Entrepreneur On Yahoo/Tumblr: It's the Content Readers, Stupid

An anonymous reader writes "Weighing in on Yahoo's recent acquisition of Tumblr for $1.1 billion, social networking entrepreneur Adam Rifkin argues that Tumblr is extremely valuable business property because it has successfully organized itself around the 'Interest Graph' (people interested in the same hobbies or things), rather than the 'Social Graph' (family, friends, and coworkers/colleagues, as is typical for Facebook). He opines that, for a social networking site, readers are far more important than writers; writers, after all, 'have time but no money. Certain groups are going to be overrepresented: Students, stay-at-home moms, the underemployed, retirees.' While readers are just the opposite: they 'have money but no time.... They want to see a picture of a watch they like, and buy it now.' In other words, it's the readers of the content that businesses are trying to reach. And interest graphs can be specifically targeted by businesses, much more so than social graphs."

Comments

Re:people actually read tumblr?

[Samantha Wright]

Here is a (rough, imperfect, insert-your-own-caveat-here) list of popular websites. Tumblr is #31.

Re:people actually read tumblr?

[sjwt]

I don't watch the Superbowl, but no matter how much time I spend say playing or watching Ice hockey it will in no way will diminish the value of targeting all those follow the NFL.

Not that easy

[Aerynvala]

Tumblr is such a fast moving, weird place that finding the right things to market to the right 'readers' is not going to be as easy as all that. And a great many users are actively hostile to corporate manipulation.

Re:Not that easy

[kk49]

They just need data, yahoo can then process it and build up an accurate model of you. People are more honest on tumblr...

Re:Not that easy

[Aerynvala]

They are frighteningly honest on Tumblr, that's true. I'm just not sure how they're going to be able to turn that information into a selling opportunity without radically altering the interface which would drive a huge portion of the audience away.

Re:Not that easy

[Aerynvala]

I've seen no appreciable change yet on my dashboard. Of greater concern so far are blogs that seek out personal posts and repost them for mocking/abuse.

Re:Not that easy

[gl4ss]

They just need data, yahoo can then process it and build up an accurate model of you. People are more honest on tumblr...

well what this guy is saying is that tumblr is worth so much because you can target the readers better because you know that they read a blog about cats and sexy women.

like, no shit sherlock? but it's not stupid to think that is not actually worth a billion dollars. I mean, how many men are they going to sell lingerie to..

Re:Not that easy

[Anonymous Coward]

You can either possess Tumblr's audience or you can influence Tumblr's audience, but never both at the same time.

  - The Tumblr uncertainty principle.

Re:Another failed attempt a open source packaging

[axonis]

Remember Carol Bartz never knew anything about the internet, just how to waste money, its now built into Yahoo culture ... a Swiss thing

Why dissociate?

[Anonymous Coward]

I don't think it is right to dissociate the social graph from the interest graph. There are things (people, topics, groups...) linked by relationships. Depending of your goals you can analyze some kind of relationships and later some other kinds for other purposes. The error would be to use only the social or the interest graph. Success will be to build the analysis on the right relationships at the right time.

Monitization Guess

[kk49]

They will gather information about you on tumblr and sell ads on other sites. So this is the best route for Tumblr to become profitable without losing "street cred" (So lame that that is a business term)

Re:Monitization Guess

[Aerynvala]

Ah, okay...that actually makes a lot of sense. Tumblr itself isn't really suited to advertising. The 'radar' thing is a very tiny vector and easily disregarded.

Re:Monitization Guess

[wvmarle]

It seems to me more that they do want to sell ads on Tumblr but then indeed highly targeted ads. Not targeting the person, but the content of the page they're reading.

Why try to profile users, and guess what their interests may be, when you can also have the user themselves select what they indeed find intersting, and target those intersts? A user may be interested in one thing now, and in another thing later. They may be interested in something now that they were not before - and very likely to want to buy stuff related to the new, fresh interest - which is something the user profiling likely misses.

E.g. user is not much of a driver. Doesn't care about cars. But gets a job that has him drive around a lot, and now he's looking for a tomtom. He visits web sites writing about satnav, looking for info about how it works, how much it costs, where the good deals are. That's a great reader for tomtom to advertise to - but if the user's profiling says "it's a headbanger" and all he gets is advertisments for heavy metal bands based on his profile, the ads are useless. In that way user profiling may very well work against the advertiser, as the wrong ad is show to the wrong user. Now if this user would be shown a tomtom ad (even if it's totally against the personal profile), there is a much better chance he'd click on it.

Keeping ads relevant is the key to the game. Google is the only site I have adblock disabled, because their ads are relevant. Not targeting some "personal profile" Google has of me, but targeting what I am searchng for there and then. And relevant advertising can be quite useful at times.

It's called multipliers

[Anonymous Coward]

People who can get other people to listen to them (or to read, whatever) are called multipliers, because if you can convince or persuade one of them, they convince or persuade many for you. That's why "content is king". You don't get to the masses without the few people that the masses look up to. Of course you want to have the writers who write what is worthwhile to read. Pretty much by definition that can't be any service with millions of users.

Sure it's the content

[Anonymous Coward]

free pornography

so am i a reader or a writer?

[decora]

im trying to figure out which color of star i should have to sew onto my sleeve when they come around asking for my papers.

Re:so am i a reader or a writer?

[Fwipp]

Easy - a creator has more followers than they are following. A reader has the reverse.

Re:so am i a reader or a writer?

[girlinatrainingbra]

Well, you're posting so you're definitely a writer, ergo no money lots of time. However, you're posting in response to something, so you must have read it so you're a reader, so lotsa money and no time. However, you're posting in response tosomething on slashdot, so if you follow the norm (for slashdot) you did not RTFA so you're definitely not a reader, so less money and more time?

As to which color of star to ask, I do not think our badge system defines that as of yet. Please speak to the gamification Tzar and I'm sure they'll get right on it. You could also use D&D to decide:

a - roll a 20-sided die three times to select a HUE

b - roll a six-sided die once to select SATURATION

c - roll a 10-sideed die to select the number of points on the star

d - roll any die and use odd/even to select whether to cut and sew the star yourself or outsource it to chinese manufacturers...

Re:so am i a reader or a writer?

[marcosdumay]

you're definitely not a reader, so less money and more time?

I'm still wondering... What is the label for we that have neither?

aha, the 'consumption economy' nonsense

[roman_mir]

readers are far more important than writers

- the "consumption economy" nonsense strikes again.

In this case production is writing and reading is consumption. If the readers are not exchanging anything of their own for the content they consume, then the writers (producers) aren't getting anything from that trade.

Rifkin is wrong about more than that, both, the readers and the writers are products on these sites, their information is collected and exchanged, the customers are the businesses that pay for the information.

Has ANY reader on tumbler actually paid for anything TO tumbler? I doubt it. Just like no writer on FB paid for anything there.

What Rifkin is confused is the reason as to why it is even possible to find investors into such business models in the first place, the reasons are not obvious at the first glance, because you have to step back and take a look at the bigger economy around. The bigger economy is massively lacking savings and investments and the business climate is destroyed. This is NOT an economy of readers, this is not even an economy of writers, this is an economy entirely based on fake money.

The banks, the hedge funds are able to borrow fake money created by the Federal reserve at fake interest rates and they have no incentive to use that money for any productive business that will NOT generate 50 or 100 times the original investment back. So every attempt at a new social site is just a gamble.

This market in social media development is just like the larger bond and stock markets (and other fake loan markets, like the student loan market). This is all about cheap money and lack of real business opportunities, complete lack of real savers of-course, so the only people that are still making money are those, who have access to cheap money provided by the Fed basically (through whatever intermediaries).

This is a fake economy, those readers and writers BOTH have no money but what the fake economy is able to borrow or just steal from the dollar asset holders around the world via inflation (money printing).

This is a fake money, gambler based economy and it is the most unstable type of economy you can imagine and it has 0 chances of growing an actual productive economy until this fake economy implodes.

Re:aha, the 'consumption economy' nonsense

[Hope Thelps]

If the readers are not exchanging anything of their own for the content they consume, then the writers (producers) aren't getting anything from that trade.

Unless the writers want people to read their stuff. Then that's what they get.

Re:aha, the 'consumption economy' nonsense

[wvmarle]

Nice rambling and it shows you didn't even read TFS (or lack comprehension).

Readers are not supposed to start giving money to Tumblr. Advertisers are who bring in the money.

The idea: some writer writes about some great album he just listened to. Reader reads it, thinks "that's cool, I want to listen to it, too". Advertiser pays tumblr to place ad at this article advertising said album, hoping that reader clicks the ad and buys the album from advertiser. Targeted advertising - back to targeting interests more than people.

So in the end everyone wins. Tumblr can stay online serving their users. Owners of Tumblr make money. Reader is happy because they have that new album they like, and they got it easily. Album vendor is happy because they made a sale. Evereyone happy - and if they do it properly, there is even no need for Facebook-style privacy invasion.

Weighing in

[Anonymous Coward]

is who? Somebody who I've never once heard of, but paid slashdot to run his shitty adverstory? This website is a shallow husk of what it used to be.

Too much time spending to create content

[tuppe666]

The premise of this whole article to justify yahoo buying a Picture only wikipedia(or animated gif porn cloud collections to some) for to sell advertising on...now its become trapped as Microsoft's Gimp (yes another one...Nokia is still wearing the mask for a Billion pay off every so often).

...the idea that this has become wise (ignoring the bullshit words around this) is the social media is full of poor people, While people with disposable income spend times looking at pictures of kittens(or amputee porn, cars...) hobbies. Ignoring the fact that this is just one of many (popular)picture sites set up like Instagram by faceook, Photo sharing built into Microsoft Skydrive(they have even bought Webfives), or that Google has Picassa Web albums...or how they have basically added another 41 features to Google+ all about pictures(including sticking together pictures into panoramas , auto-tagging and auto-generated animated gifs). They already acquired flickr in 2005!!

I wrote loads but changes my mond...the reality is there are not two groups. There is no rich reader vs poor writer, there may well be a measurable difference in balance of these activities between both groups ...but precious time in question means they are simply doing each activity less...rather than focusing on a hobby sites over a person interaction sites. because hobbies are something you only do if your rich with no time...and they are not as friendly as the poor people without hobbies.

The bottom line here is there is one Yahoo story...and its the elephant in the room. Lets talk about Bitch Yahoo digging itself out from Microsoft's Heels.

So, we built an internet, the great infrastructure

[vikingpower]

"We" as in "my generation": the engineers who are now 35 to 50. And this is what the place has become: a mostly commercialized place, a shopping mall peddling boredom against boredom. Where does this urge to vomit come from ?

Re:So, we built an internet, the great infrastruct

[geek]

The internet has become the new "idiot box" as my grandparents used to call Television. It's not all bad news though for those of us who choose to use it well. Between Google, WolframAlpha and Wikipedia we have, at our finger tips, the greatest accumulation of knowledge humankind has ever known. Using it well can and will make the difference between an idiot and a resourceful, intelligent human being.

That is not weighing in

[tuppe666]

is a shallow husk of what it used to be.

Ironically, I remember when AC had the better comments, as they were used to to protect the individual. Now its just spam.

Maybe its about class

[tuppe666]

im trying to figure out which color of star i should have to sew onto my sleeve when they come around asking for my papers.

I keep thinking this seems to be another divide between (what used to be) Middle and working class. Whatever you call those two groups nowadays.

Re:Maybe its about class

[Samantha Wright]

There was a peculiar "creative class" hypothesis kicking around a few years ago that was essentially a catch-all term for educated people. Maybe the term could be repurposed to describe low-income arts students and graduates coping with debt: accustomed to a higher standard of living, yet technically hovering around the poverty line. Surely this aligns well with the presented image of the penniless Tumblr content producer.

Re:Maybe its about class

[Aaron B Lingwood]

Undoing bad mod. Please mod Insightful.

Re:Maybe its about class

[Anonymous Coward]

I like the Japanese definition of working class; If you have a salary you do not work for yourself and you are therefor working class. :-)

Re:Maybe its about class

[freezin fat guy]

I'm sure illiterate people have even more money.

Re:So, we built an internet, the great infrastruct

[Anonymous Coward]

"We" as in "my generation": the engineers who are now 35 to 50.

Sorry pal. The TCP/IP protocol stack, sockets API, and LAN technologies were developed in the '70s and early '80s. Tim Berners-Lee (present age 57) and Robert Cailliau (age 67) invented the WWW in the late '80s, partly based on SGML which was invented by IBM in the '60s. Relational databases the theory of optimization and transactions also came out of IBM in the '70s, with client/server computing added by engineers at Sybase Corp. in the '80s. I could go on but I don't have half an hour to burn.

Idiot box

[tuppe666]

The internet has become the new "idiot box"...Using it well can and will make the difference between an idiot and a resourceful, intelligent human being.

So nothing like an idiot box then.

Re:Idiot box

[Hognoxious]

Correct - for the 0.001% who can use it wisely.

Paradoxically, sometimes using it wisely means not using it.

Re:So, we built an internet, the great infrastruct

[godrik]

Every great infrastructure ends up being used massively for stupid reason. 90% of postal mail I receive is spam, but 10% is important. (YMMV). The same goes with internet.

Drop the social network crap and funny cat pictures, and you will find again what you are looking for in the internet: a large base of knowledge and communication between people. My four most visited website are: slashdot, jeuxvideo.com (a french video game website), wikipedia and arxiv. And personnaly, I feel just fine about the internet.

Time but no money?

[Culture20]

Why not both? I'm sure a majority of people who post on /. have both time and money.

Re:Time but no money?

[VortexCortex]

Why not both? I'm sure a majority of people who post on /. have both time and money.

You must be new here. It's been made painfully obvious time and again that the writers can't read and the readers can't write.
Do you think the editors read these comments? Did you RTFA? That's what I thought.

...One revenue of Money maybe

[tuppe666]

Ah, okay...that actually makes a lot of sense. Tumblr itself isn't really suited to advertising.

I don't disagree with the parent comment(although only as an *extra* revenue stream) to there overlords Microsoft, but a disagree with yours Why wouldn't an advertisement for cat products not be suitable for displaying on a page of long haired cats. In fact for tumblr itself it does not have to profile you *like* Microsoft and Apple do it can profile the site your watching. Like Amazon so with your shopping basket. I actually think Amazon had a missed opportunity.

Re:...One revenue of Money maybe

[Aerynvala]

Well most people view tumblr on their dashboard which doesn't have a lot of 'white space' for ads to slip into. I suppose ads could be inserted into your dashboard stream as if they were another blog post, but I think that would cause a serious revolt.

Re:Price vs. Revenue

[gl4ss]

The acquisition is priced at over $1billion. Max annual revenue for Tumblr is $13million projected to be $100million this year(high hopes that are highly unlikely, I predict $20million).

Yahoo! is paying through the nose for a highly unprofitable company with no hope of ever generating a ROI.

This acquisition is massive folly!

yeah. 1 billion would have been a massive overvaluation EVEN IF it had been doing 10 million of profit. which it certainly wasn't.

topical blogs.. well doh. like "hot asian women", "hot bikini women" etc. categories are surely worth a lot to advertisers.. this guy just doesn't sound that smart. sure we know that it's a popular web service.

so was geocities. was geocities worth 3 billion dollars? HELL NO. and they had topic oriented readers and blogs as well. tumblr is just geocities for 2010's. good thing is that the sites don't hit transfer limits as easily.

The adjective may or may not be misplaced

[Hognoxious]

It's the stupid content readers.

FTFY

Fag packet figures

[tuppe666]

The acquisition is priced at over $1billion. Max annual revenue for Tumblr is $13million projected to be $100million this year(high hopes that are highly unlikely, I predict $20million).

Yahoo! is paying through the nose for a highly unprofitable company with no hope of ever generating a ROI.

This acquisition is massive folly!

I am sick of this back of a fag packet figure being banged around. In November 2006, YouTube, LLC was bought by Google for US$1.65 billion(the largest at the time). Its argued today its worth http://www.valuewalk.com/2012/03/google-inc-goog-youtube/ $45.7 Billion Ironically in the context of this article Google outbid Yahoo. In terms of numbers http://allthingsd.com/20100319/the-numbers-behind-the-worlds-fastest-growing-web-site-youtubes-finances-revealed/ youtube revenue for the year before the sale to Google was $15,057 (whole making losses of hundreds of thousands each month)

I have no idea whether this is a good deal. But these figures are not of relevance.

Stop cutting a pasting from other sites and think for yourself (registering would be a good start too)

Never looked at Tublr until now

[Kimomaru]

Yeah, sorry, got completely turned off to social media by Facebook until I read this post. Glad someone made a site focused on information and not the monetization of user's information.

I loathe Facebook to my very core.

Tumbler is popular because it has tons of free por

[Stan92057]

Tumbler is popular because it has tons of free porn. I suspect that will end not because Yahoo is against porn thats far from the truth they allow porn on Flickr IF you make sure its marked properly. Thats not the case with Tumblr and they dont allow its member to report violations. Dont like the content? leave pretty much

Re:people actually read tumblr?

[interkin3tic]

Yes, people go to tumbler. For more than porn? Er... And I think porn ads are already pretty easy to target.

Insightful article?

[Georules]

The article makes the assumption that we didn't understand this already. I find it impressive that a website has figured out how to be a porn site that people are comfortable looking at wherever they are in public, at any time.

Re:The Fucking Asshole of Macabre De Lane

[Impy the Impiuos Imp]

I say there's probably a Tumblr page for you.

Ah, that reminds me again...

[knarf]

Those words remind me again why I stay away from all these made-up-word-lacking-a-vowel services and host my own stuff on my own server. I'm not a target. Just a hacker willing to share, but on my own terms.

Maybe I should call it Servr to at least give it a semblance of social startup coolness...

Re:people actually read tumblr?

[__aaltlg1547]

How are they ranked? Windows Live #9??? Ahead of Twitter #13? LinkedIn #12 ahead of Twitter #13? Blogspot #11 ahead of Google India #12???

Re:Price vs. Revenue

[__aaltlg1547]

But if fits the new internet model of how you make money. Put in a few thousand hours developing (and promoting) an application that a large number of people find marginally interesting -- enough that you have a huge number of page hits. Then sell to one of the majors at a vastly inflated price, so your 10,000 hours or so of work is rewarded with a billion dollars.

Net pay rate if you succeed, $100,000 an hour.

Net pay rate if you don't succeed: $0/hour.

Who gets the big payoff is a total crap shoot. It's like winning the lottery, only the stakes are bigger. Who loses? The suckers you get to buy you out.

And it all goes to prove something I've been saying for years: Hard work and prudent investments will never make you rich. What will make you rich if finding a way to get paid for what other people are doing.

Re:people actually read tumblr?

[Samantha Wright]

Consider it a wakeup call that the electronically savvy are not necessarily the most electronically aware, I guess!

That being said, though, I think there are a few insights that can be offered: Windows Live is the default homepage on most new Windows machines, and might never be changed (an alarming number of people will readily type in "google" to Bing rather than set their homepage), and at any rate its rank would appear inflated because Google is fragmented. Twitter is probably behind LinkedIn because Alexa depends on embedded advertising js to count pagefetches, and Twitter is heavily accessed through external clients and has relatively fancy AJAX. Blogspot doesn't have as many different ccTLDs as Google itself, so many of the hits are aggregated (12.1% of all hits for Blogspot.com come from Indonesia, for example.)

Or maybe the Internet really just works that way! Hard to tell, really.

Re:So, we built an internet, the great infrastruct

[__aaltlg1547]

Huh? Did he say they had invented TCP/IP or ethernet? Civil engineers in the 1950s didn't invent CONCRETE either. But they built the interstate highway system.

Re:people actually read tumblr?

[tompaulco]

I have used 0 of the top 1, and 4 of the top 20 sites. I've used Yahoo in the past, but probably not in about 15 years.I would call myself a once a month user of Youtube.

umm...

[dotar]

"readers are far more important than writers"... Who the fuck does he thinks generates site's content???

Re:Indeed

[Aerynvala]

Oh no, they're very good at cracking down on people of color who dare respond to white supremacist hate blogs. /bitter

Yahoo integration can be simpler...

[nmalloch]

What Tumblr Would Look Like Within Yahoo’s Content (and Why It’s So Tough to Do It Right) http://blog.primal.com/2013/05/what-tumblr-would-look-like-within-yahoos-content-and-why-its-so-tough-to-do-it-right-2/

Re: people actually read tumblr?

[Samantha Wright]

The list is compiled according to page hit stats and reflects the last month of traffic. It's quite accurate except for the relatively small fraction of people with adblock—and do keep in mind that things may be different in different countries. Ask, for example, only gets about a quarter of its traffic from the US; it's also rather popular in Japan, India, and Mexico.

Re: people actually read tumblr?

[girlinatrainingbra]

Plus there's an age distribution, and there's been a rather fast tumbling down of other sites.

Tumblr is more popular amongst current high-school kids than facebook is. Facebook is for parents and grandparents. Tumblr is for the current high school kids. Actually, facebook is for the bonus site to make for your parents to see that you're friends with the good kids and the appropriate hoity-toity-clubs like math-club, science-club, model United Nations, scouts of boys and girls, etc. [i do not know where the fight-club members are. no one talks about fight club... ;>) ]

  Two sites that were filled with questions have disappeared (or half-disappeared): formspring.com (i'm on there somewhere, hint hint) was supposed to go dark in april but the web pages are still there. Ask.fm and a similar ask-a-question functionality on facebook supplanted formspring. And vyou.com (pronounced view?) really did go completely dark. Some kids also have gone onto myspace, though who the hell knows why...

Formspring was really popular amongst the Brazilians. If you had a page with a popular name, say teresa or allyson (in all their spelling versions), you'd get bombarded with questions in portugese and threats asking you to get off of their formspring page so that they could have it.

Re: people actually read tumblr?

[Samantha Wright]

(Probably worth noting that Tumblr also has Formspring-style questions these days.)