Christopher Mims reports in the Wall Street Journal:
The assumption was that (one) could make money off users the same way people had since the invention of the banner ad: Build a big enough audience, and “monetization” will take care of itself. (But) eyeballs weren’t enough in a climate in which advertisers had moved beyond the cut-rate programmatic display advertising. Having a very popular product and only the vaguest idea how to make money on it does not, it turns out, a world-changing business model make.
At its apex, Tumblr had more users than both Instagram, now estimated to be worth close to $200 billion to parent Facebook , and Pinterest , which has a market cap of nearly $18 billion. In 2013, Tumblr sold to Yahoo for $1.1 billion. On Monday, the parent company of WordPress.com bought it for a pittance.
The precise amount is hard to pin down but insiders have observed that there are modest homes in Silicon Valley that might be comparable in price. Marissa Mayer, Yahoo’s former chief executive, once described Tumblr as an “incredibly special” property with “105 million different blogs, 300 million monthly unique visitors and 120,000 sign-ups every day.”
“We promise not to screw it up,” she famously added. And now look where we are.
Tumblr was ostensibly a blogging site but it quickly became one of the dominant, if hard-to-navigate, social networks of the early aughts. It attracted users who made and shared memes, art, their random thoughts and, eventually, a sense of community. Its mechanisms were opaque to outsiders: For many years, it didn’t have a function for direct messages or even traditional commenting, forcing users to communicate with each other by, among other things, reblogging each other’s posts.
Since it was difficult or impossible for outsiders to insert themselves into conversations, and because it was and still is a place that allows pseudonymous accounts, the site felt safe for members of marginalized communities, says Alexander Cho, a postdoctoral fellow at the University of California, Irvine, who coedited a forthcoming book on the history of Tumblr.
“Tumblr can be as anonymous as you want it to be, and that allows people to share in a way they might not on Facebook,” says Catherine Holderness, Tumblr’s senior community trends analyst.
But inherent in Tumblr’s structure, culture and even code base were, from the beginning, problems for any potential owner. On the business side, it operated under the assumption that it could make money off its users the same way people had since the invention of the banner ad: Build a big enough audience, and “monetization” will take care of itself.
Alas, Tumblr was inherently ill-suited to advertising, says Katrin Tiidenberg, a social-media researcher at Tallinn University in Estonia who has studied Tumblr for years. Its impenetrability was a challenge to advertisers. On top of that, many of its users interspersed their posts on various fandoms, obsessions and memes with sexual content. “A lot of advertising clients, particularly in the U.S., get disproportionately nervous about being seen next to someone’s boobs,” says Dr. Tiidenberg.
Advertisers instead turned increasingly to the ostensibly safer realms of Google and Facebook. Together, the two giants now suck up 57% of all digital ad spend, according to eMarketer. In addition to owning the biggest ad networks, their crown jewels are incredibly sophisticated advertising engines that drive measurable results for advertisers.
As these titans matured, they could attract the best engineering talent, the most advertisers, the most eyeballs and the most partners, riding a flywheel made of cash that spins faster and faster.
Yahoo, which hemorrhaged talent throughout the 2010s at both the engineering and executive level, couldn’t attract and retain the sort of people that could help its revenue-generating engine, that is its ailing ad network, to compete.
More or less the same thing occurred once Yahoo joined AOL, sorry, Oath—oh wait, I mean Verizon Media—whose parent company essentially wrote down its entire value to zero in late 2018. Eyeballs, which this combined network had plenty of, weren’t enough in a climate in which advertisers had moved beyond the kind of cut-rate programmatic display advertising its sites were running.The same thing happened in media, of course—such as the “newspaper” you’re reading now—and the response was a massive shift away from display advertising and toward subscription revenue.
But actually charging people to access its services was never really an option for Tumblr, built as it was primarily on the hopes, dreams and countless blog posts of teens all over the world. Kids often don’t have credit cards, and even if they do, they’ve been raised on a steady diet of free games, free video and free services.
It also doesn’t help that Tumblr, never a very polished or particularly reliable service to begin with, had a hard time going mobile. That’s where Google and Facebook ended up moving—quickly, through acquisitions and manic development—to maintain their revenue growth.
“The site was just fundamentally broken; it broke all the time” says Klaudia Amenábar, a senior media producer and comics vlogger who is also a self-described Tumblr power user. Now 24, she found the service at 16 and has been on it ever since, building a career in fandoms and social media from what she learned there. “The mobile app is a lot better now, but before, jokes about the mobile app were rampant on Tumblr,” she adds.
In the past year, Tumblr’s traffic has dropped by more than 40%, from approximately 640 million visits in July 2018 to around 380 million now. Much of that drop happened after the service implemented a ban on adult content.
Before the ban, Tumblr grew large precisely because, like the internet, it was open to the point of occasionally being seedy. The fact that it was riddled with adult material might have been a draw for some audiences and a turnoff to others. Its parent company Verizon launched a mostly automated effort to purge the service of all adult material, a dragnet that also eliminated much of the user-curated and user-generated content on the site. At that point the site collapsed, as its massive communities of fan-fiction writers, outsider artists and moody teens led their own exodus to other platforms.
“It was a long time coming,” says Ms. Amenábar. “A lot of people just stopped using it because they got older, Twitter became more popular, Instagram became bigger.”
Tumblr, still a powerful engine of internet memes and other ephemera, is potentially retro-cool but certainly not as cool as it was during its heyday. It’s like an old car that might become a classic if its owner can hang onto it long enough. That’s why its perch in the same family as WordPress.com is entirely appropriate.
WordPress.com is committed to supporting an activity—blogging—that can seem quaint in an era where if something isn’t shared on social media, it didn’t happen.
It’s entirely possible, as we saw with vinyl, wooden toys and email, that blogging—and, by extension, Tumblr—could make a comeback, or at least hang on as a valuable place for more thoughtful creation and engagement.
The real scandal of Tumblr isn’t that it’s now worth a fraction of its former selling price. The scandal is that Tumblr was ever valued so highly at all. Having a very popular product and only the vaguest idea how to make money on it does not, it turns out, a world-changing business model make.
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