Tumblr The Free Blogging Site With 300 Million Users And $18 Million In Revenue, Is Bought By Yahoo For $1.1Billion In Cash.
Yahoo's board unanimously approved a $1.1 billion cash deal to buy the blogging site this Sunday. It's a big risk for Yahoo, since Tumblr makes only about $18 million each year, though it has been valued at $800 million.
So why is Yahoo doing it?
Google has YouTube. Facebook has Instagram. Now, Yahoo will have Tumblr. Who is next?
This move represents a growing trend of large billion dollar tech companies buying small but performing startups to get an edge in the market.
Yahoo, an older and not so popular search and community internet company (which does well in Asia), now has a thriving social network.
Marissa Mayer announced on her own Tumblr that Tumblr would continue to operate independently and "we promise not to screw it up."
Tumblr founder Karp also issued a statement on Tumblr, promising its mission to "empower creators to make their best work and get in front of the audience they deserve" isn't changing.
You don't buy a company earning $18 million a year for $1 billion, and not change it. Yahoo will have to change it in order to increase the revenue to justify the cost of buying it.
The really question is simple: Will the future changes to Tumblr to allow it to generate income, drive off it's users and force the party to move to a new service closer to Tumblr of old?
Will ads and pay service end up killing the free blogging site? Only the future will tell.