Yahoo’s new CEO has decided to buy Tumblr. This is a mind-bogglingly bad idea. Let’s take a look at Tumblr and see if we can figure out why dropping a clean billion dollars on the hot trend is a terrible idea.
(1) Tumblr’s CEO. He’s “not interested in making money”. Well, that’s nice and idealistic and all, but companies run on money. Business runs on money. Right now, Tumblr is alive because it is popular; it has a good wind behind it. What happens when that shifts? What is his plan? Oh, wait, he doesn’t have one. In his determination to avoid the crass ad schemes that have marred so many sites, he has thrown the baby out with the bathwater and failed to plan ahead in any real capacity. Tumblr is one bad fad from extinct.
(2) Monetization problems. Tumblr is a scattered rollercoaster of content, ill suited and difficult to monetize by throwing ads on every last page. It would look terrible and drive away the very users that they want to keep. So how does this company plan to make money consistently? A good answer might be that the new Tumblr plans to position itself as a social media intermediary between corporations and consumers, hosting contests and soliciting readership responses in an organic manner. Yeah, right. Yahoo is far more likely to try and force Tumblr to integrate wholesale into their conglomerate. This will work out about as well as it did for Flickr.
(3) Barrier to entry in market. Social media has a defining issue in that its very, very easy to set up a new social media site. A handful of people with coding knowledge and some free time can (and have) done it. The barrier to entry in the market is very low. The giants on top have to be aware of this and guard their customers against jumping ship, or else the next big fad can and will wipe them out. Nobody has the perfect answer for this problem yet. The current approach, as seen with Facebook, is to cram in ever more gadgets and feeds in the hope of making itself indispensable. So how is a microblogging art site going to do that, exactly?
(In my opinion, Facebook is beginning to teeter as its ads become more intrusive and its interface clutters up with useless gadgets. It still has massive, massive market share. Ie, I have a facebook because my grandmothers do, and it lets me give them easy updates. But what happens if that changes?)
So, in summary, this is one ailing tech company snatching up something young and trendy in an attempt to revitalize itself. This is your dad wearing his hat backwards and saying “sup” with a straight face, hoping he’s cool now.