Tumblr Sale: For $1.1 Billion, Yahoo Might Buy a Major Porn Problem With Tumblr

In a major deal that could send shockwaves through the internet and social media industry, major internet corporation Yahoo may acquire the blogging website Tumblr. The board of Yahoo is meeting on Sunday in order to discuss a possible $1.1 billion acquisition of the popular blogging website.

This move would be one of the most aggressive attempted by CEO Marissa Mayer in her current 10-month reign. Acquiring the blogging website would help Yahoo do well with the much coveted millennial demographic but brings to question how to integrate some of the content of Tumblr into the over Yahoo brand.

The reasoning behind the acquisition is a simple and powerful reason: age. Yahoo's demographics skew toward the older end of the spectrum owing to its past glory days before it was supplemented by other Internet corporations such as Google. An unofficial survey found that users between the ages of 35-64 made up 42% of Yahoo email users. Comparatively, Google only has about 27% Gmail user in the same age bracket.

David Karp, the CEO of Tumblr, recently bragged that users spent a higher amount of time on the site than on competing social media networks such as Facebook and Twitter, with users averaging about 14 minutes per visit. The website itself had the number of blogs pass 100 million earlier in the year, with over 45 billion blog posts. Over 90 million blog posts are created every day.

Tumblr had revenue of $13 million in 2012 and hopes to achieve $100 million in 2013. But if acquired by Yahoo, that would become less of a concern than growing the userbase aggressively in order to get the millennial demographic to enter the Yahoo ecosystem.

However integration of Tumblr into the greater Yahoo ecosystem would have one area that could prove rather thorny. Tumblr's current community guidelines allow sexually-explicit material as long as it is clearly marked. Pornographic content is one of the more popular categories and some argue that was Tumblr's willingness to not clamp down that let it have its meteoritic rise to prominence.

To be fair, Yahoo's terms of service also warn user that they might encounter sexually explicit content. But the primary venue of revenue for blogs and other content producers is advertising, and in the past advertisers have been reluctant to have their ads run on site that feature pornographic content. Any deal would have to figure out a policy to placate just enough advertisers without making Tumblr users feel that their community has been neutered by any acquisition.

However, despite any reservation about Tumblr's actual content, the property itself is a hot commodity. Yahoo has exclusive one-on-one negotiating rights with Tumblr currently, but the deal is set to expire in a few days. Facebook and Microsoft have reportedly eyed the acquisition of Tumblr as well and an expensive bidding war could result if Yahoo is unable to make a deal within the next few days.

Overall, the next few days could be quite interesting for the internet and social media landscape. If sealed, the marriage between Tumblr and Yahoo would be the union of a hip, creative, forward-thinking platform to an internet behemoth that has often ridiculed as backward and irrelevant. It will be interesting if they can make it work despite all the issues that will have to be settled.

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Gabriel Rodriguez

Gabriel Rodriguez is currently studying for a Masters in Applied Economics at Georgetown. He is a graduate of New College of Florida with a degree in Economics. He is interested in econometrics, statistical analysis, behavioral economics, and developmental economics.

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