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Tumblr has banned adult content. Is it a great business decision?

December 7th, 2018 by Ross A Hall

Filed under : Business

Tumblr has banned adult content. Is it a great business decision?

December 7th, 2018 by Ross A Hall

Filed under : Business

Much is being made of Tumblr’s decision to ban adult content. There are countless articles and posts lamenting the loss of a huge source of images and videos. The impact on niche groups and communities has been highlighted. Many questions are being raised about freedom of speech.

Why Tumblr made this decision has been the subject of debate. Concerns have been raised about its ability to filter child pornography. This culminated in Apple removing the Tumblr app from the App Store. New legislation in the US and UK will make it more accountable for what appears on its servers. Verizon, the platform’s new owners, are more conservative than the freewheeling liberalism it was founded on. All creates a picture where the risks associated with porn outweighs the benefits.

Verizon’s Tumblr investment

While these may be valid reasons, there’s one getting little attention: profit. Verizon paid $4.5 billion to buy Yahoo! and create Oath, the division that owns Tumblr. It sees potential to return a healthy profit in the long run and succeed where Yahoo! failed.

Like most social media websites, Tumblr makes money by serving up adverts to its users in their feeds. As a user clicks on content it creates a profile about their interests. This helps advertisers target specific audiences with content placed in the user’s feed. Each click earns a small fee for Tumblr.

The business dynamic: high costs and low revenues

Research has suggested more than a fifth of accounts on Tumblr actively follow and interact with adult content. The response to the announcement suggests a lot of regular porn users have “single use accounts”. Used purely for consuming porn, these accounts have little interest to mainstream advertisers. Unable to use them for targeting, they will be hard to monetize. That’s a large user base that has no value to the company.

Porn is mostly image and video, all of which consumes large amounts of bandwidth. Add to this the cost of policing content and a picture emerges of an audience whose contribution to their high running costs is minimal.

It seems Verizon’s decision is less about politics and more about business. Few companies can or will support a deeply unprofitable product on a whim. Banning adult content and driving away its consumers removes a significant cost with little impact on advertising revenue.

Strategic repositioning for Tumblr?

Tumblr was built on an ideal of freedom of expression. This has been core to its brand since its formation and survived being bought by Yahoo! The ban has driven through the heart of this positioning.

With Facebook facing international investigations and Google+ being shuttered, a rebranding might be timely. Social media users are looking for alternatives and now is a good time to fill the gap. A new focus and better profiling tools could give Tumblr a more “family friendly” edge.

Once the fury has settled and the adults find a new home, history may judge Verizon to have made a smart move.

About Ross A Hall

A freelance writer, content manager and photographer.

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