Best buy – a comedy cat worth $1.1bn

For people who make things the world of global high finance must sometimes appear wholly mad. However, even by digital economy standards the Yahoo purchase of Tumblr for $1.1bn (£723.5m) seems to defy logic.

Comedy cat pictures - worth a cool $1.1bn. No, really...

Tumblr is a social network popular with young people – a sort of Facebook for hip teens, in case you didn’t know. Or so my hip teen tells me, anyway. Frankly, it all looks like a bunch of old twaddle to me – the online equivalent to teen mumbling – but Yahoo seems to think it’s a great investment.

Apparently, Tumblr is one of the web's most popular hubs for user-generated content… that’s comedy photos of cats to you and me. But it did generate advertising revenue of $13m (£8.5m) last year – which is a whole wild wad of money being spent in support of joke pussy pictures.

Buying a website for almost 100 times its annual revenue looks like an act of monumental folly, given how history shows that today’s great online fad is tomorrow’s dead as a dodo digital folly. Friends Reunited anyone? MySpace, perhaps?

And while media enterprises bounce around liked excited toddlers on E numbers shouting “It’s the future!” those companies who actually make stuff are left wondering where all the money’s gone. Sorting out the world’s economic problems requires an investment in real-world business, not snaps of cats wearing glasses.

And yet you’ll be able to raise more interest from banks for an innovative online platform for multi-user content sharing with a customisable interface than you’ll be if you rock up and ask for a cash injection into a business that makes stuff.

That’s enough to make the cat sick…

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