users choice paradox
When the diffusion of the internet was in full swing, Time declared you as person of the
year. They believed that we, the users, would be the power that would change the way the
world changes. The belief in user agency and the power of the public was never larger. As
mentioned before, business models have changed towards models of personalization
(Pollach. 2011), where the aim is to gather as much personal information as possible for the
purpose of targeting the consumers. Therefore, consumers undergo a trade-off between
privacy and personalization, Chellappa and Shivendu (2007) say. The degree of
personalization depends on the amount of information that is shared. The ability to collect
information is linked to the trust the consumers have in a certain service. This trust is often
linked to the reputation of the firm (Chellappa & Shivendu. 2007). According to Chellappa
and Shivendu (2007) this trade-off is based on a so called privacy calculus. These researchers
wrote a formula to mimic the privacy calculus of consumers. They state that personalization
21

is an increase of utility of a service, because it reduces the cost of looking for the right offer
and because it increases user satisfaction. This privacy calculus is strictly personal, because
the willingness to share information is related to the sensitivity of a person to risk. This
varies from one individual to another, and so privacy concerns also differ.
But do users have the power to change something when the privacy calculus shows up
negative? When we look at this trade from the users perspective, we observe that they want
personalized services and offer personal information in return. From the companys
perspective, they have a service to offer and expect users to share information in return.
This means that both agents have inherent market power, say Chellappa and Shivendu
(2007). There is no personalization without the user sharing personal information and
similarly, a firm cant offer free services without gathering user information. (Chellappa &
Shivendu. 2007)
Today however many researchers start to question this, as there is still misuse of personal
information. A common idea amongst economists is that economic misuse should then be
countered by making users equally valuable to businesses in economic terms. This can be
done in theory by giving people property rights to their personal information, so that if they
use this personal information, a company must always reimburse them for this use
(Greenstadt & Smith. 2003). Greenstadt and Smith (2003) say implementing this should be
fairly easy for governments all around the world, because property law is a well-defined area
in law. This information market could be either centralized, by means of government, or
decentralized, by means of anonymising the data. The downsides to this kind of system is
that this might cause a divide between the rich and the poor, between those who can pay to
keep their own information private and those who cant pay for privacy. To implement this
market, there are also political challenges to be expected.
Acquisti (2004b) says it is unrealistic to expect the user to take matters in its own hand. In
the research of Acquisti and Grossklags (2004), they describe that the way people say they
feel about their privacy and the actual actions they undertake are not in agreement. For this
experiment, they looked at the market for personal information and noticed that there are
several technologies that offer to protect your privacy. Following a market logic, if there is
demand and there is offering, the consumer will find the offering that satisfies its demand.
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We know that there is offering to protect privacy, but it is hardly used. In theory, this merely
means that the demand for privacy is low. However, this is flawed linear logic (see further on
this page) and more accurate models of user behaviour are needed. When looking at
rational models in relation to actions, Acquisti (2004a) concludes that consumers actions
indicate that they are less concerned about their privacy than what they claim to be. The
reason for this, he says, is that consumers discount the potential losses from losing control
of their personal information (uncertain, but possibly large) with the probability that such an
outcome will take place (uncertain, but perceived as low). (p. 184). Consequentially,
economic models of property rights to information, are flawed because of issues of self-
control and immediate gratification. This affects all types of users, not only the nave ones.
When left to their own devices, individuals tend to both under protect themselves and over
share personal information, even if the perceived privacy risks are high. Acquisti (2004b)
explains this because the costs of not protecting privacy are complex. Next to costs to the
individual, there are also social costs that are very hard to oversee. Privacy costs are in
addition also uncertain. They may occur, but then again they may not occur. On the other
side of the privacy equation, the benefits of sharing information are very clearly spelled out
by the company. They are simple and straightforward, and most importantly, certain. Due to
the psychological model of immediate gratification, which describes how individuals pick the
option that is the most certain to give positive results, giving the users control about their
own personal information will not suffice. One needs to make the overview of costs more
evident for the consumer.
2.2. Social media as a new sphere of sociality
Habermas classified our social system in spheres, the public sphere, the private sphere and
the corporate sphere (van Dijck. 2011). The public sphere is the domain Habermas is really
interested in. As a sociologist, he defended the importance of this public sphere, as this is
the sphere where discussions could be held, free from any oppression. Following Habermas,
such an ideal sphere was present in the 18
th
century salons, where the bourgeoisie could
discuss politics, economics or current events. When this culture of salons died down, the
public sphere disappeared with it. Free discussions were compromised by the emerging
capitalism and by the focus on the individual that came with it. As social media have
literally translated social code into a technical one (van Dijck. 2011), many researcher have
23

asked themselves how to classify social media following Habermas logic. Does the space
belong to public interests? Does the space belong to the personal lives of the users? Or does
the space belong to the companies that govern them? In other words: are we talking about a
new public sphere, another private sphere or a different corporate sphere? Classifying social
media in the system of spheres is important because it helps us to get an overview of what is
going on. The different spheres described by Habermas help explain which domain is private
and which isnt. This is, amongst other benefits, helping lawmakers govern these spaces.
Social media can be seen as a new arena for the public sphere, because there is increased
possibility to discuss and debate without the presence of a government or corporation.
However, social media do not fit Habermas idea of a public sphere, since there are a lot of
cluttered thoughts that are either not relevant or not rational arguments. Another
characteristic of social media is that they allow for anybody and everybody to participate,
since they are free of access boundaries. If you have an account, you are free to spread your
opinion. In Habermas ideal, not everybody is allowed into to public sphere, in order to
guarantee the quality of the debate. So social media poses some of the characteristics of a
public sphere, but do not fit the mould entirely. Are they another private sphere perhaps?
Some researchers argue that everything that is put on social media is part of the private
sphere, because the messages are directed at an inner crowd of followers or friends. But is
this really so? Are people sharing with an inner crowd or are they broadcasting their lives for
anyone who comes across this to see? Following Castells and the theory of mass self-
communication, activity on social media combines both broadcasting and selective sharing.
So yet again, social media do not quite fit the mould. As for the corporate sphere, the shift
towards the economics of privacy has definitely affected social media. But social media are
not the domain of businesses alone. Companies and consumers are sharing the same space,
and often have different aims and competing goals (Jenkins & Deuze. 2008). So van Dijck
(2012) concludes that, on social media, all spheres are present, but in different forms.
2.3. Social media as unpaid labour
In his book Social Media, a critical introduction, Christian Fuchs (2014) revisits Marxist
theory to explain what is happening on social media. The classical model of labour and
production by Marx is the basis of Fuchs argument. He says that the capitalistic model,
which is focused on profit, has transformed the way in which we humans relate to each
24

other. Fuchs addresses the position of the user from a whole new perspective. As most
social media thrive on attention and data, the user should be seen as a labourer too, Fuchs
says. This means that next to a first production cycle (P1), where paid labourers create a
social media platform, there is also a second production cycle (P2). The product that is made
in the first production cycle, namely the social media platform, is not meant to be sold. Quite
on the contrary, the social media companies give free access to their product. They do this
to ensure that the user can provide them with content and data, which are the real sources
of value. The product that is created in the second production cycle by the users is thus data
and content, and in contrary to the platform, this product is meant to be sold on. The bulk of
the value is as such generated by the users. However this is unpaid labour and is as such
perpetuating inequality in society (Fuchs. 2014).

Figure 01: model of labour on social media (Fuchs. 2014)
This model is useful, because it provides a different perspective on the economics of privacy.
Next to the model of Fuchs, other researchers have described similar models. Mark Deuze
(2009) describes this inequality when discussing the position of a media worker. While
earlier, a journalist would leave his or her desk, get out there and collect the material for a
news story himself, now journalists more often rely on the audience. For example, several
newspapers welcome pictures and videos from their readers. Instead of having multiple
foreign agencies, these newspapers rely on the presence of their readers in the area of the
event. They are outsourcing a part of the job to non-professionals or amateurs. A
consequence to this is that the boundary between professional labour and amateur labour
25

has faded (Deuze. 2009). Where it is needless to say that professional labour needs to be
compensated, this is far less obvious for amateur labour.
The research of Kahn, McAndrews and Roberds, describes a standard example of an internet
based interaction. Consumer A interacts with firm B. The aim of both is to benefit in one way
or another of this transaction. There is also an outsider C, who benefits from knowledge
about the transaction between A and B. However, granting outsider C access to information
about this transaction will affect the utility of the transaction to A and B. In a model of
rational economical utility, a revelation of information to C is only desirable if the gain for C
is higher than the costs incurred by A or B (Kahn, McAndrews & Roberds. 2000).
So what does this mean if we look at the way Tumblr works? Consumer A, meaning the user,
interacts with firm B, meaning Tumblr. Both the user and Tumblr want to increase utility
with this transaction. In human language: you want to have fun and interact with others on
Tumblr, while Tumblr wants to make money by hosting you. There is also an outsider C to
this transaction. Because this model is simplified, only one outsider is taken into account. In
reality, a whole network of outsiders has to be dealt with, all linked in more or less intensive
ways. Since Tumblr functions on the business model of a two-sided market, the most
obvious outsiders to this transaction are the advertisers. Revealing the information that you
share with Tumblr (and Tumblr shares with you) is only worth it if two conditions are
fulfilled. Firstly, you have to benefit from the advertisers knowledge about you and this
benefit should be greater than the cost of your privacy loss. Secondly, Tumblr has to benefit
from sharing knowledge with the advertisers and this benefit should out measure the costs
of revealing user information to third parties (Kahn, McAndrews & Roberds. 2000). While it
is possible to think of scenarios where all three parties benefit to some extent, it is harder to
find out if the overall utility to all parties will be positive (Kahn, McAndrews & Roberds.
2000).
2.4. Social media as the end to privacy
Privacy has many definitions; this is partly because there are many possible perspectives on
privacy and partly because privacy is a word loaded with social meaning. Ethically speaking,
privacy is seen as a fundamental human right or moral right (Rosenberg. 2002). Privacy on
26

the web could be defined as the balance between the exchange of some information and
the safeguarding of other information (Varian. 2002). An exchange, sometimes described as
a transaction, is the domain of economics. Posner, also an economist, defines privacy as
(to) enjoy ones peace and quiet (Posner, 1981). Stigler (1980) defined privacy as the
concealment of information that has value, either to the consumer, or to the economy and
Kahn, McAndrews and Roberds (2000) define privacy as the concealment of potentially
useful information, causing the user to miss benefits. Most of the researchers who take an
economic perspective define privacy issues as issues of information asymmetry (Chellappa &
Shivendu. 2007). This reasoning ignores that privacy is a word that holds value which is not
only economic, but also social. In current research, it is rare to find a definition that
reconciles both the social and the economic tradition (Gellman. 2002). The work of
Chellappa and Shivendu (2007) is an exception. They describe the concern for privacy that is
subjective, intangible and unique to an individual. Such a phrase points out that there is
more to privacy than that what can be expressed by economics. At the same time, these
authors also appreciate economic aspects, as their research is in essence an economic
analysis of privacy. Therefore, their working definition of privacy is more complete than
others. They say: Informational privacy encompasses an individuals freedom from
excessive intrusion in the quest of information and an individuals ability to determine the
extent and circumstances under which his or her beliefs, behaviours, opinions and attitudes
will be shared with or withheld with others. (Chellappa and Shivendu. 2007, p 2) Similarly,
Westin (1967) stated information privacy is the right of the individual to choose what
personal information about them is available. Here, privacy is no longer defined in terms of
information asymmetry. It is about freedom from intrusions to privacy as well as control
over the usage of information (Chellappa & Shivendu. 2007). Privacy is a question of power,
and both audiences and corporations seem to be gaining and losing power at the same time
(Jenkins & Deuze. 2008). Privacy concerns are not unique to this age. What is new today, is
that transactions that used to be complicated and that would have many intermediaries, can
now take place directly between buyer and seller (Kahn, McAndrews & Roberds. 2000). So,
what exactly is a privacy issue? In scientific publications, this is rarely described. One of the
causes could be that it is a very complex matter (Varian. 2002). Gellman (2002) defines
privacy toll as the cost and/or negative consequences for consumers or society by
unrestricted trafficking. This definition is clear, but not very specific. Being specific is rather
27

impossible, because as Greenstadt and Smith (2003) state: privacy invasion means different
things to different people (p.2). Greenstadt (2002) does state that the haziness in the
definition on what privacy is, fostered misuse of personal information by businesses,
because they were able to distort the view of what was allowed and what wasnt. In this
way, businesses have moulded the opinion of the public on what exactly is problematic,
Gellman (2002) suggests.
2.4.1. Types of privacy
Acquisti (2004a) remarks that in the academic debate, there is rarely a distinction between
the online and the offline identity of a person. Online and offline identity are different. The
online identity is what in an economical model would be called the customer type (p.
181), the offline identity represents the actual identity of an individual (p.181). The offline
and online identity of a person are linked to each other by the person, but in an online
environment, both can be un-linked. On the web, the term digital footprint is used to
describe the database of data gathered through online behaviour. A persons digital
footprint includes two types of data; tracking data and profiling data. Tracking data is data
that records behaviour on the web. Tracking data includes what sites where visited, if the
purchase was made or not, how many minutes the user was on the site, etc. The footprint
also contains profiling data. This type of data contains personal information, such as income,
age or employment status, as well as data containing preferences and needs (Acquisti.
2004a).
Next to the difference between online and offline privacy, there is also a difference between
the type of transaction that is going on. Information can be shared with individuals on the
one hand and with institutions on the other hand. If information is protected from sharing it
with individuals, this is called social privacy. Social privacy helps people to maintain social
relationships, as it helps to modify what people think of us. On Facebook, users are more
concerned about this type of privacy than about institutional privacy. Institutional privacy is
the form of privacy where information is protected from being shared with governments and
corporations (Raynes-Goldie. 2010). The reason that users are more concerned about their
social privacy could be indeed related to the users choice paradox described earlier.
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2.4.2. The future of privacy online
As with most things in life, boom and doom scenarios about the future of privacy exist. Some
state privacy is a long lost cause. Others believe that privacy and the benefits that result
from sharing information can go together (Chellappa & Shivendu. 2007). Gellman belongs in
the latter category. He says: Privacy can be an essential component of a successful
business. (Gellman. 2002, p.6). This simple realization is not recognized by many economic
studies that solely focus on the cost of preserving consumer privacy. These studies overlook
that there might be benefits to keeping private information private, not only for the
consumer but also for the business. (Gellman. 2002). According to Gellman (2002), studies
that investigate the cost of privacy are needed, but the existing studies contain three
analytical mistakes. The first misconception of studies accounting for privacy costs is that
they assume that a consumers demand for privacy is an irrational one. The rationale is that,
based on economic logic and rational arguments, consumers would realize that information
sharing is more feasible than not sharing. This reasoning suggests that users do not know
what is in their best interest, which is a very patronizing approach. The second
misconception is that data trafficking always serves individuals and businesses alike. This
argument is often based on a monetary cost-benefit analysis, which ignores the social side to
privacy completely. The third misconception is that an economic analysis is sufficient to
understand privacy dynamics. In reality, the value of privacy is much more complicated than
purely economic factors (Gellman. 2002). Carroll agrees, and says that business is treating
personal information as a commodity that is traded by information brokers, rather than part
of the privacy rights of individuals. Taking care of the privacy of users should not be an
economic objective of companies, but an ethical responsibility (Carroll. 1979).
The information revolution isnt all good say Kahn et al (2000). Whenever there are new
practices developing, there will be both benefits and harm. When defining what privacy is,
the notion of control over information was very present. To be able to exercise control, it is
as such necessary that the individual knows who possesses his or her data. Whereas earlier,
it was physically apparent who knew things about the customer, now data transparency is
not always guaranteed. Whether or not the consumer is aware of how information is
handled is mainly dependant on company discretion (Pollach. 2011). One of the more
persistent issues in this brave new world continues thus to be privacy. Kahn, McAndrews and
29

Roberds (2000) state that if consumers are given the initial right to their personal
information and enough freedom in drafting the contracts and negotiating about these
rights with others, this will increase the economic efficiency without harming society.
However reassuring this is, this conclusion is only valid when Coasian logic applies, and will
not be valid if the users cannot voluntarily make certain decisions or if there are very high
costs even before the transaction can take place. Currently, no fixed regulation exists that
grants citizens the rights to their personal information. Even if such laws existed, the
enforcement would be highly challenging because of technological possibilities today. (Kahn,
McAndrews & Roberds. 2000)
3. Conclusion
The economics of privacy is the field of economics that is concerned with the study of the
use of personal data in economic manners. It has been around since the early seventies,
when technology became sufficiently potent to collect and search larger amounts of data. In
recent years, the interest in the subject really took off amongst economists. The catalyst for
this was the shift in logic when the world went from web 1.0 to web 2.0. Whereas earlier,
the economics of the internet were based on the same value chain logic as traditional
environments, the logic of the ecosystem was now prevailing. This logic has slowly settled
down, and now most internet related business models are at least in part concerned with
the economics of privacy. These models use data in a variety of manners to gain profit.
Firstly, there are information-goods that are tailored to the users preference. Secondly,
there are services that accompany the selection and purchase of another good. To be able to
make profit, companies go through five data practices, namely the collection, maintenance,
use, disclosure and processing of information. Whereas only the last three are generating
profit, the first three are needed as a prerequisite. These processes lead to the existence of a
market for personal information. Various theories are available about whether or not and if
so how these markets should be regulated. One of the reasons that there is so much
controversy about the existence of a market for personal information, is because
researchers are differing in opinion about what these markets are doing to our sociality. In
this thesis, a closer look is taken at four claims about sociality on social media and the impact
the economics of privacy has had on them.
30

Firstly, researchers question their selves in order to find out whether social media have been
an equalizer to sociality or not. In other words: did social media make the world a more
empowered world or a more disempowered world? When social media just became
widespread, researchers praised the user empowerment that was made possible. However,
social media exist within the economic context. Their main aim is not to empower users, but
to make profit. Therefore the power of the user lies in the everyday practice, and by doing
so, they can modify the structure.
Secondly, the question poses itself if we need a new classification of sociality to be able to
understand social media. Habermas classified our social system in spheres. Current
researchers are discussing whether we are talking about a new public sphere, another
private sphere or a different corporate sphere? van Dijck concludes that social media can be
all of these spheres, and this is what is making sociality online so hard to study.
Thirdly, some researchers have pointed out that labour relations on social media do not only
include paid labour, but also unpaid labour. Social media platforms are not the end product,
because they are not intended to be sold on. Instead, access is given away for free. The real
end product is user data and content. As such, the bulk of the value is generated by the
users. However this is unpaid labour and is as such perpetuating inequality in society, Fuchs
states. Other researchers have stated that the users are maybe not getting paid in money,
but that they are receiving the use of the platform as a form of barter trade.
Lastly, the economic switch towards the economics of privacy logically has an impact on our
privacy. With the arrival of digital environments, privacy is no longer one dimensional. There
is social privacy, or the type of privacy that guards interpersonal information, and
institutional privacy, or the type of privacy that protects an individual from companies and
governments. There is online privacy, or the type of privacy that regulates your preferences
and likes and personal privacy, or the type that regulates information about your identity. In
the midst of all these forms of privacy, some researchers fear that privacy is a long lost
cause. Others say there is merely a change in the importance of privacy in our society.

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CASE STUDY
The model designed by van Dijck tries to offer an analytical framework for understanding the
different aspects of connectivity online. In the book The Culture of Connectivity, van Dijck
conducts six case studies on major social media platforms of today. A case study is ideal
when a holistic, in-depth investigation is needed (Feagin, Orum, & Sjoberg, 1991). According
to Yin (1993) three types of case studies exist: exploratory, explanatory, and descriptive. The
case study that is most suitable in this case is explanatory, as its aim is explain the social shift
from connectedness to connectivity. Case studies are selective studies, that seek out to
explain a selected process from a multitude of perspectives (Feagin, Orum, & Sjoberg, 1991).
As the aim in this thesis is to test whether or not the change from connectedness to
connectivity is even more prominent in small non-profit platforms that are taken over by a
bigger media corporation, a hypothesis is being tested, making the research deductive
(Johansson. 2003). As for the case, Tumblr caught my attention. The hip platform was strictly
non-commercial, until May 2013, when Yahoo took over the company. Tumblr looks like an
interesting catch, because users spend a huge amount of time on Tumblr, and in economic
terms, attention is money. Using the model designed by van Dijck, the intent is to take
Tumblr apart, layer by layer. For that, various sources of information were used. Firstly,
information was gathered from official press releases of both Yahoo and Tumblr as well as
from the Tumblr blog of Yahoo and the blog of Tumblr staff. Secondly, information was
gathered by relying on business press from various sources. The most prominent sources are
the New York Times, Business Insider and Business Intelligence. However, the snowball
method was used when articles linked other articles. Thirdly, via the search system in Tumblr
itself, posts that talked about Yahoo, the Terms of Service, the privacy policy and Tumblr
Staff were tracked. Combining all these resources generated enough information to be able
to follow van Dijcks model.
Phase 1: disassembling the micro system
In the first phase of the model of van Dijck, the aim is to learn more about the functioning of
the platform at hand. Therefore, she discusses three different aspects of a service. Firstly,
van Dijck talks about technology. Technology is not neutral. The way technology is created
steers what it can do. Most technologies are designed to allow certain things and prohibit
32

others. The question that can be asked here is: what does Tumblr allow on the site and what
doesnt it allow? Next, she asks questions about the user. For many economists, the user is
the holy grail of social media. They are the ones generating the data from which the
platform derives its value. That is why the value of a social media platform is often measured
by its number of users. But how does one decide what counts as a valuable user? Why are
some users more important than others? Are there other ways than numerical ways to talk
about the user? Once van Dijck has discussed this, it is time to talk about the content. What
content is shared on this platform? How important is this content for the owner of the
platform? How do owners try to stimulate valuable content rather than white noise? When
all these questions are answered, one will have an overview about what Tumblr does, who is
using it and where the value lies.

Figure 02: Disassembling platforms as Microsystems (van Dijck. 2013, p.28).
1. Technology: blogging made easy
In this chapter, the aim is to learn more about Tumblr as a platform. How does it function?
What is possible? What isnt? What is different now as opposed to before the Yahoo
takeover? Technology is an important starting point for understanding a service. To
understand why, one needs to understand the difference between an affordance and a
practice. Affordances point to all the possible actions that are possible with a technology.
Affordances are the domain of technology, while practices are the domain of the user, about
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which I will talk in more detail later. When looking at the definition of a platform van Dijck
offers, a platform is a mediator rather than an intermediary (van Dijck. 2013, p. 28). What
she means is that platforms are not neutral pieces of technology, but are systems that
transform the message. Platforms are software that turn social activities into
computational architectures (van Dijck. 2013, p. 29). Tumblr is known for its simplicity, its
beauty and a strong focus on user experience. As Tumblr is growing at a rate of 30% a
month, the technology needs to be constantly updated. There are five important
components behind the scenes of any platform. These are: (meta) data, algorithm, protocol,
interface and default. In what follows, these five components will be discussed in relation to
Tumblr.
1.1. Data and metadata
Data is a mythical word that is used a lot, but is very broad and general. Data can be any type
of information in a form suitable for use with a computer. Examples are photos, status
updates, e-mails, demographical information, etc. When this information is structured in a
way that it is easier to retrieve, use or manage data, this data has become metadata. What
makes data metadata are the structural elements added to the data, such as tags, time-
stamps or cookies. It is important to understand this difference, because all metadata is
data, but not all data is metadata. Tumblr handles an approximate of 3 TB of data every day,
generated by the 500 million page views that day and the 40 thousand requests every
second. This huge traffic is a technical challenge on itself, and demands extensive storage.
Today Tumblr runs on approximately 1000 servers, of which 500 are web servers and 200
are database servers. All this activity is managed by as little as 277 employees. However,
Tumblr does receive help from Yahoo, especially concerning the metadata. To make sense of
all the data Tumblr generates, they rely on Yahoos knowledge on analytics. Like Google,
Yahoo has a service that is called Yahoo Web Analytics.
1.2. Algorithm and protocol
Many people think of platforms as code. While this is certainly true, code alone doesnt
make a platform. Bucher (2012) states that software can be divided up in dimensions. In this
work, we will discuss algorithms and protocols. Bucher (2012) defines an algorithm as
coded instructions that a machine needs to follow in order to perform a given task
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(Bucher. 2012, p. 17). The algorithm thus contains the behavioural rules that operate as such
that the computer can handle the input of data independently. Protocols, says van Dijck
(2013, p. 31) are formal descriptions of digital message formats. What she means is that a
protocol is a collection of conventions that steer the network. This means that a protocol is
not only code, it can also be seen as a management style (Bucher. 2012, p. 17). Because the
protocol prescribes what actions should be taken when transferring messages, this not only
affects the code and the software, it will also affect the sociality of the platform. Therefore,
Bucher (2012) states that the platform is a management style put into code.
Naturally, not much is known about the algorithms and protocols of Tumblr. The company
wants to protect the inner workings of their site, in order to keep a competitive advantage.
However, as technology is a result of a management style, Tumblr is believed to have
changed their algorithm in more than one way when Yahoo came on board. The most
prominent example of the effect of Yahoos policy on the technological workings of Tumblr is
the policy concerning adult content. Tumblr made it so that some search terms are blocked
and some blogs are unlisted. In an official communication, Tumblr states that Empowering
your creative expression is the most important thing in the world to us. Making sure people
arent surprised by content they find offensive is also incredibly important.
Another change that is likely to have been made is the protocol for sponsored posts. On the
dashboard, not all posts of the people you are following are posted. The algorithm for what
is visible and what is not, is not known, but it is likely to be similar to Facebooks algorithm of
which is certain that sponsored content will be visible. A new feature that has become
integrated in the Tumblr dashboard is the recommendation feature. Tumblr suggests people
to follow by inserting a popular post of that blog into a users dashboard. The post will look
like any other post, except the line heres a blog will be mentioned on the top of the post.
Tumblr users have made it clear that the suggested blogs are not always a hit. Tumblr user
Wingsunfurled grabbed a screenshot from such a recommended post that appeared on
his/her dashboard. The post that is suggested contains the text:
glad that tumblr has started putting random ppls posts on my dashboard,
love it, thanks for this exciting new feature, definitely want to see posts
from people i dont follow, thats why i didnt follow them .
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Wingsunfurled added: This is just a big joke to you isnt it, Tumblr?. The original post has
221,208 notes. A note can be either a like or a reblog. The screen grab of this post has
another 91,880 notes, which goes to show that the new features arent always appreciated.
1.3. Interface
Because just showing code to a user is not so desirable for many reasons, all platforms have
an interface. In the first place, interfaces are put into place to hide the protocols and
algorithms going on in the background. Any good interface makes interacting with the site a
pleasant experience for the user. At Tumblr, they are especially focussed on enhancing user
experience. The company wants to streamline user behaviour. Tumblr is based on
Tumblelogging, which is a variation of microblogging, intending to make the blogging easier.
The Tumblelogging system is designed to make posting a blog post a less daunting task, by
giving the user categories to choose from when making a post. Each category comes with its
own lay-out and features.

Figure 03: the Tumblelog
Secondly, some actions need to be easily accessible and even encouraged while other
actions might be possible technically, but not so desired. By modifying the interface, Tumblr
can steer the user behaviour in the right direction. For example, the newest feature on
Tumblr are sliding blogs. This feature makes it possible to enter a split screen mode, where
the user does not need to leave the dashboard to get a quick view on a personal blog. The
user can click the avatar of the user whos site they want to visit, and the following screen
will pop up:
36


Figure 04: Sliding blogs, the newest feature on Tumblr
This feature is steering use, because less people will leave the dashboard to go and look onto
peoples blogs. Since all the advertising and sponsored posts are located on the dashboard,
this is beneficial to Tumblr. Tumblr is based on "the mullet theory of social software", says
Chris Muscarella, a tech-entrepreneur at Tumblr, with which she refers to modern pop
culture. In pop culture, a mullet is a hairstyle often described as business in the front, party
in the back. The way Tumblr works is business in the front, namely a personal blog that can
be designed to the preference of the user. In May 2014, Tumblr released a new blog
composition tool, allowing brands to express themselves more freely. However, the real core
activity, and the real reason why people come to the platform (the real party so to speak) is
in the back, on the dashboard. The dashboard is a backend system, that shows post in a
time-line, quite similar to Facebooks newsfeed (Yarow. 2013).
1.4. Default
A default is a strategic tool that a company uses to favour some behaviour over others,
without making the user feel trapped. For example, privacy settings are often as open as
possible by default, because companies know that it takes more work to change the settings
as opposed to just leaving them how they are. As most platforms, Tumblr has a default
setting that makes you agree to the Terms of Services when making an account. Next to that,
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Tumblr also has a default blog-theme setting. As for the settings menu, the default settings
are as follows:

Figure 05: Default settings on Tumblr
Tumblr is a more anonymous platform. To register you need to insert your e-mail address, a
password, a username, your age and indicate that you accept the terms. The barriers to
entry for Tumblr users are not very high, which is what makes the platform so attractive to
the users (Sorkin. 2013). Once the account is made, Tumblr settings are rather minimalistic.
Since Tumblr has no personal information on their users, they do not need privacy settings
either, making the notion of default privacy settings irrelevant. As can be seen in figure 05,
all default settings are turned off. The only exception is for the setting that allows search
engines to index your blog.
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2. Users and usage: the power behind Tumblr
This section is dedicated to the users, they are the action that is operating within the
structure of technology. Here, the aim is to understand who the users of Tumblr are, how
these users experienced the shift in ownership towards Yahoo and what they did to voice
their opinions.
Technology shapes sociality as much as sociality shapes technology; we
can partly trace this process through user reactions.
(van Dijck. 2013, p. 33)
There are different ways to study the user. Schaefer (2011) explains that one can study
implicit user participation or explicit user participation. Implicit user participation studies the
use as it was intended by the designers. This type of study does not go on the look-out for
deviant use. Explicit user participation looks into real users and how they interact within the
boundaries of the software Such explicit user participation research consists of three
different types of information. Firstly, one can look at demographic or statistical information.
Such information include user intensity, national and global diversity of users and
demographic features of the users. Secondly, there is information on an experimental
subject. Such information contains knowledge about how users behave on the site and what
action they undertake, regardless of intended use. Lastly, there is information on an
ethnographic subject. This means that the researcher tries to blend in into the user
environment and mindset. The researcher places the users and the usage back in their
context (Schaefer. 2011, in van Dijck. 2013). In this thesis, the aim is to study explicit user
participation. In what follows, there will be a look into the statistical information available
about the Tumblr users as well as a more detailed look into what action the users undertook
when it was announced that Yahoo would take over the company. In a follow up research
focussing upon the Tumblr users, there would be room to expand upon this basis by also
including ethnographical methods.
2.1.1. The Tumblr users in statistics
Tumblrs biggest asset has always been its vast user base. Each platform creates a unique
identity, where knowledge of which users are active on your platform is the basis for all
targeted strategies and personalised advertising (Smith. 2013a). At the time of the takeover
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by Yahoo, it was believed that the large, young and growing audience of the 34 million active
users of Tumblr was what reeled in the big media corporation to attempt a takeover (N.N.
28.02.2014). Yahoo has indeed stated that one of the most important features of Tumblr
was their unduplicated audience on a popular personal publishing platform (Sorkin.
2013). At that time, in mid-2013, Tumblr has 300 million unique visitors monthly. With the
Tumblr users included, Yahoos user base was going to go up by about 50%. The traffic from
and to Yahoo websites would grow by approximately 20% (Arthur & Halliday. 2013).
However, talking about monthly unique visitors is misleading. Since Tumblr is being regarded
as a social platform by Yahoo, their strategy will rely upon advertisements that people see
on their dashboards. Therefore it is much more relevant to look at active users, which are
users that actively use the dashboard, because all the other major social media platforms
also talk in terms of active monthly users. Tumblr has never announced the amount of active
users, but Peter Kafka, a journalist at All Things Digital, reported the active users are
estimated to be anywhere between 30 and 50 million users a month, which is significantly
lower than the 300 million unique visitors a month (Yarow. 2013).
Nevertheless, Tumblr has an impressive user base, and its growing too. Every day, 120 000
new users make an account. These users spend 24 billion minutes on the site every month.
(Arthur & Halliday. 2013). Almost 50% of Tumblrs active users in 2013 was between the age
of 16 and 24. That are 15.6 million people in their teens or young adulthood. Once on
Tumblr, the users say they stay there for a long time. 61% of 13 to 18 year-olds say they use
the service several hours a week or more (Smith. 2013a). Tumblr users tend to be most
active during weekends. The biggest amount of notes, so the most activity, takes place on
Wednesdays at 10 pm EST, the most posts are made at 4pm EST. In general, the Tumblr
community is most active between 5pm and 1am EST (Smith. 2013b). Tumblr users are
interested in self-expression and relate to pictures. Across all age groups, Tumblr is far less
popular. Only 6% of internet users over the age of 18 use the service. (Smith. 2013a).
2.1.2. How useful is a user?
Economically speaking, the amount of users a platform has, reflects the demand for a
service. Demand is a result of a need, following economic law. However, demand is not a
straightforward factor. The need for Tumblr is very volatile. It is also unarticulated and
diffuse (van Dijck. 2013). In other words: the demand for a service like Tumblr is dependent
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from what other platforms similar to Tumblr are doing. With the high amount of social
media around, there is a high degree of substitutability. Substitutability is when the use of a
product or a service can be replaced by the use of another similar product or service. In
addition to this, there is not only the social media: users need to divide their limited amount
of attention and time over other media too. In the midst all of this, Tumblr is very good at
keeping people on their site once they are on there (Smith. 2013a, Wortham. 2013b). So
next to the presence in numbers, user behaviour can also tell the company a lot about the
quality of their platform. User response, in all means or forms, articulates thoughts the users
have about the design, the purpose of specific monetizing strategies and gives insight in the
effects on the user of the platform. For example, every time Tumblr has added a creative
functionality, usage has exploded, says Karp (Wortham. 2013b).
2.1.3. User protest
Users of social media do not sit passively when change happens online. When the platform is
built differently, the way people connect will change too, as will self-representation and
taste performance (Papacharissi. 2009; Luders. 2008). Tumblr users have always been vocal
about their opinions, which are most often shared on the platform itself. Such reactions are
spontaneous in most cases, and only rarely solicited. As with most things, the critical users
are significantly more vocal than the ones that are happy with the change (van Dijck. 2013).
User protest is relevant as they give expression to a number of issues that help protect the
user (such as protecting their intellectual property), but can also be of information to the
company (such as better community building). On Tumblr, the users have repeatedly asked
for a better messaging system. Another feature the users of Tumblr have beef with is the
mobile version of the site and the Tumblr app. Mayer acknowledges this complaint and
admits that Yahoo has had a bit of a slow start when thinking about mobile solutions. Yahoo
only had 60 mobile engineers at the time Mayer joined the company (Shontell. 2014).
However progress is being made. In a report from Business Insider, they concluded that
Tumblr, along with Pinterest and LinkedIn, had made the most successful actions towards
their mobile engagement (Smith. 2013a).
Van Dijck (2013) states that reactions to new business models often contain explicit
judgement on what counts as collective or exploitative. When Tumblr got taken over by
Yahoo, a lot of existing users were very much on guard. They felt sceptical of the promises
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made by Yahoo to maintain Tumblrs integrity. So naturally, they talked about their
frustration on, you guessed it: Tumblr (Watercutter. 2014).
Users were so taken aback by the takeover that some were ready to walk off at the drop of a
hat, and some chose to not stick around to wait for what the change was going to bring. This
is visible in statistics released by Tumblrs biggest competitor at the time, Wordpress.
According to Wordpress Matt Mullenweg, Tumblr posts were being moved to their
platform at a rate of 72.000 posts an hour when speculation of a possible takeover by Yahoo
first started. Compared to the 400 to 600 post an hour that usually migrate platform, that is
a lot. However, in the grand scheme of things, with tens of millions of posts made each hour
on Tumblr, it is not that big of a deal (Sorkin. 2013).

Figure 06: mock up by a user about what Tumblr would look like after the Yahoo deal.
(Bilton & Perlroth. 2013)
Other users got really creative, such as one user who created a mock-up page containing all
the fears they had about the Yahoo-Tumblr deal. In this sketch, the Tumblr interface is
modified with a worst case scenario of what will happen to Tumblr. Firstly, the messaging
system and the search feature would be powered by Yahoo. Secondly, the site would start to
run banner advertisements on the dashboard. Thirdly, a premium version of Tumblr would
exist. Lastly, Yahoo would limit what could be posted on the blogs by for example blocking
adult content. This would make Tumblr kids-proof (cfr. Tumblr Kidz) and lastly, Yahoo
branding would be applied over the whole site. Next to the appearance of Tumblr, some
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users were also concerned about their privacy and intellectual property (Bilton & Perlroth.
2013).
3. Content: Tumblr, home of the creative minds
When talking about how platforms function, researchers rarely have attention for the
content. However, it is important to take a look at what content is put on the site, because
that is strongly interwoven with what the architecture allows on one hand and of course also
is an indication of user agency (van Dijck. 2013). As discussed before, social media is an
umbrella term for a variety of services. To be more accurate in the analysis, the aim of the
platform must be taken into account. Following van Dijcks classification (2012), Tumblr can
be defined as a user generated content site (UGC). Most content on the site is user
generated and since Tumblr is a micro blogging platform, the focus lies on sharing ones
content with each other, rather than on gaming, building social communities or selling
something. That doesnt mean that those activities are not taking place on Tumblr, but just
that these activities are rather marginal.
On Tumblr, there are two types of contributions on the website. Firstly, you can post your
own text, picture, quote, link, chat question, audio or video. Every second, 900 varying text
posts are made (Arthur & Halliday. 2013). Secondly, you can interact with posts other people
have made. Also interaction is possible in two ways. Firstly, you can reblog a post.
Reblogging allows you to respond to a post made by another user as well as to modify that
post. Secondly, you can heart the post, this is not quite the same as liking which happens
on Facebook, says Karp. The heart symbol is important, because it inherently is something
that creates an atmosphere of positivity. A major feature of most blogging platforms is a
comment section. Quite remarkably, Tumblr has no comment section. There is no possibility
to comment on posts, because Karp says that this is where the harmful and negative lies on
most blogging platforms. Instead, if a user wants to react to somebody elses post , they
have to reblog this post, making their comment (and the original post) appear on their blogs
as well. As for communicating with other users about the same topic, Tumblr allows users to
ad a tag to their posts. A tag will allow other users to search for all content that contains this
tag, as well as for people to find out what other posts are made by this user with the same
tag.
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Yahoo has compared Tumblr to Youtube (Sorkin. 2013), emphasizing that Tumblr is all about
the content. YouTube is the biggest UGC platform of this age. When it comes to managing
UGC platforms, a common strategy is to have some degree of standardisation in the user
contributions, to be able to pre-sort the content. This is because the algorithm can function
better when the input can fit in a limited number of categories (van Dijck. 2013). Tumblr has
had such a classification form the very beginning, as the original idea of Karp when designing
the platform was just that. He wanted to make blogging easier, without any learning curve.
On Tumblr, users are free to create personal content and can express anything they want,
without the social stigma of their real life friends (Wortham. 2013a). However, Tumblr lends
itself also to more serious communication. Yahoos Marissa Meyer used the platform even
for announcing that Yahoo bought Tumblr, and so did Tumblr owner David Karp
(Watercutter. 2014).
Tumblr is a creative platform, which makes it a very interesting one for the users. User
engagement sometimes manifests itself in a claim to ownership of the contributed content
or of the data, van Dijck says (2013). This could also be witnessed on Tumblr, as lots of
people mentioned concerns about their artistry. Some said they would watermark their
work and others removed their work away from the site.
As it turns out, Tumblrs versatile possibilities for making content have been working out for
businesses too. In an interview of May 2014, Marissa Mayer stated that 58% of all Tumblr
users engage with sponsored content and 48% share this content. In Tumblr language, that
means that 58% of users either reply to, like or reblog a sponsored post and 48% reblog
sponsored posts. Prior to the Yahoo deal, Karp has stated that he is pretty opposed to
advertising. He mentioned that It turns our stomach (Sorkin. 2013). Therefore, Tumblr
has chosen the route of the post as advertisement. This means that the border between
what is content and what is advertising has drastically decreased. Tumblr has known a few
very popular viral advertising campaigns that used memes, which is a humorous post, that is
slightly modified each time.
User generated content is a blessing for a platform, as it means that companies do not have
to come up with their own content, but this type of content also holds its dangers. Users
create content that can either support or subvert the existing corporate control (Jenkins and
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Deuze. 2008). Tumblr has known both, as users have protested corporate decisions, but also
displayed affection for the platform, such as the following post demonstrates:

Figure 08: Users showing appreciation for the decisions that Tumblr has made
Phase 2: reassembling the ecosystem
After the initial phase, it is time to reassemble the ecosystem. By this, van Dijck means that a
platform never functions in a void. Each platform holds relations to others around them. For
Tumblr, the most direct influence on the functioning of the platform comes from Yahoo. Of
course other social networks are in direct competition for the attention of the user and
therefore they too have an impact on how Tumblr behaves. When reassembling the
ecosystem, the aim is to look at how Tumblr is reacting to tensions in the field. van Dijck
begins with lookingat what interests need to be served. This entails questions as: who owns
the service? What interests do these parties have? The second set of questions focus around
governance. What sort of rules does the platform set for the users and themselves? What is
allowed? What isnt? Who do they share information with? Lastly, there is a set of questions
that is interested in the business model and the strategy of the company. Is this company
making profit? How does this company make profit? What other parties is this company
doing business with?
4. Ownership: Tumblr. + Yahoo! = !!
Prior to the Yahoo takeover, Tumblr was owned by 26-year old David Karp. He is the founder
of Tumblr and was leading the company since Tumblr had been launched on February 19th
2007. So what did Tumblr look like before Yahoo came along? The company was said to have
an estimate of $25 million on expenses in 2012, with an ad revenue as low as $13 million. In
45

may 2013, Yahoo paid $1.1 billion for Tumblr. The business press immediately called the
takeover a big bet. At that point, the micro blogging website had a lot of users, but not
very many other assets, besides an innovative concept. Karp himself has always refused to
name Tumblr a social networking site. Instead, he considers it to be a creative technology, a
means to make blogging more easy. The reality of the situation however remained that
Tumblr hadnt yet proven anything in terms of moneymaking to Yahoo (Wortham. 2013a).
One analyst named the takeover the end of entrepreneurism, precisely because of this
reason. Tumblr was setting an example that start-ups neednt worry about making money,
only about getting big fast. Judging by Tumblrs example, this is what would reel in the big
bucks over time (Oxford. 2013). The reality is that this approach has been successful before
in the internet business. One of the reasons is that the question about the worth of a
platform has been boggling economist for quite some time now (Lau. 2013). The price of a
social network is always volatile. Whereas earlier there was a value calculation that was
based on production turnover, the value of a social network is dependent on speculation. To
come to a sum of $1.1 billion, Yahoo has said to have looked at established figures, such as
the expenses the company makes and the revenue they bring in on a yearly basis. Next to
this, they also considered what was happening in the market, such as the $1 billion takeover
of Instagram, says Ken Goldman, the CFO of Yahoo (Perlroth. 2013). Anthony DiClemente,
analyst at Barclays Capital, is of the opinion that it is difficult to justify the premium
acquisition price for Tumblr given its low levels of revenue.(Sorkin. 2013).
This takeover was the result of a larger shift in the social media market, Jenna Wortham
(2013a), analyst at The New York Times, said. Lately, we have seen a lot of vertical
integration, where social media team up with traditional companies. This is because the
social media landscape is shifting. Facebook was the absolute king of the social media, and it
still is. However, the platforms approach is becoming passive and outdated. This made room
for new platforms, such as Tumblr, that offer a different type of experience. Facebook will
never be not relevant, said Wortham, but users are becoming less and less engaged. Not so
on Tumblr, where users are the drive of the social network. Only very rarely, a social media
platform is a commercial endeavour from the start. This could be due to the nature of social
media. A critical mass of users needs to be reached in order to even begin to think about
making money. In the beginning, most platforms are really focussing on the user. They have
46

a non-profit strategy and are collectively owned. However, when the platform matures and
the user base grows, a corporate owner tends to step in and shift the focus of the platform
away from the user and towards profit. In many cases, a start up that was doing well is taken
over by an established media player (van Dijck. 2013). This is exactly what has happened to
Tumblr.
The negotiations for the takeover were particularly quick, with few parties involved, despite
it being Yahoos fourth biggest takeover ever. On the side of Yahoo, Marissa Mayer, the CEO,
Jackie Reses, an executive in charge of development and Ken Goldman, the CFO were
present. On the side of Tumblr, CEO David Karp was present with a small committee. Tumblr
was the only partner that brought a team of bankers into the takeover (De La Merced. 2013).
The total amount of the takeover was transferred in cash, and not in stock, as has been the
norm in recent years. As to the compensation for David Karp himself, he is receiving a small
amount of Yahoo in stocks in addition to incentive compensation (Fleischer. 2013).
Since 2007, Karp has been presented with many offers that would make him rich, so why did
he agree to a takeover now? There are three crucial reasons, say Yarow and Carlson (2013).
Firstly, Tumblr had no COO at the time they were approached by Yahoo and the Tumblr
board was looking into hiring one. Secondly, the revenue of Tumblr was behind plan. And
thirdly, Karp was concerned about the future of Tumblr as his technological brainchild.
Tumblr would need more money in order to keep the servers running and grow in the
future. Yahoo offered an answer to all these concerns, as Mayer would become COO, Yahoo
would help Tumblr find the right business model and make sure to keep the servers going.
On the other side of the deal, buying Tumblr solves two of Yahoos main problems. On the
one hand, Tumblr offers the rejuvenation Yahoo was looking for. On the other hand, Tumblr
is Yahoos lead into the mobile market, an area of business that they were lacking severely in
(Yarow & Carlson. 2013). The graph underneath shows how Tumblrs mobile use is almost as
strong as Facebooks mobile use, and much stronger than Yahoos.

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Figure 09: Graph of mobile use of websites by ComeScore (Yarow & Carlson. 2013)
Prior to the Tumblr takeover, Yahoo has known some rough times of their own, when the
shares of the company dropped 38% while the Nasdaq was growing at a rate of a 6% gain in
the first quarter of 2012. In 2007, Yahoo had started to tailor its services increasingly to
consumers (Chellappa & Shivendu. 2007). In that same year, Yahoo acquired Overture
Services, a company specialised in contextual advertising. Yahoo was interested in this
company, because they were at that time gathering large amounts of user data and
information. Reeling in Overture meant that this data could immediately flow through to an
advertising system, as the core business of Overture Services is to mine this customer
information to construct user profiles and place targeted advertisements (Chellappa &
Shivendu. 2007). Trouble started when Yahoo repeatedly declined offers from Microsoft in
2008 and switched rapidly between CEOs in the years that followed, each of which failed to
put up a coherent business model for the company, which ultimately resulted in the decline
in value. Until Marissa Mayer made the transfer in July 2012 from Google to become CEO of
the company (Goldfarb. 2013). Mayer implemented a mobile first strategy and looked into
revamping the image of Yahoo. Mayer was expected to drop all extra activities and focus on
a few core assets, but instead, she baffled the business world by taking Tumblr on board
(Goldfarb. 2013).
Yahoo apparently isnt discouraged by Tumblrs lack of a practical
business model. (Lau. 2013)
In an interview from May 2014, Yahoos Marissa Mayer stated that she did not overpay on
the Tumblr deal, even though still today, Tumblr still is not making any profit. Mayer
continued to state that (Tumblr) has some fundamental advantages over other things that
are in the market today (Shontell. 2014). Yahoo and Tumblr are very different companies
(Arthur & Halliday. 2013), starting from the origins of both companies. Yahoo is one of the
internets pioneering companies, while Tumblr is a fairly recent but fast growing start-up.
However, each can bring the other complementary assets. Yahoo has the knowhow and the
trust of brands that Tumblr is lacking, Tumblr has the crispness and the cool factor that
Yahoo was missing (Arthur & Halliday. 2013).Once the takeover was completed, Karp stated
Tumblr would continue business as usual but with extra support. Karp also felt the need to
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reassure people that the offices were not moving anywhere and that he would remain CEO
of the company (Perlroth. 2013).
5. Governance: One Terms of Service and two privacy policies.
Governance is a collective term to describe the rules and terms that come both from within
the company and from outside the company, e.g. from a trade association or a government.
There is an extensive debate in scientific environments about regulatory frameworks for
privacy online. Information practices just cant be continued to be regulated as they were
regulated before the internet existed. The need for regulation is more explicit in a
monopolistic market, because the impact on society of a monopolist is considerably larger
than in a competition driven market. (Chellappa & Shivendu. 2007)
5.1. The national rulings
In the United States, the jurisdiction under which Tumblr falls, all privacy regulations are
based upon the fair information principle. This principle is composed of eight different sub-
principles. Firstly, there is the collection limitation principle. This limits the collection of data
to that data collected with lawful and fair means and demands knowledge and consent from
the data subject. Next, there is the data quality principle, which entails that the data
collected has to be relevant to the purpose, accurate and up-to-date. Thirdly, the purpose
specification principle specifies that data needs to be collected for a specific purpose and
every change in purpose needs to be announced. After that comes the use limitation
principle. This principle limits use and disclosure other than described in purpose, except
when consent was expressed or the law has commanded it. The fifth principle is the security
safety principle, which obliges companies to foresee in reasonable protection against theft
of information. This is followed by the openness principle, which grants the data subject easy
access to their data. The seventh principle is the individual participation principle. This
principle obliges the data collector to tell the data subject what data they have on them, to
notify data subjects of collected information and give a data subject the right to change,
rectify, complete or amend this data. The final principle is the accountability principle,
which puts the responsibility to comply to all these principles on the data collector.
As Tumblr and Yahoo are both companies that fall under U.S. legislation, both companies are
expected to follow all these principles. However and strangely enough, this is no hard law,
49

but it is self-regulation, causing corporations and firms to select what they like about these
principles and omit what is not feasible to them (Gellman. 2002). Even according to the
Federal Trade Committee of the USA, self-regulation is not the answer, as they admitted
already back in 2000 that industry self-regulation was not producing the results they were
hoping for (Acquisti 2004a).
Since online platforms are a relatively new space for social traffic, the law
does not yet cover all corners of this territory. (van Dijck. 2013, p.38)
When there is no clear policy that protects privacy rights, scientists expected a boom of
technology tracking data transactions and concealing information. When we look at the
available technologies today, we can observe large amounts of technology with various
purposes available, though these technologies are not widely spread. Instead, the research
of Kahn, McAndrews and Roberds predict a technology race, where technologies to protect
privacy are trying to beat those that invade our privacy. Such a race would more likely harm
the economy than help it forward, therefore the authors suggest that defining privacy rights
will be the answer. They also foresee that this question will become more prominent in the
future.
5.2. Yahoo and Tumblr versus user privacy
"A website with a clearly stated privacy policy communicates a you can
trust us signal to visitors. (Pan & Zinkhan. 2006)
In this part, the attention will go to how Yahoo is governing Tumblr, with a special focus for
the Terms of Service. The Terms of Service of a site are never fixed, but subject to constant
modification. Although the company likes to give users the feeling they are in control, the
content of the terms is not really in the hands of the user. The company will have certain
norms and values, these norms are scripted in the terms, which will in turn influence the
way in which things are coded. Commonly, the company usually makes the users agree to
Terms of Service that give them the right to amend these terms without the user noticing
and even without the approval of the users. Most of the time, users agree by default and
unknowingly, because they skip reading the details, to give up the rights to their data, just by
50

logging onto a site. Pan and Zinkhan (2006) found that the presence of an online privacy
policy generates more trust in that company than the absence of one.
When the Terms of Service change, the users relationship with the company has to be
renegotiated. Such a point reveals more about the stakes involved for both parties. The
company needs to reveal their aims and the users need to lay down the boundaries to their
values (van Dijck. 2013). After the Yahoo takeover, a change was to be expected, and indeed
Tumblr last modified their Terms of Service on 27
th
January of 2014. Between the previous
version of the 23
rd
of March 2012 and this new version, 623 additions and 577 deletions
were made. The question everybody is asking is: do users actually read and understand
these Terms of Service? At Tumblr, they do make every effort to make sure you understand
their privacy policy, they say. This might be in their benefit, as research into privacy policies
has shown that short and clear is better than long and legalistic (Pan & Zinkhan. 2006). With
the changing terms in January, the wording of the policy update was very funny, and still at
the same time getting the message across.

51

Figure 10: look of the policy update from the 27
th
of January
The policy update of 27
th
of January consisted of an updated Terms of Service, an updated
privacy policy and updated community guidelines. Throughout all three documents, Tumblr
made witty and culturally relevant remarks, fitting to Tumblrs image of a cool and hip
medium. This didnt go unnoticed by the users, as many Tumblr posts began to circulate
containing all the jokes made in these documents. Other users expressed their regret of not
having read the documents. In June 2014, as a follow up, Tumblr released a humorous video,
explaining what is allowed and what not (Moss. 2014).
While all the attention for the jokes and the pop culture references possibly made the new
Terms of Service go down smoother, not all attention of critical users was redirected. One of
the biggest issues users had with the new Terms of Service was the new way of formulating
ownership over content. Although Tumblrs terms state in very clear language that what you
post on Tumblr is yours and the company will never claim ownership over anything posted
on a blog, a panic broke out immediately after the unveiling of the new Terms of Service. A
clause, called the Subscriber Content License, grants Tumblr the right to undertake several
actions with your content. These actions that Tumblr can undertake are use, host, store,
cache, reproduce, publish, display (publicly or otherwise), perform (publicly or otherwise),
distribute, transmit, modify, adapt (including without limitation in order to conform it to
the requirements of any networks, devices, services, or media through which the Services
are available), and create derivative works of said content. Now, what this means is that
Tumblr claims two rights. Firstly, Tumblr has the right to store your posts and show them to
others, which is the right that allows Tumblr to function. Secondly, Tumblr allows for other
users to spread and/or modify your posts, which makes the reblog function possible. The
reblog function requires specific legalistic protection, because according to US law, all things
that are created by a person automatically belong to the creator. There is no need to claim
ownership rights, they are automatically granted. However, reblogging a post gives you the
possibility to modify the original post, and possibly harming the original right to the content.
This is why the Tumblr terms include the Subscriber Content License.
As for things that actually changed, Tumblr has included Yahoo in its Terms of Service.
Specifically, in the renewed privacy policy, Yahoo is prominently mentioned.
52

Yahoo owns us and we share. (Tumblr. 27.01.2014)
The relationship between Yahoo and Tumblr, as described in the privacy policy, is mutual.
Tumblr will be both giving and receiving information, as Yahoo will too. The policy mentions
that this entails that the user of Tumblr implicitly agrees with Yahoos privacy policy as well.
For users, this means that they are agreeing to a policy that does not have the best name.
Yahoos policy has a clause stating that they do not require a warrant for governments to
access your data, and will not notify you in the case that a breach does occur. (Biles. 2013).
Another strong relation between the two companies is revealed to be the analyzing and
processing of information. In short, the new Terms of Service allow for more sponsored
content and less (or at least hidden) adult content now, but Tumblrs still the same
laidback, content-happy site you know and love. (Romano. 2014).
6. Business model: getting the balance right
In recent years, media have shifted away from economies of scale, where the aim was to cut
the R&D costs by developing once and spreading the product to as many places as possible.
Today, media have become economies of scope. The aim is no longer to focus on spreading
one message to a very large audience, but to spread the right message to the right
individual. Media companies need to reconsider the principles of the attention economies.
As there is oversupply of media goods, the struggle for the attention of the public has only
become greater. This shift has been especially challenging to traditional business models.
Even more so than in traditional companies, online businesses produce products and
services that are highly substitutable, due to the digital nature and high levels of
convergence. Amidst all this struggle, Yahoo is trying to find just the right approach that will
make Tumblr into a goldmine without scaring the users away, because as a Tumblr user aptly
put it:
Dear Yahoo, Welcome to the most emotionally driven group of people on
the internet. (...) And youre not making any moneys off of a site with 250
users. Thank you. ~A user ready to walk off at a moments notice.
(Bilton & Perlroth. 2013)
A business model is not a fixed entity. It is constantly fine-tuned to adapt to new players,
new user protests and new circumstances online. The online world moves at a fast pace, so
53

as social media platforms evolve, business models are constantly tweaked and changed to
test their evolutionary strength. (Potts. 2009, in van Dijck. 2013, p.41) The aim of the game
is to find new ways to monetize online creative activity by users, and in doing so, to stay one
step ahead of the user protest. Clemons (2009) has stated that in current days, a business
model is a balancing act between the wish to make profit and the desire to keep the user
satisfied. User trust is a very important ingredient of any business model. Before Yahoo,
Tumblr was not making any profit. Tumblr made premium products and sponsored content
their priority. Premium products are in this case premium themes that help you personalize
your blog or design formats. Sponsored content is a form of niche advertising to small
businesses and individuals. Tumblr CEO Karp stated that the Tumblr ads were successful
even before Yahoo joined the ship, because Tumblr regularly sells out of its ad inventory
(Perlroth. 2013). However, even this combined approach was far from enough to generate
any kind of net profit.
When Yahoo bought Tumblr, they knew they would have to push Tumblr to do certain things
that Tumblr doesnt necessarily want to do, so they can make more money from the
platform (M.G. 2013). Brian Pitz, analyst at Jefferies, calculated that Yahoo needs to find a
way to make $127 million a year to justify the takeover. This means that Tumblr needs an
additional $950 million in annual revenue (Sorkin. 2013). Wired Magazine lists the options
Yahoo has in order to regain the money they invested in the platform and make the deal
worthwhile. Firstly, Yahoo could try to sell out 60% of the current radar feature. The radar is
a designated area that shows a new post relevant to your interests. Tumblr users have been
trained for years to check this area for relevant and interesting content, so this is every
marketers dream come true. However, this feature only works because users dont expect
to be targeted with advertisements on the radar. If all radar posts were advertisements, the
novelty would rapidly die off, leaving Tumblr with nothing to offer marketers instead.
Secondly, Tumblr could try to convince their bloggers to allow advertisements to run on their
own Tumblr blogs. However, convincing these bloggers to give up the freedom to their own
blogs might prove to be quite a challenge. And even if some users are willing to give up
space on their blogs, they wont be happy without a reward in return. Thirdly, Yahoo could
try to sell 31 million ads to small corporations and individuals annually. These so-called
sponsored posts could then appear on the dashboard of users. 31 million is a lot of
54

advertisement space to fill, but in recent years sponsored posts have had a lot of success.
This approach could be called the long tail of advertising. Lastly, and most realistically, Yahoo
will attempt a combination of the above. However, even if Tumblr doesnt provide any
income for Yahoo after all these efforts, it wont be that big of a deal, Wired magazine
writes. Even if the $1.1 billion seems like a lot to Yahoos management and the world, they
have a bit of spare room for some experimenting in search of the best format for Tumblr.
(Tate. 2013, Sorkin. 2013). The Economist reports that Yahoo has already promised to look
into new and experimental ad formats that are not so scary to users (N.N. 2013).
Yahoos power has always been in a more mainstream audience. Even though Yahoo-users
age range is higher than that at the average internet company, and even continues to rise,
the company has a wealthy user base. This means that these users do hold value to
advertisers. Tumblr users paint a very different picture. The audience is young, dynamic and
tech savvy, because they grew up with the web. Therefore the web is a very logical place to
try and reach this market segment. What makes this group less interesting for advertisers is
their restricted financial capabilities (Kiss. 2013). Pooling this group of users means that
Yahoo can now offer access to a larger user pool, but at the same time it also means that
two totally different advertising practices shall need to be handled. On the one hand, there
are the more traditional methods of banner advertising, already practiced by Yahoo before
Tumblr came along. On the other hand, there is the Twitter principle. On Twitter, the tweet
is the ad, which means the content doesnt need to stand out, but flows organically in
between other messages. This has the advantage that people are a lot less skeptical to the
message and a lot more receptive to what the company has to say. Tumblr has looked into
developing advertisements along those lines prior to the Yahoo takeover and has even run
such advertising on a small scale. This makes the content more organic to the surroundings
and will most likely not upset users as much (Kiss. 2013).
As to whether the business model is working or not, there is a lot of speculation going on. In
a chart published by Statista on the 28
th
of February 2014, they showed the interests of
marketers in social media. Quite depressingly, Tumblr closed that list with only 3.5% of
marketers interested. For comparison, Facebook and Twitter lead the chart with 81.2% and
43.7% respectively (N.N. 2014). Business Insider reported that after 10 months of Yahoo
owning the company, the site continues to struggle to make revenue. According to Marissa
55

Mayer at the time of the takeover, adds would start to appear on Tumblr, originating from
the Yahoo advertising market place. And they did. From June 2013 onwards, Tumblr has
been showing advertisements. So why isnt the business making money? Because Tumblr
doesnt have enough information about their users, sais former employee Mark Coatney.
The only thing that is required to sign up for Tumblr is a valid e-mail address. Besides that,
Tumblr doesnt know much about the background or the identity of their users. While that
makes Tumblr cool, and a true free space for creativity, it is also tricky to sell this to an
advertiser. Offline identities matter to marketers, they do not want to be involved in
experimental advertising when they could invest their money in advertising on Facebook, a
tested format where the advertiser has access to data about real life individuals, albeit
anonymized. (Edwards. 2014) And what if Yahoo did not buy Tumblr for the revenue, but for
the access to the younger audience? Then Yahoo is in a sticky position, because with the way
Tumblr works, via a central dashboard that collects post from various blogs, Yahoo isnt able
to reach all of the users that Tumblr has on offer when they look into having ads pop up on
Tumblr blogs. On the other hand, if they try to reach users all at once via the dashboard,
these users are likely to get upset and leave the service. It seems to be a catch 22 for Yahoo
(Yarow. 2013).
7. Conclusion
Tumblr has grown and changed over the years, but the most radical change to this day has
to be the Yahoo takeover. This takeover influenced all aspects of Tumblrs workings. In order
to get an insight into a platforms workings, van Dijck has listed six components of a platform
that are interdependent, namely technology, users and usage, content, ownership,
governance and business model.
The first question which is being asked is whether or not the inner workings of Tumblr have
changed from connectedness to connectivity. To find an answer, Tumblrs microsystem
needed to be disassembled.
On the level of technology, Tumblr is known for its simplicity, its beauty and a strong focus
on user experience. Tumblr processes 3 TB of data every day, and their technology is
constantly updated by their 277 employees. To handle all this data, Tumblr has been
receiving help from Yahoo Web Analytics. Its rather unclear if Yahoo has enforced other
56

changes in Tumblrs technology, but it is believed that Tumblr has made changes to their
algorithm. One protocol that has been put into practice, is the one concerning adult content.
This type of content is no longer showing up in searches and some blogs are unlisted.
Another protocol change occurred regarding sponsored posts. A new recommendation
feature was added to Tumblr, which shows relevant content to users. However, this new
feature isnt appreciated by all users.
Tumblr is based on Tumblelogging, which is a system of 7 categories of content to make
posting a blog post a less daunting task. Tumblr does not only make interfaces for users
convenience, as the design of an interface can steer the user behaviour in favourable
directions. A new interface is the feature of the sliding blogs. Since Tumblr is based on the
mullet theory of social software, where there is business in the front, aka on the personal
blog, and a party in the back, aka on the dashboard, this feature helps to get the most
activity by keeping users on the dashboard for longer periods of time.
Tumblrs biggest asset has always been its vast user base, and this is believed to be the
reason why Yahoo was interested in a takeover. The Tumblr user base can be described in
three words: large, young and growing.
Tumblr users have been vocal about their opinions on the Yahoo takeover. They felt
sceptical of the promises made by Yahoo to maintain Tumblrs integrity that some were
ready to walk off at the drop of a hat, and some actually chose not to stick around and
migrated their posts to Wordpress. Common fears are the forcing of Yahoo services upon
Tumblr users, a premium version of the site, Yahoo branding and, to a lesser extent, privacy
concerns.
Finally, on the level of the content on the site, not that much has changed, except for the
slight alterations at the very beginning of the Yahoo takeover. At that point, lots of people
mentioned concerns about the ownership to their content, and some stopped posting or
added watermarks.
In the second instance, questions about Tumblrs relationship with Yahoo are posed. When
reassembling the ecosystem that surrounds Tumblr, the relations of ownership, governance
and business models will become clear. Tumblr has had a very surprising shift in ownership,
57

as previous takeover offers were systematically refused. However, Yahoo offered Tumblr a
way out of some problems the platform was experiencing and on the 20
th
of May 2013,
Tumblr and Yahoo came to an agreement. Yahoo paid $1.1 billion for Tumblr, while Tumblr
had $25 million expenses in 2012, with an ad revenue as low as $13 million. On the other
side of the deal, buying Tumblr solves two of Yahoos main problems. Yahoo has bought
Tumblr, because Tumblr offers the rejuvenation Yahoo was looking for and is also their lead
into the mobile market. In return, Yahoo would provide the knowhow and support Tumblr
needs to start making money. In an interview from May 2014, Yahoos Marissa Mayer stated
that she did not overpay on the Tumblr deal, even though still today, Tumblr is not making
any profit.
Governance is a collective term to describe the rules and terms that come both from within
the company and from outside the company. However, because the USA only offer self-
regulation principles, Tumblr has much room to make their policy. While it is true that the
Terms of Service of a site are never fixed, but subject to constant modification, it is
remarkable that the terms changed very soon after the Yahoo takeover. When the deal was
completed, analysts anticipated Yahoo to modify the terms. However, possibly due to the
heavy user reactions to the deal, this change came only about on the 27
th
of January 2014.
While all the attention for the jokes and the pop culture references possibly made the new
Terms of Service go down smoother, not all attention of critical users was redirected. One of
the biggest issues for users was the Subscriber Content License, even if this was largely
based on a misunderstanding. What did change, is that the new Terms of Service allow for
more sponsored content and less (or at least hidden) adult content and Tumblr included
Yahoo in their policy. This entails that the user of Tumblr implicitly agrees with Yahoos
privacy policy as well.
Yahoo is trying to find just the right approach that will make Tumblr into a goldmine without
scaring the users away. Before Yahoo, Tumblr made premium products and sponsored
content their priority. Premium products are in this case premium themes that help you
personalize your blog or design formats. Sponsored content is a form of niche advertising to
small businesses and individuals. Tumblr CEO Karp stated that the Tumblr ads were
successful even before Yahoo joined the ship, because Tumblr regularly sells out of its ad
inventory (Perlroth. 2013). Still, even this combined approach was far from enough to
58

generate any kind of net profit. To make the takeover a success, Yahoo needs to find a way
to make $127 million a year. There are four possible approaches Yahoo could take. Firstly,
they could try to sell out 60% of the current radar feature, as Tumblr users have been
trained for years to check this area. Secondly, they could try to convince their bloggers to
allow advertisements to run on their own Tumblr blogs. Thirdly, they could try selling 31
million ads to small corporations and individuals. These advertisement dont need to stand
out, but can flow organically in between other messages, which will most likely not upset
users as much. Lastly, and most realistically, a combination of the above could be envisaged.
Even if Tumblr doesnt provide any income for Yahoo after all these efforts, Yahoo wont get
hurt since it has some leeway.
For now, the site continues to struggle to make revenue. One of the main reasons is that
Tumblr doesnt have enough information about their users. This is a big issue, since Yahoo
cant just ask users to tell them more about themselves, because that would no longer make
Tumblr a true free space for creativity. And without information on offline identity,
attracting advertisers will be far from easy. It seems to be some tricky paradox Yahoo got
themselves in.

59

GENERAL CONCLUSION
Social media locate themselves at the centre of our everyday lives and the social sciences
have been concerned with the impact social media have on our daily lives. The shift from
web 1.0 towards web 2.0 entailed a whole other way of organizing the online world,
economically speaking. This shift has been described by the economics of privacy. Since it is
not clear what this field of economics precisely means, the first research question was: What
are the economics of privacy? The economics of privacy is the field of economics that is
concerned with the study of the use of personal data to make money. One of the reasons
that there is so much controversy about the existence of a market for personal information,
is because researchers are differing in opinion about what these markets are doing to our
sociality. The second research question asked can we notice any social changes following the
economic change towards the economics of privacy? To begin answering this question, a
look at what van Dijck has called the shift from connectedness to connectivity is useful,
because what used to be unmediated social interaction is now being influenced by
technology and the economic interest that guide these technologies. van Dijck states that
previous research has simply forgotten to look into those mechanics. The analytical model
designed by van Dijck offers an understanding in the different aspects of connectivity online.
In the first phase of this analytical model, the micro system of the platform is disassembled,
in the second phase, the ecosystem is reassembled. In this research, Tumblr was analysed in
this way. As such, we get a better view on the four claims about sociality on social media
raised in the literature study.
Firstly, did social media empower or disempower users? In theory, the power of the user lies
in the everyday practice, and by doing so, they can modify the structure. Indeed, the Tumblr
users have demonstrated this by being very explicit about their opinions on the Yahoo
takeover. Common fears were the forcing of Yahoo services upon Tumblr users, a premium
version of the site, Yahoo branding and, to a lesser extent, privacy concerns. As of today,
Yahoo has not yet implemented any of these things. However, Tumblr did introduce a new
privacy policy, which also entails that the Tumblr user equally agrees to Yahoos privacy
policy by default.
60

Secondly, should we talk about social media in terms of a new public sphere, another private
sphere or a different corporate sphere? Social media can be all of these spheres, and this is
what is making sociality online so hard to study. On Tumblr, theres the possibility to react
with other users by liking and reblogging content another user has made, so there are
definitely aspects that remind of the private sphere. There is no comment section on
Tumblr, which would lead to believe the public sphere is not present. However, by using tags
and reblogs, users can create an arena for discussion on a certain topic, which do resemble
aspects of the public sphere. As for the corporate sphere, Tumblr is more than just a
creative technology. They had been looking for a coherent business model before Yahoo
arrived, but Yahoo definitely took that search to the next level.
Thirdly, how about user generated content online? Social media platforms are not the end
product, because they are not intended to be sold on. Instead, access to Tumblr is given
away for free. The real end product, and the reason why Tumblr has such a large user base,
is the content. On Tumblr, bloggers are encouraged in every way to make content and
interact with each other. An example of this is the new sliding blogs feature, that keeps users
on the dashboard for a longer time. However, contrary to what the economic logic
prescribes, Tumblr does not have a lot of information on users. Still, the bulk of the value is
generated by the users, so any profit made is indeed unpaid labour.
Lastly, some researchers fear that privacy is a long lost cause. Others say there is merely a
change in the importance of privacy in our society. In any case, Tumblr users are not obliged
to provide any personal information about themselves, nor is that likely to change in the
future since Tumblrs identity is based on anonymity and freedom of the user. However, this
is challenging Yahoos endeavour to make money, since advertisers care about offline
identities.
So, in conclusion and to answer the last research question Can the shift from connectedness
to connectivity be observed as Tumblr evolves under the strategy of Yahoo? , we can say
yes, Yahoo has helped Tumblr to take the leap towards turning connectedness into
connectivity. Tumblr has grown and changed over the years, but the most radical changes to
the platform have happened over the past year since the Yahoo takeover. This takeover
influenced all aspects of Tumblrs workings: the technology, the users and their usage, the
61

content, the ownership (evidently), the governance and their business model. For now, the
site continues to struggle to make revenue. One of the main reasons is that Tumblr doesnt
have enough information about their users. This is a big issue that Yahoo and Tumblr will
have to try and solve in the months to come.
Thus, in order to really be able to give an accurate answer to the research question, a series
of follow up researches would be necessary to keep an eye on the day to day evolution of
the shift towards connectivity. Such a phased research would show a trend and give an idea
about how long it takes for a company to make the shift from connectedness to connectivity.
This research could also benefit from more in depth ethnographical research about the users
and their position in this shift, as they are a very important cornerstone. In addition, to give
this research more validity and more general results, other smaller platforms that are being
taken over by a large corporate owner could be analyzed in a similar fashion in order to
detect a trend.

62

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