Tumblr is a tremendously popular blogging platform that, in any other economy, would be taking over the world and making real money. Instead, it can be down for entire business days at a time and hasn't figured out how to make money from its users, who stubbornly refuse to consider infrastructure, server and other costs. How will it survive?
“It’s ironic because you can actually put Google Ads on your Tumblr blog if you want and make money that way,” Rucker said. “But the company itself isn’t doing anything like that.”
Tumblr, based in New York, raised more than $10 million by April, with three rounds of funding led by Union Square Ventures and Spark Capital. Competitor Posterous raised $4.4 million in March in its first round, led by Redpoint Ventures. Automattic, which hosts blogs on WordPress.com and supports an open-source blog-software platform, has raised about $30 million in venture funding including a strategic investment from The New York Times Co., as well as backing from True Ventures, Polaris Ventures, and Radar Ventures. [Venture Beat]
The commercial promise of these services remains untested.
What is it about these competitors that one of them raised half of what Tumblr did and the other raised three times as much? Is the New York Times, always way behind trends, seeing something we're not?
The real problem, of course, is that giving something away and building up a huge network of users has never been a proven long-term business strategy — especially on the internet. If you don't believe us, just ask Mark Zuckerberg and the Fail Whale:
“Realistically [Tumblr] can easy surpass Twitter in overall value,” he said. “It would be valued at nine figures based on just the page view number. But the real reason is because you can find a whole lot more of value on a Tumblr page potentially than on a Twitter page. People will revisit a Tumblr blog because of a wealth of content whereas they don’t re-visit a Twitter page nearly as much because it is made up of 140-character messages.” [Venture Beat]