Would you buy Tumblr?

Last updated 10:06 17/04/2012

People are all up in a huff because Facebook paid a billion dollars for a company that hasn't actually made any money - Instagram.

I still think it makes sense - Facebook has the money to spend, they want the brand and user loyalty, and the technology/talent is nice too. If they hadn't, Twitter would have, and Twitter already edges out Facebook in the mobile space. The buy got me thinking about company buys in general though, and whether my favourite startups/services are going to be bought.  

I love Twitter, but it seems too big to be bought these days.* So that leaves me with my other favourite non-profitable web company, Tumblr. Tumblr was valued at around US$800 million last August; it will have risen since then, but this still puts Tumblr at a buyable price. For the record, I think this valuation is either criminally low, or Instagram's was criminally high.

So who would want to buy Tumblr and what would they get for their money? Tumblr's About page gives us an idea of the numbers. At the time of writing, there are 51 million Tumblr blogs with 63 million posts today, and 21 billion posts in total. Yes, that's an average of 400 posts per blog, which is some crazy good user engagement. Now, 51 millions blogs does not mean 51 millions users: Tumblr users can have as many blogs as they like. Still, I would guess around 90 per cent of people, and this is based on nothing but anecdotal/using the service daily for three years evidence, have only one blog. The number is pretty impressive, especially when you take into account that Tumblr users spend an average of 89 minutes a month on the service. Tumblr has a few revenue makers, premium themes and highlighted posts, as well as flirting with sponsored tags etc. but nothing quite solid yet. It costs a whole lot to run, you need expensive servers/engineers to chew through 63 millions posts a day, especially when most of them are pictures.

For whatever you would pay, you would get around 50 million highly engaged users to target ads to. You don't quite have Facebook/Google levels of pesonal data, so you can't target the ads as well as they do, but you can take into account tracked tags/frequent words when serving these ads. You also take on a pretty hefty cost just to keep the service going.

Then, who has pockets deep enough? Apple, Google, Facebook and Microsoft, really. We can strike Apple off the list immediately (see my Twitter * at the bottom of this post.) Microsoft buying Tumblr would prompt some pretty heavy user outrage (okay, anyone buying Tumblr probably would, but still) and it doesn't really make sense within Microsoft's pared down focus these last few years, so let's take them off too. Now, Google already has a relatively successful blogging platform, Blogspot, and they might not be a fan of how closed Tumblr is in some respects. Still, it wouldn't be that crazy - it would definitely give them a bigger foothold in social, and even if they kept the site as a completely separate service they would get more and more data from you. Think YouTube - you still use it as a separate site, but you login with Google and are served hundreds of targeted ads. Facebook? Same deal really, ads-wise. Pre Instagram buy, I wouldn't think Facebook would be an option, but now I can kiiiiind of see it. They would keep it as a separate service and probably attempt to compete with Pinterest with it. Facebook are looking to the future though, mobile that is, and while Tumblr is definitely decent on mobile, probably the best mobile blogging platform in fact, it isn't quite a mobile company in the same way that Instagram is.

Where does this leave me? Well, realistically, it doesn't seem very likely. Tumblr looks as though it's following Twitter - continuing to grow at an astronomical rate without really making money, experimenting with new revenue sources rather than just plain old ads. I have a bit of a webcrush on Tumblr, if you haven't noticed, so I'm hoping they become profitable on their own terms eventually. What do you think? If you were in the position of making acquisitions at Facebook/Google, would you consider it, or are there other companies you would buy?

*Sure, there a few companies with pockets deep enough, but barely. Twitter is valued at around US$10 billion, and you would need to pay a fair bit more than that to actually buy it: Instagram was valued at US$500 million just a few days before the purchase. The only company with enough cash on hand to realistically consider it would be Apple, and Apple don't buy big web companies, they buy small startups for the technology/talent.

Picture: xkcd

Email Henry or follow him on Twitter.

8 comments
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Scott   #1   12:13 pm Apr 17 2012

I think Tumblr suffers from ambiguous branding. I've been in and out of a lot of Tumblr blogs over the past few months, and unless I actually think to look at the address line its just not obvious when something is on Tumblr. If I remember the site at all its by the site's own name.

John   #2   12:27 pm Apr 17 2012

While I have heard of tumblr I had to read your article to find out what it does / did or was about. I know what a blog is, twitter, facebook, Apple, Mictrosoft, google aare aboout /are so I am not totally technically inept. To me tumblr is the next level down in notoriety. An "also ran" if you will.

@ReillyHodsoNZ   #3   12:44 pm Apr 17 2012

I think the problem with Tumblr is in the users, and what those 400 posts a day are. Tumblr users promote consumerism, anorexia and one mindedness. I deleted my Tumblr account the other day because of the trollop teenage girls were posting on there.

Henry Cooke   #4   12:51 pm Apr 17 2012

@3

I feel like you might be painting Tumblr's entire community with the same brush. Re: Anorexia, Tumblr has recently put several things into place to eliminate 'thinspo' blogs (more here http://staff.tumblr.com/post/18132624829/self-harm-blogs). Other than that, there is definitely a large part of the community that are typical teenage girls blogging about typical teenage girls thing, but the platform as a whole has a wiiiide variety of users. I feel like you may have just been following blogs that didn't suit you, kind of like if I hated Twitter because I only followed die hard republicans.

@ReillyHodsoNZ   #5   01:11 pm Apr 17 2012

@4

Yeah I guess but I could'nt find anything that appealed to my interests. Your tumblogs, for instance, are the sort of thing I want on my dashboard, but there is not enough quality stuff on there to convince me to have it as one of my top websites.

David   #6   02:02 pm Apr 17 2012

I think Tumblr (I get reminded of drinking Rum or Whisky every time I see that name too, so close to Tumbler) is a great site with great potential for the Internet was created for (free flow of ideas and thoughts between group who may not otherwise have a way to interact) and therefore think a buy out buy a group looking for a Profit would be a very bad development, hopefully one day I'll find time to start using Tumblr myself rather than just randomly looking at it.

John   #7   01:41 am Apr 18 2012

I thought Tumblr was a website where you copied photos of dubious copyright status from other "bloggers" who copied from others etc etc. In terms of clicks on advertisements, I have no idea of it's value, but comparing the quality of actual blogs with say Blogger (a free blogging website owned by Google) is like comparing a 2 year old's finger painting with the Mona Lisa.

Niri Tacen   #8   09:09 am Apr 19 2012

There's some brilliant stuff on Tumblr. For example, txts from dog: http://textsfromdog.tumblr.com/ (Warning: Has written swears).

For Tumblr is no different to any other site. I only go there to see certain blogs that I've seen linked somewhere else. I don't browse it looking for stuff.

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