The emergence of the ‘Say no to Rightmove’ campaign made the pages of the Financial Times at the weekend.
Writing under the headline of ‘Rightmove’s ‘network effect’ could be thrown into reverse’, Bryce Elder looked at the potential effect of agents beginning to exert coherent pressure on the portal.
“The past decade has seen money flood into any company that could claim to be carving out a dominant market position.
“No niche was immune to some online disrupter looking for the positive feedback loop of market leadership that strengthens as the company grows.” he wrote.
“But with great market power, to misquote Spider-Man, comes great responsibility.
“If a company succeeds in establishing itself as the default route to market and that market then disappears overnight, those providing the inventory will want their pain to be shared.
“Advertisers expect reduced fees and subscription holidays.
“And if these incentives are seen as ungenerous, the company risks triggering an exodus that throws the network effect into reverse.
“Rightmove has the potential to become a case study in network effects.”
Elder noted that although estate agents have spent a long time complaining about being held hostage by the likes of Rightmove and Zoopla, the fragmented nature of the industry meant that, until now, the complaints had little effect.
“It was never obvious what might fuel a rebellion against the duopoly.” he said.
Covid-19 appears to have provided that fuel.
Rightmove’s first response to the crisis was to offer its most loyal agents a fee deferral. The backlash to that idea made the company perform a swift U-turn and instead cut all customer bills by 75% for four months.
The move did not defuse the situation, which Adam Pigott of rival portal OpenBrix described as a Rightmove’s ‘Ratner moment’ – the infamous self-inflicted PR disaster that sank Gerald Ratner’s jewellery chain in the 90s.
According to Elder, broker and analyst firm Jefferies believes that to preserve its market leading position Rightmove will have to make a permanent cut to its fees.
The Say No to Rightmove campaign is lobbying for that change and now represents around 18% of Rightmove’s network.
Despite this tide of dissent, Elder made the observation that Rightmove has no borrowings and holds enough cash to pay wage costs well into next year.
The ability to outlive the current crisis gives Rightmove stock a rarity value and there are signs that investors are reckoning the company is very likely to maintain its pre-eminent position when the Covid-crisis is over.
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