The RISE and FALL of Tumblr – From $1 Billion to $3 Million…

Automattic – the owners of WordPress – just bought Tumblr for $3 million bucks. That’s right: $3 million – a huge drop from its once-billion-dollar valuation. So what the hell happened?

Not so long ago, Tumblr was a force to be reckoned with. As a blogging platform, it was used by millions of people all over the globe. Even next to Instagram and Facebook, it could hold its own.

Everybody knew about Tumblr and millions of people used the platform on a daily basis, sharing content and publishing their own unique work.

Growth was impressive and steady during its formative and peak years, making it one of the most-used and viewed sites on the web. Things began to change in and around 2017, however, when Tumblr’s spectacular fall from grace began. From here, it essentially nose-dived into oblivion, allowing WordPress to eventually acquire Tumblr for $3 million in 2019…

So what happened? How did one of the biggest social blogging sites on the planet completely tank? Who’s to blame? And how did it lose so many users between 2017 and 2019?

The Death of Tumblr – From $1.1 Billion to $3 Million

Back in 2017, Verizon acquired Tumblr off of the back of its Yahoo acquisition. Prior to this, Yahoo paid $1.1 billion for Tumblr because it saw Tumblr as a viable, vibrant platform with masses of potential, something it could use to compete against Facebook and Instagram.

After all, controlling a big social network is one hell of a business opportunity, just ask Mark Zuckerberg. The potential for revenue when you have tens of millions of users is otherworldly. This is why Tumblr was worth $1.1 billion in 2017.

But then things started to go wrong quickly. Yahoo’s first mistake, a mistake that wasn’t fixed or addressed by Verizon, was banning adult, NSFW content. And as anyone who regularly used Tumblr knows, adult content was a large part of the platform’s appeal.

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This systematic ban on ALL forms of adult content angered A LOT of people as well as many in the LGBT community who used Tumblr as a safe place to openly discuss their lives, experiences, and sexuality.

The ensuing boycott of Tumblr and mass exodus of its users began in 2017 and continued throughout 2018/19. This was the beginning of the fall, and neither Verizon (its previous owners) or WordPress has any plans to change this. Though there were some troubles along the way that helped galvanize things – stuff like the FOSTA-SESTA Act and the fact that Tumblr got kicked off of the Apple App Store for hosting child porn.

Combined, these factors sent Tumblr into a tail-spin that it never recovered from. And the blocking of NSFW content wasn’t just limited to porn – it also started taking out any content that showed males or females in underwear, anything with nipples, as well as any content about weed and booze. One user even had a picture of his friend (a female) eating ice cream banned…

And the net result of all this culminated during late-2018/18 when Tumblr saw millions leave its platform and 30-40% drops in its monthly traffic. Tumblr remained committed to its policy of not hosting NSFW content and that, as they say, was that – Tumblr effectively withered and died on the vine.

How Automattic Inc. Bought Tumblr For $3 Million

This is why Automattic Inc. – the owners of WordPress – was able to acquire a billion-dollar company for $3 million; the user base is gone, the traffic is down, and no one’s coming back.

“We couldn’t be more excited to be joining a team that has a similar mission. Many of you know WordPress.com, Automattic’s flagship product. WordPress.com and Tumblr were both early pioneers among blogging platforms,” said the current owners of Tumblr in a post on the social network. “Automattic shares our vision to build passionate communities around shared interests and to democratize publishing so that anyone with a story can tell it, especially when they come from under-heard voices and marginalized communities.”

As of right now, Automattic has a rather interesting asset on its hands. Could it turn around Tumblr’s fortunes? Would switching NSFW content back on work and bring everybody back? Or has that ship sailed?

“I have worked on WordPress my entire adult life — 16 years now — and so the democratization of publishing is near and dear to my heart. Tumblr and WordPress have always been very philosophically aligned there,” said Automattic CEO Matt Mullenweg via Post Status. “When the possibility to join forces became concrete, it felt like a once-in-a-generation opportunity to have two beloved platforms work alongside each other to build a better, more open, more inclusive – and, frankly, more fun web. I knew we had to do it.”

Mullenweg also confirmed that Automattic has NO plans for bringing back NSFW content to Tumblr. Tumblr will remain a separate entity from WordPress, joining the company’s growing roster of applications and services. Mullenweg did confirm that Automattic will be switching the back-end of the social blogging site to WordPress, opening up the potential for WordPress plugins on Tumblr.

The Future of Tumblr – It’s Not All Doom & Gloom… 

According to the WSJ, Tumblr will act as a “complementary” site to WordPress. Right now it is unclear how – or whether – there will be any further integration between Tumblr and WordPress. Personally, it seems as if Automattic bought it because it could and it didn’t cost it too much money. The potential, if it could scrape back its users, is still massive for Tumblr. But then again it could just as easily go the way MySpace did and fade into oblivion.

“Adding ~200 people and porting all of Tumblr to Automattic is non-trivial and by far the largest investment or acquisition Automattic has ever made,” said Mullenweg.

But there is BIG potential for Tumblr, according to Mullenweg. Things like e-commerce could be one of the areas Automattic focusses on first, adding in the ability for stores and the like. Tumblr is already an established platform, it still has lots of potential, all that’s missing is some focussed direction and new features. Could Automattic be the company to find and implement these things?

Imagine if it could turn Tumblr into a viable Shopify alternative? It already has the user base and brand, now it just needs to capabilities. And if it can pull this off, the return on investment for Automattic could be enormous! Automattic owns WooCommerce, one of the biggest e-commerce applications on the planet, so getting this technology rolled out on Tumblr once the back-end of the blogging site is switched over could well be Automattic’s first order of business.

Mullenweg also discussed the idea of making Tumblr a primarily mobile product, think Instagram just with more features and abilities. I like this approach; the world is screaming out for a different kind of social network. Facebook is now totally uncool, so there is definitely room for something completely different that brings together the best elements of Shopify, Facebook, and Instagram inside one application.

Whatever happens, it is definitely going to be interesting, so don’t write Tumblr off just yet…

Richard Goodwin

Richard Goodwin has been working as a tech journalist for over 10 years. He is the editor and owner of KnowYourMobile.