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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."
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.
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.
You can't handle the truth.
"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.
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.
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)
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.
Bio questions? Ask me to start a Q&A journal. Computer analogies available for most topics!
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.