As Mitch Wagner discussed today, Yahoo is acquiring Tumblr. The big Internet debate at the moment is whether Tumblr will be good or bad for Yahoo. Regardless of their stances on the future of Yahoo itself, many claim that Yahoo will somehow ruin Tumblr.
Yet perhaps Tumblr needs ruining, so that it might thrive. Perhaps.
We're not talking about censorship. Predictions that Yahoo will bar some Tumblr images of pornography and self-harm are empty speculation. Yahoo has not done much to restrict such content on its other properties.
Tumblr has desperately needed better management for some time. True, over the past several years, its use has grown and grown and grown. However, its monetization has stayed at bake-sale proportions. Much of its income comes from customized blog designs -- a feature that in and of itself complicates Tumblr and threatens the streamlined approach to social networking that has come into vogue. Remember MySpace pages? Those were highly customizable, too.
Another staple of Tumblr's revenue stream has been sales of T-shirts and other Tumblr paraphernalia. That's a business idea worthy of Paul Ceglia's playbook. (See: Lessons From the Latest Battle Over Facebook Ownership.)
This past year, Tumblr finally incorporated advertising -- something it had resisted for a long time -- but it generated a paltry $13 million of ad revenue in 2012. Considering CEO David Karp's on-the-record abhorrence for even having an ad-based model, it is a very real possibility that Tumblr simply can't figure advertising out.
Sure, Tumblr could pull itself up by its bootstraps and spend years (and lots of money) experimenting with advertising solutions. This is what Twitter did successfully. But Tumblr may not have the time or money for that. Its meager 2012 ad revenue offset just more than half of the company's 2012 operating costs, and those costs are rapidly increasing. And for all its growth, Tumblr still pales in comparison with the heavies of social media. Tumblr traffic never even surpassed the all-but-dead MySpace's traffic until this past summer.
Yahoo, conversely, has been one of the few companies to come close to genuinely competing with Facebook for online advertising impressions. Even though its traffic and advertising sales have declined, it has remained an advertising impression and monetization machine.
As I observed two years ago in an Internet Evolution Big Report, Tumblr as a social network is fantastic. It is flexible. It is customizable. Whatever form of content you want to view and share, Tumblr's unique selling point is that it can be anything you want it to be. This, in a way, has also been one of its weaknesses.
With great customization comes great complexity, and complexity requires focus and vision. Facebook has a clear, concisely communicable vision: connecting people interacting using real identities. So does Twitter: real-time broadcasting. Even Google+ has a vision: Hey, what if Google owned Facebook? Today Yahoo's direction is becoming clearer, now that Marissa Mayer is running the show. (See: Why Summly Is the Future of Yahoo.)
Unlike its bigger social brothers, Tumblr has lacked direction. Perhaps this accounts for its notorious misfit hipster demographic -- a demographic Yahoo could change. Certainly, Yahoo may ruin Tumblr for elitist hipsters who like the idea of being on a social networking site that doesn't make much money and that relatively few people join, but Tumblr could use new blood. Mass social networking thrives on growth and diversity. Tumblr, with its penchant for sleek customization, could be poised to be the ideal social network to provide growth and diversity. With the right monetization plan, there is no reason Tumblr shouldn't be hugely successful.
Yes, if there's one company that could destroy Tumblr with a buyout, it's certainly Yahoo. But if there's one company that could build Tumblr up into the huge success it deserves to be, that may also be Yahoo.
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— Joe Stanganelli is a writer, attorney, and communications consultant. He is also principal and founding attorney of Beacon Hill Law in Boston. Follow him on Twitter at @JoeStanganelli.
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