Could Facebook and Yahoo Stage a Bidding War for the Rights to Ruin Tumblr?
Reports indicate that Yahoo is in serious talks to buy Tumblr, but fears Facebook may crash the party. The new chief executive of Yahoo, Marissa Meyer, believes that purchasing Tumblr could provide the same benefit the Blogger acquisition did for Google – making it relevant again with the youth crowd. And to do so Yahoo may have to drop at least a billion dollars or more to make that a reality. But as Om Malik put it, “the question is: is Tumblr the fountain of youth that Yahoo badly needs or will this be case of a pathetic old-middle aged guy hanging with youngsters trying to be hip?”
Yahoo CFO Ken Goldman spoke at JP Morgan’s Global Technology conference earlier this week, and elaborated the need for the aging internet giant to make itself “cool again” by appealing to the coveted 18-to-24 year old demographic. “One of our challenges is we have had an aging demographic,” said Goldman at the Boston event. “Part of it is going to be just visibility again in making ourselves cool, which we got away from for a couple of years.”
And according to the latest buzz, a strategic alliance or investment in Tumblr could provide Yahoo that much needed infusion of hipsters. Tumblr has recently been ramping up its efforts to raise another round of financing that could value the company near $1 billion dollars. In a previous series of funding back in 2007, Tumblr raised $125 million at a reported $800 million valuation. Tumblr also told Forbes that it generated $13 million in revenue last year, and also suggested it could approach $100 million this tear due to its new advertising platform. Tumblr already has a pretty large audience too seeing 117 million visitors in April according to comScore, and on its home page Tumblr touts is has over 107.8 million blogs and 50.6 billion posts.
This all sounds good for Yahoo right? Well, not so fast, Yahoo is terrified that Facebook could swoop in at the last minute. The CEO of Tumblr, David Karp, is said to have a close relationship with Facebook and was even spotted at the Facebook Home launch. Even though Facebook recently purchased Instagram, they too could use more of the sought after younger demographic that populates Tumblr.
Either way, Tumblr appears to be on the move courting multiple suitors, so stay tuned for the latest in these potential negotiations! Do you use Tumblr now though? Do you think a Facebook or Yahoo take over could potentially ruin its virality and enjoyment for users? Facebook is always making changes that seem to upset users, while Yahoo has a solid track record of buying and ruining companies like Geocities, Flickr, and Delicious!
What do you think Tumblr should do? Do you think a Facebook or Yahoo buyout would be bad for its users?
UPDATE: Yahoo is reportedly moving forward to aquire Tumblr, with a board meeting on Sunday to consider the $1.1 billion cash offer!