Best buy – a comedy cat worth $1.1bn
Posted on 20 May 2013
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.
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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