After nearly a year under Yahoo's massive corporate umbrella, it appears that popular blogging platform Tumblr is still struggling to find a profitable business model.
In Yahoo's first quarter earnings report, there once again was no mention of revenue from Tumblr. The obvious issue is the lack of advertising revenue. To avoid turning off longtime users who've enjoyed Tumblr's ad-free experience, the site's ad sales team has focused instead on encouraging clients to create their own Tumblr blogs and share content in the form of native advertising. Problem is, these ads don't make Tumblr much money.
“The stakes are as high as they’ve ever been,” Tumblr founder David Karp, 27, said in a recent interview with The New York Times.
As the New York Times article points out, being acquired by a company of Yahoo's size has afforded Tumblr a little wiggle room in its quest for meaningful revenue. How much time it has left is unclear. Lee Brown, Tumblr’s head of global advertising sales, declined to say how much revenue the site is making now compared to a year ago.
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Last May, Yahoo acquired Tumblr for approximately $1.1 billion in cash. As part of the deal, Karp stayed on as chief executive and Tumblr operated as an independent unit within Yahoo.
While Tumblr's revenue is at an apparent standstill, its user base is growing. Since the acquisition last year, Tumblr's audience has grown 22 percent, according to comScore metrics, and its network is made up of some 180 million blogs. And Tumblr's staff has more than doubled under Yahoo, growing to about 220 people, The New York Times says.
Tumblr was founded in 2007. Here's a video of Karp from 2011, discussing how to scale a business: