The Decline and Fall of Yahoo and The Death of Tumblr?

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If you follow the business news, you’ve probably heard about the problems of YaHoo, the former internet giant that has, through an extensive series of bad management decisions, questionable, high cost acquisitions and other problems, driven itself into the toilet. Once valued at over $120 billion, Yahoo ended up selling itself, or at least large parts of itself, for just $4.8 billion.

Apparently unable to come up with new products, new technology or new business models to keep itself functional, YaHoo instead tried to buy itself out of trouble. It embarked on a spending spree, snapping up high profile start up businesses, often at premium prices.

Sometimes this works. If done correctly. Microsoft, Apple and other successful companies do this frequently. They discover a new company with new technology or new business models that would fit in with their core  business plans, buy it or invest in it heavily, nurture it, foster it, and develop it into a successful part of the new parent company.

Unfortunately Yahoo didn’t seem to have either the expertise or the motivation to do that in many cases. A few were successful, but not many. Most performed poorly at best. At worst, Yahoo’s incompetent management and corporate policies quickly drove them into the dirt and many failed completely. If you scrounge around on the net and look at sources like Forbes, Bloomberg and other financial media organizations, you can find entire lists of the companies Yahoo bought, and ruined over the years for one reason or another.

How did they ruin them? Mainly through mismanagement, poor decisions, and often attempts to squeeze as much cash out of them as they possibly could while investing as close to nothing in them as possible. I know a few people who worked in ‘silicon valley’ over the years, and a lot of them were terrified about the possibility of being acquired by YaHoo because it meant they’d be looking for jobs in a very short time. An acquisition by Yahoo became regarded as sounding the death knell. It was automatically assumed, justifiably or not, that acquisition by Yahoo meant mass layoffs as it tried to squeeze as much cash out of it as possible, or being mismanaged into extinction.

But let’s talk about Tumblr… I’ve been on the service for more years than I care to think of now. By and large I’ve enjoyed it. Yes, I have other outlets if I want to blog, put photos or stories or bad jokes or whatever up for public view. This is one of them, after all. Most of those outlets are, frankly, a lot more flexible, more useful, and allow far more creative outlet than Tumblr ever did. Nor is the fact Tumblr is free much an incentive. There are, frankly, a lot better, much easier to use free services out there which allow far more creative freedom.

What Tumblr had going for it was a sense of community. It was as much a social network as it was a blogging service. A lot of the users developed friendships with other users of the service. The people reading your blog were almost certainly other Tumblr users themselves, with their own blogs, and you quickly accumulated an enormous collection of other Tumblr users you read, followed, and exchanged thoughts with. Some of us became pretty good friends. I know maybe a dozen people over there that I now consider friends because our interactions through the system. I’ve even visited some of them.

When Yahoo bought Tumblr for the utterly ridiculous price of $1.1 billion, a lot of us regular users over there saw, frankly, doom on the horizon. And not just because of Yahoo’s well deserved reputation of driving their acquisitions into the toilet.

Tumblr was a ridiculously popular service. But it had a serious problem. No one was able to figure out how to make money off it. The system that made it so popular made it very difficult to try to monetize it without destroying the very features that made it popular.

Tumblr’s main way of making money seemed to be silly things like trying to sell users stuff like ‘premium’ templates, fancy, pretty formatting for their blog’s home page. That’s fine, but I haven’t even seen my home page over there since I set up my account for the first time. Nor have I ever seen the home pages of any of the blogs I follow there. One of Tumblr’s features is that registered users have a dashboard, a more or less bare bones, distraction free system that aggregates all of the posts from the blogs you follow into a single page. Since virtually all of the readers of Tumblr blogs are also Tumblr users, we all have dashboards, and we do everything from them, reading, posting, commenting, everything. I follow a lot of blogs over there and I’ve never even seen the home pages of any of them. So why waste the time and money setting up a fancy premium template when no one’s going to see it anyway?

Tumblr survived largely by infusions of capital from outside investors. I’m not sure if it ever made a profit to be honest.

At the time Yahoo bought Tumblr, well, we figured that was going to be the end of it. Yahoo, with it’s reputation of running new businesses into the dirt, mismanagement, laying off the very people who had created the startup to begin with to save money, and above all, it’s desperate need to make money any way it could because the CEO was under pressure to resign or be fired and stockholders were up in arms, well, we figured this was going to be it. Yahoo would either utterly wreck the service, or gut it and turn it into a ghost town.

Yahoo did indeed try to do just that, but the enormous backlash from users forced them to pull back or at least make it’s attempts at monetizing the system less obnoxious. Attempts at censoring the massive amount of outright porn on the service pretty much failed as Tumblr users fought back, left in droves and otherwise forced the company to back down. They did a lot of annoying and damaging things that often made no sense at all, like completely removing the ability to comment on posts, one of the things that had turned Tumblr into a successful social network. Eventually they brought it back, but in ways that made it harder to use, more difficult to follow and extremely irritating. “Improvements” they promised either never materialized, or were completely useless, and often made the system more difficult to use.

They made a real dog’s breakfast of it, but somehow managed to keep from completely destroying it. Barely.

But now… YaHoo just sold off almost all of it’s internet businesses to Verizon. The CEO will get a $53 million buyout. I suspect she’s the only one actually making money off the deal.

As for those of us who use the service…

We just got word now that they are going to be injecting ads into blogs. In order to make this less painful, less obnoxious, they’re even offering to actually pay the bloggers. With real money! Ooo, be still my beating heart…

Well, maybe they are. They’re “still working out the details” about exactly how they’re going to pay the bloggers, how much they’re going to pay, But we all know that any amount that eventually filters down to us, the people who actually write the content, well, we will be lucky if we make enough for a cup of really, really bad coffee. All we know for sure is that they are going to start injecting advertising now, and later, maybe, they’ll figure out a payment system for the actual bloggers. Yeah, right.

The advertising can, they claim, be turned off if you wish. We’ll see how that goes. A dozen or more people I’ve talked to are claiming that as soon as they turn it off in the settings, it somehow mysteriously turns itself back on again… sigh. Mine is turned off. We’ll see if it stays that way. Or if it does any good.

Some will probably do pretty well. Like the porn blogs, the spam blogs, the scam blogs. They’ll probably do very well indeed. They have tens of thousands of followers, largely due to the use of bots that tamper with, manipulate the system. I’ve heard rumors that something like half of the “users” of Tumblr are actually bots that fish through the system, following random bloggers in the hopes that it will lure them back to follow some automated porn or spam site.

Most of us, though? We’re lucky if we have a few hundred. Any money that would filter down to the majority of us would be little compensation for putting up with the advertising, and quite possibly could prove to be an enormous headache.

I took a look at the comments attached to the announcement from Tumblr’s staff, and they were about what I expected; Lots and lots of cursing, frustration, anger, outrage, and a nearly universal impression that this was the beginning of the end. This time for real.

Is this the end of Tumblr? Well, that’s why there’s a question mark up there in the headline. I really don’t know. I suspect not, but I do know I’m not really happy with what’s going on over there. Neither are most of the other users I know.

I’m not going to leave Tumblr. I have too many friends over there. But I don’t think I’m going to be over there as much.

Tumblr is — comfortable, like an old pair of shoes. Easy to slip into, kind of ragged around the edges, but who cares, it feels good. But sometimes you have to admit that it’s time for them to go live in that great dumpster in the sky.

I don’t think Tumblr has reached that point. Yet. But it’s getting close.

I’ve often asked myself why I didn’t switch over to this forum completely. It’s easier to use, I have an excellent off-line editor that let’s me write, edit, proof-read material easily. Grouchyfarmer is easier to use, give me more creative freedom over formatting, I don’t have to deal with Tumblr degrading my photographs, don’t have my drafts mysteriously disappearing (that’s happened a dozen or more times over the past year, so often I don’t even bother to try to save anything as a draft over there any more). The commenting system here is light years better than Tumblr’s… I have wonderful tools here that let me quickly refer to outside websites and sources. Basically this system here is light years beyond anything Tumblr has to offer.

I suspect that as time passes, as the ads start to become more obtrusive over there, as the service continues to degrade as the new owners try desperately to make it profitable, I’ll be turning up over here more often than there.

We’ll see…

The Future of Tumblr

You may not be aware of it, but I’ve had a blog over at Tumblr for years now, and I’m far more active over there than I am here for a variety of reasons. But that is probably going to be changing in the near future.

Tumblr was bought up by Yahoo a while back, and they have not exactly been kind to their new toy. They’ve made a number of questionable decisions that have seriously annoyed many of it’s long time users. Advertising has become far more intrusive, paid, commercial blogs are being injected into our feeds over there. They’ve tampered with the user interface, adding features that no one seems to want, while removing features that people liked.

A few months ago they removed the “Reply” function, replacing it with some kind of messaging function so you can send a message to the author of the blog, but not make a public comment. They really hyped up the message function. And hype was exactly what it was. We always could send messages to the author of a blog if we wished to. It was already part of the system. All their “new” version did was add an icon to the bottom of each post to make it easier to do.

Meanwhile, the Reply function, which was widely used and widely liked, was eliminated, causing such a storm of protest that they’ve been promising to bring it back RSN (Real Soon Now).

The biggest problem with Tumblr, though, is it’s parent company, Yahoo. Yahoo hasn’t had a very good track record. It’s been losing money for years. It’s only really profitable venture is Alibaba, and there is ever increasing pressure on the company to reorganize itself, shed it’s unprofitable ventures and try to become something it hasn’t been in a long, long time, a profitable business. It’s CEO is under fire constantly, with increasing pressure to either resign, or attempts to force the board of directors to fire her. There is even pressure now from some of the bigger stockholders to fire the entire board. And to be perfectly honest, there seems to be considerable justification for both of those actions.

Shortly after buying Tumblr, Yahoo announced some sweeping changes. There would be new terms of service which would regulate what content could be posted to try to eliminate ‘offensive’ material in an effort to make the service more attractive to advertisers. Censorship/filtering software to weed out ‘unsuitable’ content would be installed. Advertising would be injected into people’s dashboards. Paid blogs would be injected into people’s dashboards. Etc. etc. etc…

There was such an enormous outrage over these new policies that they were forced to back off. While the injection of advertising into the service did take place, they backed off on the threats of censorship and other types of content restrictions. I won’t go into all of the other attempts they’ve made to “improve” the service that have irritated and alienated it’s users. While they’ve backed off on some of the more potentially destructive changes they wanted to make, they’ve continued to do things that have irritated it’s users.

But to return to Yahoo and it’s problems…

Right now Yahoo has announced it’s drastically cutting staff, firing people left and right. It’s trying to either sell off or spin off different units of the company in order to shed it’s unprofitable ventures. One of the ideas the CEO put forward was that they’d spin off everything except Alibaba. Basically Yahoo would become Alibaba, and everything else would be dumped into a company that would immediately go bankrupt because all of Yahoo’s less than successful ventures would be rolled up into that new business.

That plan got shot down. Now they’re trying to sell off various parts of the business. If they can find buyers for the stuff. In any case, the handwriting is on the wall. Yahoo, as it is known today, is not going to exist for much longer. 

What’s going to happen to Tumblr? I have no idea. Tumblr isn’t all that profitable, to be honest. It’s difficult, if not impossible, to monetize it to the extent they would like because doing so would drive away the people who create the content that draws viewers to the site in the first place, as Yahoo quickly discovered when it took over the service.

I think it’s highly likely that Tumblr will not remain the property of Yahoo for much longer. Whether they sell the service or spin it off into an independent company is something I don’t know. (Frankly, from what I’ve been reading in the financial press, I don’t think anyone at Yahoo knows what the hell they’re doing.)

My dissatisfaction with what’s going on at Tumblr and the uncertainty about the future of the service means I’m going to try to move more content over to grouchyfarmer.com in the future. Over here I don’t have to worry about injected advertising, dealing with the ridiculous way they keep changing the user interface, etc.