If anything is being learned from these last few years of Twitter clones, fights between CEOs, fake posts and bad policies to capture money from users, it is this: making a social media company profitable is difficult!
After implementing some unpopular features, Tumblr is now trying to "build public" and be more transparent about the business behind this fan-oriented and fan-driven platform. In a livestreamed Q&A, CEO Matt Mullenweg and COO Zandy Ring answered questions from Tumblr users about the company's direction. The executives weren't completely unprotected, but they offered some interesting insights into what it's like to run Tumblr right now.
According to Mullenweg, Tumblr spends about $30 million more than it makes each year. This isn't too surprising, given Tumblr's history as a company. Founded in 2007, the blogging site was acquired by Yahoo for $2013 billion in 2019. But in XNUMX, WordPress parent company, Automattic, bought Tumblr for just $3 million. Although it has a loyal base of power users, Tumblr also comes fighting for growing its daily active users since its porn ban.
Midsize social platforms have the opportunity to grow amid the “exodus” of Twitter users, and Tumblr is no exception. When you log into your Tumblr account, a link appears that says, “Is this from Twitter? Sign up.” As a result of Twitter's payment verification product system, Tumblr increased its iOS revenue by 125% by giving each user of $8 blue checks from Tumblr itself. This blue check is a confusing product, to say the least, generated by Twitter. These blue checks have no application, at least on Tumblr, they are simply fun.
Still, Ring says Tumblr hasn't had such a noticeable increase in its user numbers.
“People are under the impression that we have massive growth right now, and we really don't,” he said. During the Q&A session, it was promoted to the top of users' dashboards, and only about 300 people tuned in simultaneously.
In November, Mullenweg told The Atlantic that Tumblr's iOS downloads had increased by 62%, the week Elon Musk finalized his acquisition of Twitter. According to data.ai, Tumblr saw 880.000 new installs on iOS and Android in November, up from 450.000 and 500.000 in September and October, respectively. But in the following months, their download numbers returned to standard levels (around 400.000 to 500.000 downloads per month).
This Q&A took place a day after Tumblr posted their “base product strategy” on his staff blog, which caught users off guard as it reads more like notes from an investor's slideshow than a blog post.
“The underlying problem is that Tumblr is not user-friendly,” the post says. It describes several changes, such as making the difference between reblogs and replies less confusing for new users, or collapsing reblog threads. In the post, the company wrote that it would improve "algorithmic sorting capabilities across all feeds," which some users misinterpreted as Tumblr saying it would force an algorithmic feed on its users, causing an uproar across the site.
“Chronological feeding will always be an option,” Mullenweg clarified.
Tumblr's fundamental tension is that it doesn't have enough users to be profitable, but the users it does have are fiercely protective of the site's culture and don't follow standard patterns of consumer behavior: they will pay to send crabs to their friends, but they won't pay to subscribe to content creators. Therefore, Tumblr's emphasis on easier sign-ups and improved discovery may seem like a harbinger of unwelcome changes for the site's most dedicated users.
Throughout the Q&A session, Mullenweg and Ring emphasized that they would not make permanent changes without user feedback. But regardless, making an extra $30 million per year is a serious challenge. Tumblr will probably have to do more than sell useless (but hilarious) digital goods if it wants to stay afloat.
