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A confidential document has revealed that Tumblr, the online social platform, is undergoing significant financial difficulties. The majority of the platform's workforce will be moving to different roles within Automattic, the company that owns Tumblr and employs approximately 1,900 people globally.
This transition leaves only a critical operations team intact at Tumblr. Matt Mullenweg, CEO of Automattic, publicly addressed this situation via his Tumblr blog, actively engaging with user queries about the future of the site.
Mullenweg expressed that prior strategies to revitalize Tumblr financially were unsuccessful. He highlighted that the previous efforts did not generate sufficient revenue to justify the investment in infrastructure and personnel necessary to maintain the platform.
Tumblr Struggling for Several Years
The CEO admitted that some past changes alienated users and announced that, starting January 1, 2024, Tumblr will adopt a new approach with a leaner and more focused team. This team will concentrate on enhancing the core features that users have been requesting improvements on while discontinuing or reversing initiatives that did not resonate with the audience.
The platform's financial issues are not unexpected. Tumblr experienced a brief spike in user activity as some Twitter users sought alternatives following Elon Musk's acquisition of Twitter. However, Mullenweg disclosed that Tumblr has been operating at a loss of around $30 million annually.
Tumblr has always faced the complex task of balancing monetization with its user community's preferences, which has shown resistance to most revenue-generating changes. While users engage with playful site features, such as sending virtual crabs or purchasing satirical blue checks, they responded negatively to Tumblr's attempt at introducing a paid subscription service.
Established in 2007 and purchased by Yahoo for $1 billion in 2013, Tumblr was later sold to Automattic for a mere $3 million in 2019. Despite having a dedicated and active user community, particularly among fandoms, the platform has struggled to increase its daily active users, especially after the controversial decision to ban adult content.
