This week we have seen the purchase of Tumblr by Yahoo, for an eye-watering $1.1bn. That's not small change, so no wonder David Karp, the 26-year-old founder, signed off his note to staff with the phrase “**** yeah”, and a promise that they won’t be going purple.
Tumblr heroically treads the middle ground between Twitter, with its 140 characters, and the full blog sites such as WordPress and Blogger. It also ticks the social box for Yahoo.
Yahoo chief executive Marissa Mayer said, "Tumblr is redefining creative expression online"; which Mayer also seems to be doing having just opened a Tumblr account. Her view is that, "On many levels, Tumblr and Yahoo couldn't be more different, but, at the same time they couldn't be more complementary.
"Yahoo is the internet's original media network. Tumblr is the internet's fastest-growing media frenzy. Both companies are homes for brands – established and emerging. And, fundamentally, Tumblr and Yahoo are both all about users, design, and finding surprise and inspiration amidst the everyday."
The key benefit to Yahoo of the purchase is the one-off acquisition of a massive user base. Yahoo has publically said that it expects to grow its audience by 50 percent. And along with that, Yahoo also hopes to achieve an audience diversion, keeping them away from other social network sites. This of course brings with it advertising revenue opportunities, particularly because of Tumblr’s mobile app.
We all know that Facebook has struggled with advertising on its app, so it will be a challenge for the combined Tumblr and Yahoo team to make this work – particularly as the Tumblr community is perceived to have a more creative, left-brain outlook. They will react badly to excessive commercialisation.
This brings us to the real question, which is, of course, will this happy union work? If we look at Yahoo during the pre-Marissa Mayer days, we see an ‘old’ internet company, which is very much about marketing and pushing traditional technology products. Tumblr, on the other hand, really is cool in every way possible: cool product, cool tech, cool people. So this could go one of two ways, couldn’t it? We could be talking AOL and Bebo or we could be talking Google and YouTube, and only time will tell.
I think we could be pleasantly surprised. This really is Yahoo now saying watch out, it means business, and its business was very much in doubt for quite some time.
The purchase of Tumblr by Yahoo is interesting for a wider reason too. It is another one of those green shoots in the telecommunications, media and technology (TMT) economy, a really big green shoot. Over the last few months, we have seen a number of things: Facebook share price up, teenagers selling out apps and a number of acquisitions by grown-up technology companies.
This is not the beginning of a bubble by any stretch, but it could well be the beginning of something quite exciting. Is it only a matter of time before someone hoovers up Pinterest?
Vanessa Barnett is a leading technology and media lawyer at City law firm Charles Russell LLP.
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