Three of the top rated hostels in San Francisco refused to sign the contract in January and were subsequently delisted. At first we were all worried that we would see a drop in our business. However, the drop never came. Turns out when travelers were unable to find any good hostels they liked on Hostelworld they searched harder and found our hostels anyway. In short, business is good....very good in fact. In addition, the quality of travelers has improved as well in that they know more about our hostel before booking.
Now I think we are all very happy to be free of Hostelworld and Hostelbookers.
In my opinion, Web Reservations International turned it's back on the Hostel Industry when it started listing hotels. More and more, I'm hearing from hostels that are leaving or have left Hostelworld/Hostelbookers and are doing fine.