TelecomTV TelecomTV
  • News
  • Videos
  • Channels
  • Events
  • Directory
  • Smart Studio
  • Surveys
  • Debates
  • Perspectives
  • DSP Leaders World Forum
  • DSP Leaders
  • Great Telco Debate
    • |
    • Follow
    • |
    • Subscribe
  • |
  • More
  • Webcasts
  • Surveys
  • Debates
  • Perspectives
  • Great Telco Debate
  • |
  • Follow TelecomTV
  • |
    • Subscribe
    • |
  • About
  • Privacy
  • Help
  • Contact
  • Follow TelecomTV
  • About
  • Privacy
  • Help
  • Contact
  • Sign In Register Subscribe
    • Subscribe
    • Sign In
    • Register
  • Search

Business Models

Business Models

When DSP strategies fail: why Verizon got pocket change for Tumblr

Ian Scales
By Ian Scales

Aug 13, 2019

via Flickr © JeepersMedia (CC BY 2.0)

via Flickr © JeepersMedia (CC BY 2.0)

  • Yahoo bought Tumblr and Verizon sold it for a fraction of the original price
  • Verizon seems to be getting the blame for the loss, but in fact Tumblr’s decline set in under Yahoo and was not because of the decision to drop the porn
  • Let’s review the evidence

Back when media companies thought that buying into social media was a passport to the future, Yahoo, mostly a search site, bought Tumblr (a micro-blogging site - a sort of cross between Facebook and Twitter) in 2013 for $1.1bn (£910m).

Then, when telcos thought buying up online content companies was the way forward to make good on their digital service provider strategies, Verizon bought Yahoo complete with Tumblr in 2016 (are you following?) for $4.83 billion. At that point, Yahoo had a global audience of 1 billion monthly active users, including 600 million monthly active mobile users.  

Now, Verizon has just kissed goodbye to Tumblr for what is estimated to be around $3 million (that’s million with an M). Keep in mind that Tumblr was  initially considered an important added component to the Yahoo brand when that company was making a string of expensive purchases under the direction of its then CEO, Marissa Mayer.  

That means that the stewardship of Tumblr by Yahoo and Verizon between them (mostly Yahoo, it has to be said), has seen the almost complete value destruction of Tumblr, from $1.1 billion - it’s purchase price in 2013 - to chump change today.

 

Tumblr's demise: source Alex Barredo, Twitter

Tumblr's demise: source Alex Barredo, Twitter

When Yahoo bought Tumblr in 2013, it was riding high with over 90 million new posts on its platform each day.  That growth continued for a short time (see chart) and then began a precipitous decline through to about 2017 when Verizon finally closed its deal for Yahoo. 

By this point posts were way down, to just over 30 million per day and the other marks and measures for social media success (revenues) were down in proportion. 

Tumblr’s founder, David Karp, who had stayed at the company through the Yahoo years (despite the precipitous decline), held on for a bit under Verizon and then left. The notorious (at least for some Tumblr users) decision to ban pornography from the site, seems to have caused another slide in postings (rather than the uplift that Verizon was presumably looking for) and Tumblr was by earlier this year at 20 something million postings a day when presumably Verizon thought it could steady the ship and achieve a renaissance. As it found it couldn’t reboot it, Verizon decided a sale rather than suffer the embarrassment of further decline, was the best option. 

Many observers have been pointing to the porn ban as the reason for Tumblr’s decline, but as Alex Barredo illustrates with his chart, the rot had set in well before that - posting declines can be taken as an early warning sign of major illness, analogous to clogging arteries, perhaps in advance of other, more drastic symptoms. 

So does this mean that telcos simply aren’t a fruitful home for content or social media? On the face of it Yahoo/Verizon both made a pig’s ear of their investments, but in fact Yahoo, not Verizon, was the real butterfingers here. 

Yahoo already had the right sort of Silicon Valley culture and understanding of social media that should have seen it do better with Tumblr. Instead it suffered huge posting declines and seemed unable to right the ship. Why?

As we’ve seen with other social media properties or ‘brands’ once a vibe sets in that a particular site is no longer ‘hot’ or cool or fashionable, perhaps because of the image of the parent company, it’s very hard to turn it around. In social media success can be fleeting and seemingly small failures are often terminal. 

For that reason the current proud owner of Tumblr, Automattic, the web services company which runs the blogging platform Wordpress,  seems to have the credentials to do better. Can it?

Related Topics
  • Analysis & Opinion,
  • Business Models,
  • Media & Entertainment,
  • News,
  • North America,
  • Telco & CSP,
  • Transformation,
  • Verizon,
  • Yahoo

More Like This

Access Evolution

Vodafone 5G network turbo boosts Virgin Media’s mobile service

Jan 25, 2021

Access Evolution

Loon falls back to earth with a bump

Jan 22, 2021

Policy & Regulation

It's Google and Facebook v. The Lucky Country

Jan 22, 2021

Digital Platforms & Services

All data centres are not the same - proximity matters

Jan 21, 2021

4G LTE

DT and Telefonica/O2 plan active site sharing in Germany

Jan 20, 2021

Email Newsletters

Stay up to date with the latest industry developments: sign up to receive TelecomTV's top news and videos plus exclusive subscriber-only content direct to your inbox – including our daily news briefing and weekly wrap.

Subscribe

Top Picks

Highlights of our content from across TelecomTV today

1:4:29

Great Telco Debate: Live Debate – Day 2 (On-demand)

1:18:20

Great Telco Debate: Live Debate – Day 3 (On-demand)

43:08

Developing an ecosystem for vRAN

2:23

The TelecomTV Snapshot: The Great Telco Debate 2020 - CSP Highlights

  • TelecomTV
  • Decisive Media

TelecomTV is produced by the team at Decisive Media

Menu
  • News
  • Videos
  • Channels
  • Directory
  • Smart Studio
 
  • Surveys
  • Debates
  • Perspectives
  • Events
  • About Us
Our Brands
  • TelecomTV Tracker
  • TelecomTV Perspectives
  • DSP Leaders
  • DSP Leaders World Forum
  • The Great Telco Debate
Get In Touch
[email protected]
+44 (0) 207 448 1070

Request a Media Pack

Follow
  • © Decisive Media Limited 2021. All rights reserved. All brands and products are the trademarks of their respective holder(s).
  • Privacy
  • Terms
  • Legal Notices