Update: Yahoo issued a press release Monday morning that confirmed the news They promise not to screw it up:
Per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business. David Karp will remain CEO. The product, service and brand will continue to be defined and developed separately with the same Tumblr irreverence, wit, and commitment to empower creators.
With more than 300 million monthly unique visitors and 120,000 signups every day, Tumblr is one of the fastest-growing media networks in the world. Tumblr sees 900 posts per second (!) and 24 billion minutes spent on site each month.
Yahoo CEO Marissa Mayer seems to have decided that the best way to revive that firm's flagging prospects is by buying up smaller startups. The latest company to feel Yahoo's
half-nelson affectionate embrace is the blogging service Tumblr. According to the WSJ, Yahoo's board has approved the acquisition:
Yahoo's board has approved a deal to acquire blogging startup Tumblr, people familiar with the matter said Sunday.
Yahoo has agreed to pay $1.1 billion in cash for the company, one of the people said. Tumblr would continue to operate largely as an independent business, the people said.
Before you read too much into this, it's worth noting that none of the coverage includes a confirmation from Tumblr, nor has Tumblr mentioned the deal on their staff blog. Also, this is all based on unnamed sources who talked to the WSJ, so there's no real evidence that the offer to buy Tumblr has been approved or even formulated. And even if this offer is real, I'm not so sure that Tumblr will take Yahoo up on it. The userbase is uniformly hostile to the idea, and that means that selling out to Yahoo could cause the service to self-destruct.
But the deal could still happen. Tumblr is beginning to look worried about the lack of revenue, and this deal would resolve that issue - in the short term, at least. But based on how Yahoo has cared for Flickr and Delicious, I don't have high hopes for Tumblr's long term prospects. Both of those sites are like Tumblr in that they are driven by user-generated content, but both have been neglected by Yahoo (here, here). Many expect Tumblr to suffer the same fate.