“We promise not to screw it up”: Yahoo buys Tumblr for $1.1bn

21/05/2013

Yahoo has bought blogging platform Tumblr for $1.1bn (£725m) in cash, with CEO marisa Mayer pledging “not to screw it up” in a blog post.

Watch Wikipedia's Jimmy Wales speak to the BBC about what the deal could mean for Tumblr:

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The deal is likely to see Yahoo integrate Tumblr into its services, in a bid to boost traffic to its other properties, such as the photo sharing site Flickr.

Formed in 2006, the Tumblr blogging platform now hosts 108 million blogs, with a total of 50.7 billion posts, with a significant presence on mobile devices.

Despite its fast-growing user base it has struggled to make money, and has traditionally resisted advertising.

In her blog post on Tumblr, Mayer added that the company would continue to operate independently and David Karp, will continue as chief executive officer of Tumblr.

The $1.1bn price tag for Tumblr represents a significant premium on its $800m valuation when it last raised money from private investors.

The deal is the largest made by Mayer since she took the helm at Yahoo last July, and she described the acquisition as a "unique opportunity."

"On many levels, Tumblr and Yahoo couldn't be more different, but at the same time, they couldn't be more complementary," added Ms Mayer.

Karp said he was "elated" to have the support of Yahoo.

"Tumblr gets better faster with more resources to draw from," he added. Mr Karp emphasised that neither its aims or team was changing as a result of Yahoo's purchase.

It announced that limited use of adverts would be rolled out in April last year, but made just $13m in revenues for 2012, according to a report by Forbes magazine.

It is unclear whether the deal with Yahoo will result in more adverts on Tumblr.

Yahoo remains a giant in the internet world, with around 700 million visitors to its website every month. The majority of its revenues come from advertising.

But it has limited mobile reach and lags behind Google in the search engine rankings. It also shed more than 1,000 jobs during 2012 and has long been divided over whether it should focus on media content or on tools and technologies.

Commenting on the deal, Warwick Business School Associate Professor John Baptista, a digital communication expert, said: "Email is slow and old and dying, so just being an email services provider is not sustainable for Yahoo. Google has had some success with Google+ and this looks like Yahoo is trying to replicate that with Tumblr. They are building capabilities to move into more dynamic forms of communication than email to offer Google + functionality to Yahoo! customers. Tumblr is a very popular platform, but if Yahoo try to impose regulations on it too much to appease advertisers it could quickly drive users away."

Read the blog post here

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