Here's a little dose of financial reality for Tumblr users who
are upset that their free-to-use, nearly ad-free little corner of
the Internet has been bought by big, bad corporate
): One way or another, probably sooner rather than later, you're
going to pay for your free blog. You're going to see more ads, or
pay to post, or be asked to subscribe, or pay for some premium
level of service or information.
Some way or another, somebody's got to pay. That's the way the
"content" business works, or that's the way it worked for a couple
of hundred years before the Internet took hold and media companies
jumped on board and tried to establish an audience before worrying
about making money. Now they may rue the day, and for good reason.
So, how has Tumblr survived since its launch in 2007 with
all-you-can-eat free service, no ads until last year, and very few
ads since? It coasted on venture capital and took the long view for
the payoff, which came this week at a cost to Yahoo of $1.1 billion
in cash, including about $250 million for founder David Karp, who
gets to keep his job as CEO, too.
Now it's Yahoo that gets to figure out how to make money from
Tumblr. In announcing the purchase Monday, CEO Marissa Mayer hinted
broadly that Tumblr's value to Yahoo comes with its advertising
That potential is pretty juicy: Tumblr's very young demographic is
at least a generation younger than Yahoo's. It has good mobile
reach, and a strong international presence. According to Mayer, the
sheer numbers are impressive: She expects Tumblr to boost Yahoo's
user base by 50% and its Web traffic by 20%.
Moreover, Tumblr's community of users collect around their special
interests rather than, like
), around social and professional contacts. Advertisers are willing
to pay a premium to advertise to a small but self-selected group of
people with an expressed interest in golf or puppies or movies.
Mayer has promised "a very light ad load" on the Tumblr Dashboard,
that is, the user's personal home page, plus ads on blogs, but only
with the permission of the author.
So, all of this sounds like a business plan, and it's better than
most big media business plans, particularly considering Tumblr
doesn't have to spend a dime to acquire its user-generated content.
That puts Tumblr in a minority of sites devoted broadly to
information, as opposed to transactions, that have a shot at making
real money with their present business plans (assuming, of course,
that it can get past that high barrier of a $1.1 billion upfront
There are other ways that information websites can make real money,
and these are business models that were around for a long time
before print and broadcast media ceded their audience to the
Internet. For instance:
- The subscriber model. At the risk of landing in the cranky
old geezer category, it must be said that Rupert Murdoch, head of
), wasn't all wrong when he decided he wasn't giving everything
away for free anymore. He owns a few properties that are worth
paying a monthly fee for, notably the
Wall Street Journal
Times of London.
New York Times
has made inroads with an online subscription model, and many
others will follow soon. This is possible when a website has
unique content of high quality with a loyal audience that
advertisers need to reach.
- The advertising model. The ultimate success story here is
) which, like Tumblr, knows which ads might get your attention
because you're telling it what interests you day in and day out.
But Facebook -- maybe not so much, because the site is about
staying in touch with social connections rather than exploring a
mutual special interest. So far, Facebook seems to have been able
to target ads according to age group, and previous Web browsing
activity, and not much else.
- The hybrid model. Minyanville is an example. It has a free
advertiser-supported front for people with a strong interest in
personal investing, and "MVP Subscriptions" for the high-rollers
There are many variations, of course, and smart people in the
business are working on more of them.
Their problem is the advertising vacuum hose that is Google.
an estimate from eMarketer
, mobile advertising is expected to rise 77%, to nearly $7.9
billion, in the US in 2013. Google alone is expected to suck up
more than half of that total.
Mobile ad spending is expected to hit $27.1 billion by 2015,
according to the same forecast.
It's time for big media to get cracking, if they want a piece of
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