Why Tumblr Was a Massive Steal for Yahoo - AllThingsD
Adam Rifkin stashed this in Interest Graph!
When Epinions started out, it tried to force everyone to register for the site and write reviews. It took being bludgeoned over the head with overwhelming data to realize that readers and writers are completely different animals — and that in fact it’s generally the readers who are the foundation of any business. Basically, writers turned out to be people with a lot of time and not much money, and readers turned out to be the opposite.
Writers have time but no money. Certain groups are going to be overrepresented: Students, stay-at-home moms, the underemployed, retirees. Epinions, which paid for product reviews, especially ran into issues with writers whose relationship to reviewed products lay more in the realm of fantasy than reality. Writers are also going to have the time and emotional commitment to give your site a lot of feedback about their needs and desires … many of which will be counter to the best interests of the business.
Readers have money but no time. They don’t want to spend hours combing the Internet for photos of vintage jewelry. They want to see a picture of a watch they like, and buy it now. If readers don’t find your content valuable, they’re not going to send you a long email about what they don’t like. They’ll just silently hit the back button and get gone.
It’s easy to forget this hard readers/writers dichotomy, especially in the era of “scaling via social networking” a.k.a. “spamming your Facebook friends for fun and profit.” It totally seems to make sense that you’d want every reader to become a writer, and to recruit their friends to become readers in turn. Thus you see Twitter, Pinterest and Quora going through phases where they more or less force all readers to register for accounts just to look at a few pages of content.
However, this reasoning goes counter to the all-important social versus interest graph distinction. You’re going to be interested in your Facebook friends’ photos and updates just because you know them, but their strange hobbies are probably not going to inspire you to take up the same hobbies. On the other hand, you will be interested in people with your same strange hobbies even if you don’t know them. (The distinction is actually probably even less symmetrical than this, in that you will invariably respect your friends somewhat less when your nose is rubbed in the fact that they enjoy cake pops or boxing; but you enjoy your interest graph more if the writers occasionally betray a trace of humanity.)
Also, those who have only worked on social graphs might not fully grasp how much more usage you can build in the long run by allowing for anonymous, non-social browsing. If you have good content that is meaningful to readers who do not know the writers personally, you are leaving money on the table — and increasingly alienating your potential userbase — by forcing a social graph that doesn’t need to exist.
I think the whole article is worth reading:
Writers v readers was a revelation to me.
This is part of the problem: GE, a handful of movie studios, and Adidas have famously taken to Tumblr like fish to water. But other than that, brands with serious money are conspicuous by their absence.
What Tumblr must do is go down the path trodden by Facebook: Encourage brands to use Tumblr's free offerings — blogs and dashboards — and then, once they've gained some traction with their followers, start charging for promoted products that have extended reach beyond organic views.
I think they'll succeed at this.
Mayer wanted Tumblr because she was "looking for a future for Yahoo, a path forward and growth."
She convinced Karp that an acquisition would save Karp from a painful learning curve. "This was an unbelievable opportunity to shortcut all the very hard things that we are about to be going through," he said.
That's because Tumblr's business "hinges on" creative brand advertising, he told Rose.
Yet, as we previously reported, some research showed that Tumblr was a ghost town for brands. Of more than 10,000 brands tracked by social media marketing company Optimal, less than a quarter had a presence on Tumblr. Those that did hardly used their Tumblr accounts.
But Yahoo has "a legacy, and a huge amount of resources, around all the business stuff that Tumblr was about to go through" and "a big honkin' salesforce," Karp said.
Mayer tossed in more than a billion in cash and the deal was done.