Yahoo buys Tumblr for $1.1 billion

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Could a Tumblr deal fix Yahoo's square reputation?

Yahoo needs to prove its street cred to get in with the under-30 crowd, so the company is reportedly mulling a $1 billion bid for Tumblr, the social network where animated GIFs and all sub-genres of cats run amok.

Tumblr's iOS update in April added social features and animated GIFs

Yahoo is considering either a significant investment in Tumblr or an outright acquisition of the 4-year-old micro-blogging site, according to All Things D.

Tumblr has some 54 million users and more than 100 million blogs, and nearly half of Tumblr’s visitors are in the coveted 18- to 34-year-old demographic, according to comScore. The benefits of a Tumblr acquisition are obvious for Yahoo, which is looking to shake up its square image. A major backer could be useful for Tumblr, which has been exploring money-making opportunities with promoted posts (otherwise known as ads).

Flickr, Facebook, and a new frontier

It’s easy to find parallels between a Yahoo-Tumblr deal and Facebook’s infamous $1 billion Instagram acquisition. For starters, the Tumblr purchase would command a similarly hefty price tag, if the deal ultimately bears fruit. Yahoo could also apply Facebook’s post-purchase treatment of Instagram—letting it run wild and free as an autonomous extension of Facebook—to Tumblr, proving that the company learned a lesson from its Flickr fumble.

Tumblr
Tumblr's big appeal: animated GIFs

Flickr was an incredibly popular photo-sharing site before Yahoo snapped it up in 2005. Yahoo folded Flickr into its mammoth corporate culture and stopped developing new ideas to keep Flickr competitive with Facebook and photography up-starts like Instagram.

Yahoo CEO Marissa Mayer is serious about making Yahoo relevant again. Since taking the helm of the once-might Internet giant, which has been bested in social, search, and news by Facebook, Google, and Twitter, Mayer has overseen a site redesign, new apps for email and weather, a new Yahoo app for iOS, and a major mobile initiative. The company has already acquired four mobile-focused start-ups this month to expand its mobile team. Yahoo also this week partnered with Twitter to integrate tweets into its homepage news feed.

Even Flickr has been getting some love from Mayer after years of languishing. In December, Yahoo released a redesigned Flickr app for iOS, and recently indicated that it plans to dramatically overhaul Flickr to give it a more mobile-friendly focus.

A Yahoo rep said the company doesn’t comment on rumors or speculation. Tumblr has not yet responded to a request for comment.

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