Marissa Mayer’s Secret Plan For Tumblr Revealed: Make It YouTube

marissa mayer david karp 2
marissa mayer david karp 2

Megan Rose Dickey/Business Insider

So, David…have you heard of JackJack?

Just after Yahoo bought Tumblr for $1.1 billion in the spring of 2013, several of Marissa Mayer’s top product and media executives presented her with detailed plans for what Yahoo should do with its new property.

To every proposal, Mayer said no.

In her efforts to convince Tumblr CEO and founder David Karp to sell his company to Yahoo, Mayer had promised Karp that Tumblr would remain an independent property — much the same way YouTube runs separately from its parent company, Google, and Instagram its parent company, Facebook.

A source close to the situation says Mayer was determined to prevent Tumblr from becoming a “shiny new toy” for Yahoo executives to play with.

Over the next few months, it was decided that Tumblr would use Yahoo’s ad sales force and ad technology, and that Yahoo would use Tumblr’s publishing tools to power some of its media brands. The integration of Karp’s company into Yahoo would go no further.

Sometime between the late fall of last year and spring of this year, this stance softened.

Mayer and her team now have an expanded vision for what Tumblr could be for Yahoo — a vision that did not originate from the mind of Tumblr’s CEO, David Karp.

According to several sources, Yahoo executives believe Tumblr should become turned the company’s answer to YouTube. In this vision, Tumblr would become the exclusive distributor of videos from YouTube stars like JC Caylen, JennXPenn, Teala Dunn, Ricky Dillon, Connor Franta, JackJack, and Bethany Mota.



You’ve never heard YouTube star Teala Dunn, but millions of kids have

In late March 2014, Re/Code’s Peter Kafka and Kara Swisher reported that Yahoo was “working on a plan to lure some of YouTube’s most popular stars and networks to show their stuff on the site.”

Kafka and Swisher said that the plan was “aimed at taking advantage of persistent complaints by both video creators and owners, who think that they don’t make enough money on YouTube.”

The story continued: “Yahoo executives have told video makers and owners that the company can offer them better economics than they’re getting on YouTube, either by improving the ad revenue or by offering guaranteed ad rates for their videos.”

What Swisher and Kafka didn’t mention was where the videos from former YouTube stars would go.

Many people assumed that Yahoo would stick them on its Yahoo-branded video product, Screen.

But we are told by three sources — one close to Tumblr, one close to Yahoo, and a third close to a digital media publisher approached by Yahoo about the plan — that Yahoo actually envisions its poached YouTube stars setting up their new channels on Tumblr.

Bunny YouTube
Bunny YouTube

Business Insider

Yahoo hopes YouTube fans like these will soon go to Tumblr for their Bunny fix.

Yahoo’s thinking was pretty simple, says one source. Having concluded that poaching YouTube stars would be a good strategy, it simply looked in its portfolio for a user-generated content network. Tumblr was the obvious choice.

It makes sense. Yahoo product executive Mike Kerns has done a nice job of turning Screen into a slick product that’s easy and fun to use. But the tweens and teens who love Ricky Dillon have probably never heard of it. Tumblr, they know.

(You maybe wondering who Ricky Dillon is. Or JC Caylen. That’s OK. Your 12-year-old knows. And if she saw either, she would go into a hysterical screaming fit — just like the kids used to when they spotted Paul, John, George or Ringo.)

 The other reasons executives may favor Tumblr is that its so “social.” Tumblr has a dashboard like the Facebook News Feed. As you can subscribe to YouTube channels, users can already “follow” Tumblr blogs. Videos and other Tumblr posts can be “reblogged” spread virally throughout the platform.

That said, the plan could obviously change.

In fact, while the idea has been in the works at Yahoo for many months now and is still going forward, its implementation has been more slow than some originally expected.

One reason: YouTube stars are happier with YouTube than they used to be.

In February, Google executive Susan Wojcicki became the CEO of YouTube, replacing Salar Kamangar. 

Wojcicki’s first initiative was to repair the company’s relationship with its homegrown stars. She went on a listening tour. She’s put ads marketing YouTube stars in TV commercials, on billboards, and in subways.

Her most effective move was to stop using so much of YouTube’s available funding for original content on established celebrities like Madonna or Jay Z, and using more of it to pay advances to homegrown talent.

We heard a story about how business is so good for some young YouTube stars, it’s not unusual for them to turn down offers from basic cable channels offering them shows.

Susan Wojicicki YouTube CEO Harvard
Susan Wojicicki YouTube CEO Harvard

Screenshot Via YouTube

YouTube CEO Susan Wojcicki

For whatever reason, Yahoo has been running hot and cold on its big YouTube plan over the past few months. There were reports of delays at the beginning of the summer. The CEO of one digital media company that Yahoo approached about setting up a Tumblr channel says he liked the idea, but that his contact at Yahoo seemed to drop it.

There is some gossip attributing the delay to a lack of enthusiasm from Tumblr CEO David Karp. But a source close to the company tells us that’s not the case. This source said Yahoo and Tumblr are working together to lure YouTubers, but that it’s still “early.”

Yahoo may soon feel more pressure to speed the process along. 

So far, the Tumblr acquisition has not been material to Yahoo’s revenues. Tumblr was hardly mentioned during Yahoo’s last earnings call. On October 2, Fortune’s Miguel Helft wrote a story headlined, “Was Yahoo’s Tumblr acquisition a flop?”

Late last month, activist investor Jeff Smith of Starboard Value published an open letter to Marissa Mayer, accusing her of wasting $1.3 billion of Yahoo’s money on non-revenue generating acquisitions since 2012.

Smith said that Yahoo was better off selling to AOL than continuing down the path Mayer has established.

“The $1.3 billion spent on acquisitions has clearly not delivered value to shareholders,” he wrote. “Not only do we believe that many of the acquired companies were, and still are, losing a considerable amount of money, but we also believe that these acquisitions, on a combined basis, have failed to deliver material revenue growth.”

If Yahoo were able to suddenly begin generating even a fraction of the $3.5 billion of gross revenues and $1.5 billion in net revenues YouTube brought in for Google in 2013, shareholders like Smith would likely hold their fire.

Tumblr and Yahoo spokespeople declined to comment on this story.

Nicholas Carlson is the author of Marissa Mayer and the Fight to Save Yahoo! on sale January 6.

Read more stories on Business Insider, Malaysian edition of the world’s fastest-growing business and technology news website.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting