1) Tumblr's 2013 Revenue GoalsTumblr Founder David Karp graces the cover of Forbes with an article unflatteringly titled "David Karp's $800m Art Project." The article itself is pretty balanced - celebrates David's smarts, Tumblr's growth while highlighting the business challenges they have ahead. There's enough insider information and quotes that it's clear Tumblr's PR department cooperated with Forbes, giving access to David, other execs/investors and friends. Given this, I was very surprised to read the following sentence:
"The company finished 2012 with $13 million in revenue; the hope in this “leap” year is that it’ll get to $100 million."
What's so strange about it? Well it serves no strategic purpose for the company. And it's quite a remarkable goal. This level of increase usually comes from one of the following:
- Adding more salespeople to scale a proven direct sales model
- Opening a previously supply-constrained ad program up to all advertisers (ie going from ads on 5% of site to 100%)
- Taking a program which is working domestically and launching in other countries
Maybe the number isn't correct - it could be "$100m runrate" (which essentially means $25m booked in Q413). Or the number could be lower. But if either one was true, why didn't the company correct it since they're working so closely with the reporter? Here's how these things work - maybe reporter got the number from somewhere (or made it up). Tells the company. Company won't confirm or deny on the record, but on background says "that's really high. Our goal for the year is closer to X." And then the reporter uses that figure, or turns it into a range. So I look at this and think, wow, either the business plan is very very aggressive or someone really wants to hold Karp's feet to the fire. Either way, uncomfortable discussions sure to happen as the year progresses.
Btw, how do I think Tumblr should make money? Here are two I'd investigate in addition to the promoted brand advertising approach.
A) Affiliate Programs like viglink.com. Essentially allows publisher to add their affiliate codes to organic commercial links if Tumblr owner didn't add their own code already. Would be invisible to readers - no change to current behavior. Maybe a bit off-brand for Tumblr but if authors can toggle on/off at the blog level. In 2011, I estimated Wikipedia could make $16m annually using Viglink on just their US traffic. (Disclosure: I joined Viglink's advisory board last year)
B) Let Brands Sponsor Users. Increasingly brands needs to create content or lovingly wrap themselves around content. Create marketplace where brands can sponsor users, which means addition of some branding/attribution on the Tumblr. Classy though - in a style that's consistent with the aesthetics of the Tumblr and style of the author. Tumblr creator can accept/reject and get some % of the $.
2) Andrew Sullivan Leaves Daily Beast, Starts $19.99 Subscription Site
You're going to encounter a lot more of this from content creators who can rally their audience. I call it the modern version of the 'fan club' (you know, when you'd pay $30/year and get a t-shirt from a band plus newsletter). The people who sign-up initially aren't going to be treating it like a transaction but rather becoming part of a community. Supporting something they care about. Voting with their dollars.
I see this on YouTube all the time. Many of the channels driven by personalities could easily convert tens of thousands subscribers into paid 'fan club members.' Content, access to the influencer, social recognition - these are just some of the rewards consumers will get for supporting the personalities they enjoy. And with low production/distribution costs + no middle man, the margins could look pretty good.
The more it feels like you're paying the person, and the less it feels like you're paying a corporation, the better it will work.