Yahoo! has completed a cash-only deal to purchase Tumblr for $1.1 billion. This deal is significant since Tumblr, despite its massive audience, has yet to make money. Tumblr recently began inserting ads into its 100 million blogs and took home just $15 million in revenue last year even though the company gets upwards of 20 billion page views per month.
“We promise not to screw it up. Tumblr is incredibly special and has a great thing going. We will operate Tumblr independently.” stated Marissa Meyer. “David Karp will remain CEO. The product roadmap, their team, their wit and irreverence will all remain the same as will their mission to empower creators to make their best work and get it in front of the audience they deserve. Yahoo! will help Tumblr get even better, faster.”
There are several risks that come along with the purchase of Tumblr by Yahoo. Pages on Tumblr has been noted to include many racially insensitive, pornographic and other sexually oriented content which could potentially scare off advertisers. Tumblr’s appeal could as well diminish among some users should advertising become too aggressive.
Source: The Wall Street Journal