Yahoo Acquires Tumblr for $1.1 Billion – What Does This Mean for Tumblr Users?
After weeks of rumours, Yahoo has officially acquired the microblogging giant Tumblr for $1.1 billion. The move by Yahoo will not change day-to-day activities at the Tumblr office and the two companies will remain separate, utilising different elements to work better.
Yahoo has had a pretty rough time in the past few years and there have been some pretty raw acquisitions, with some leading to the demise of the purchased franchise. Tumblr users are hoping the microblogging website does not go down the same route.
Yahoo’s big acquisition
Yahoo has acquired ten startups since Marissa Mayer took over as CEO, almost a year ago. All of these have been small and the services and apps bought are shut down right away. Yahoo has been buying technology and talent more than broadening their collection of services.
Tumblr is a different acquisition and will obviously remain open to all the users. Yahoo will be distancing itself from the microblogging website, with no official branding changes or Yahoo control from the user perspective.
This deal reminds us of the Instagram purchase by Facebook, they too said it would be a very unique deal where Instagram could keep working as normal and nothing will really change to the user.
The question on everyones mind is why did Yahoo acquire Tumblr, the microblogging website has always been against advertisement and the majority of users are young and think of Yahoo as an old web company.
Yahoo has said it is because of this unique young audience that they bought Tumblr. With 300 million unique viewers, it is one of the biggest social networks in the world, something Yahoo would love to own in this social age.
The two companies will share their content, Tumblr posts will start cropping up on Yahoo sites about food, fashion and other topics popular on Tumblr, in turn, Yahoo will offer their personalisation and search experience on Tumblr.
Yahoo will also offer their superior hosting skills to Tumblr. We believe Yahoo will start to look at mobile and web advertisements and we may see some clever new ways to make sure Tumblr users enjoy the advertisements.
Tumblr’s Revenue Troubles
2012 Tumblr revenue was $13 million, a pretty poor amount for a company valued at $1 billion. Where many investors shake their heads and question Yahoo, others see Tumblr’s unique userbase and content.
Tumblr is expected to pump out more revenue this year and Yahoo is confident by 2014 they will have a truly profitable acquisition, churning in profit quarter upon quarter.
Yahoo has to play with caution though, Tumblr’s user base is volatile and we have already seen thousands of blogs jump ship to WordPress and other microblogging websites.
If ads are put in without the user base accepting them or if they appear all over blogs, it may be corrosive. One method to help out bloggers is to offer shared ad revenue, as Google and WordPress do with their blogs.
Could it go wrong for Tumblr users?
Instagram was the same as Tumblr in many ways, low revenue, a cool interface, lots of users and a unique experience. People asked the same question of Facebook when they bought Instagram for $1 billion.
Now people don’t question the purchase, Instagram has tripled in users since the Facebook acquisition and is still seen as the cool app everyone has and uses to upload photos.
Even though Instagram has no ads and there was a huge controversy over the company possibly wanting to sell your photos to third party advertisers, we suspect Facebook will slowly integrate them into the mobile app.
This will be the same with Tumblr, although hopefully without the advertising hiccup that cost Instagram to lose a few thousands users. Yahoo has a few new apps out now that do not have any ads, but they will start to in due time.
Right now, big companies are looking for small startups to take over, Facebook could be looking at Waze, Microsoft may see Foursquare as a possible mobile revival, Apple needs a way into the social market, perhaps Path is the answer.
These small startups lack true advertising revenue but have a unique user experience and large amounts of users, this is what the big acquisition price stands for – users, not revenue.
Does that mean Tumblr isn't a p0rn site anymore?
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