Let’s wrap up this week with some important nerd business news.
§ WordPress buys Tumblr from Verizon for a few blankets and a box of ramen. Earlier this week it was announced that Verizon had finally succeeded in unloading Tumblr, the fractious meme-spitting platform that it famously purchased in 2013 for $1.1. billion. The purchaser was Automattic, the parent company of WordPress, and the buying price was reportedly south of $2 million.
In a lengthy analysis, Vox‘s Aja Romano lays out how this pricing leaked:
Axios reported that Automattic purchased Tumblr, which launched in 2007, for “well below” $20 million; Axios business editor Dan Primack added in a tweet that the sale price was in fact below $3 million, and Recode’s Peter Kafka tells Vox that sources say the actual figure is closer to $2 million. That’s a very long way down from Yahoo’s infamous $1.1 billion purchaseof the website in 2013. (Verizon subsumed Tumblr when it acquired Yahoo in 2017.)
After Verizon acquired Yahoo, TUmblr remained a troublesome, expensive tweenager. Automattic’s CEO Matt Mullenweg spoke about the purchase, confirming that the platforms notorious ban on adult material — which led to Tumblr users dropping by 30 percent — would stay in place. However, WordPress’s more easygoing approach to business is seen as a better fit for the future for Tumblr than Yahoo’s “We need to put ads on your Sherlock screencaps” approach. Vox again:
Where WordPress excels over Tumblr, however, is in respecting and following its community’s lead on things like site design. One of the foundations of its success is its commitment to open source web design, meaning anyone can make and customize their own WordPress website theme. We might say Tumblr is something of an open source community too, with the ecosystem flourishing and growing most when it’s able to be artistically inventive and essentially bend Tumblr’s format in new and interesting directions. (For instance, the site was initially intended to be a “microblog,” closer in spirit to Twitter’s original 180-character limit; instead, Tumblr users made the platform well-known for long, image-heavy posts, subcultural artistic movements, and animated GIF storytelling.) Tumblr’s corporate overlords have had significant trouble with this notion in the past, but supporting a more hands-off community is not something that should give Automattic much trouble.
Tumblr has, of course, been the greenhouse for much of contemporary comics culture, giving many of today’s hottest and most successful creators — Noelle Stevenson, KC Green and about a million others — their launching platform. It’s also been the nexus of participatory fan culture, with its proliferation of memes and various kinds of fan created narratives. This sprawling, authentic user base is not very compatible with the monetization of the internet, but perhaps this new arrangement will give it some room to breathe.
To get a bit more into the weeds, an analysis on the WordPress blog WP Tavern lays out some of the potential enhancements.
Mullenweg took to the Post Status community Slack channel for an impromptu Q&A this afternoon where he discussed more of Automattic’s plans for Tumblr. He outlined a brief roadmap for Tumblr’s future that includes re-architecting its backend with WordPress:
- Move infrastructure off Verizon
- Support same APIs on both WP.com and Tumblr
- Switch backend to be WP
- Open source Tumblr.com client similar to Calypso
“WordPress is an open source web operating system that can power pretty much anything, including Tumblr.com, but it’s also a large property so will take a bit to figure out and migrate,” Mullenweg said.
Automattic doesn’t currently have plans to change the frontend Tumblr experience. Mullenweg said the Tumblr mobile app gets 20x more daily signups than the WordPress app. “It’s working amazingly well, despite being fairly constrained in what they can launch the past few years,” he said.
Sounds like Tumblr plugins and blocks are coming — but the new set up may also be nimble enough to inject some simple ad structures into Tumblr as well.
Overall, it seems to be good news that Tumblr has been rescued from languishing, misunderstood and sullen, at a big corporation by a smaller, more sympathetic owner that understands the value of the bedroom content creator. But Yahoo/Verizon promised not to mess it up, too. We’ll see.
§ Loot Crate files for bankruptcy
At the other end of the spectrum, Loot Crate, the subscription based trinket merchant has filed for Chapter 11 after some business setbacks. I’ll let ICv2‘s Milton Griepp read the filings for us:
The Chapter 11 filing appears to have been precipitated at least in part by Loot Crate’s credit card processor, Vantiv, which had notified Loot Crate that it planned to cease processing charges Monday. Vantiv feared the potential losses if Loot Crate subscribers requested refunds for Crates not delivered, leaving Vantiv no way to recoup the money it had already forwarded to Loot Crate. Vantiv had also begun withholding money from charges.
As another factor impacting immediate liquidity for Loot Crate, Midtown Madison Management, which had provided $21 million in financing to the company last August, had begun sweeping funds from Loot Crate accounts (permissible under its loan agreement) over the last 10 days.
There’s a lot more of this kind of thing but the short version is: they’re in the red.
Loot Crate was founded in 2012 and by 2014 had revenues of $18 million in 2014 and $165 million in 2016. The idea was simple. For $20 a month or so you got a cool box filled with exclusive or special nerd junk. We’re all packrats and like cute crap, so subs and unboxing videos flourished.
As the model caught on with imitators, Loot Crate had a huge impact on the comic industry, as purchases of individual comics for the boxes would lead to massive sales. Among them, Star Wars #1, which sold 1 million copies thanks to Loot Crate, and issues of Bravest Warriors and a Big Trouble in Little China/Escape from New York crossover, both from Boom.
For a little while, Loot Crate was a pretty big windfall for a few publishers. But over the last few years they seem to have expanded too much, made their products easier to get, and less desirable over all. The box of crap really was just random crap, and not a curated experience.
The bankruptcy has led to the usual setbacks — 50 people laid off and $20 million owed to subscribers, $30 million to creditors, including Facebook and Marvel Brands. In a press release, Loot Crate promised to fulfill fan orders some day, while revealing a mystery “stalking horse,” somewhat ominously named Money Chest, that is looking to purchase their assets:
Loot Crate received a commitment for up to $10 million in new financing from Money Chest LLC, an investor in the company. These funds coupled with ongoing revenue from subscriptions will be used to maintain normal operations. “During the sale process we will have the financial resources to purchase the goods and services necessary to fulfill our Looters’ needs and continue the high-quality service and support they have come to expect from the Loot Crate team,” Mr. Davis said.
Mr. Davis also emphasized that employees and customers should not notice any difference in operations as a result of the filing or during the sale process except for the better. “Daily operations will continue as usual, unique and exciting fan items will be purchased, crates will be shipped, and all aspects of the business will go on as before the Chapter 11 filing. Our employees will continue to be paid as usual during this transaction,” he said.
“This transaction represents good news for our employees, our customers, and our other constituents. It will provide Loot Crate with greater access to the financial resources necessary to continue to prosper and grow. By utilizing the Chapter 11 process, we are able to ensure an expedited and orderly transition,” Mr. Davis concluded.
The monthly gift box remains a profitable model in other realms for now — ads for makeup and food boxes are everywhere I turn on Facebook — but the heyday of the exclusive Loot Crate experience seems to have passed. Although you’ll still see people walking around at cons with those dumb “? ? ?” boxes which seem to be akin to a carnie ripoff to me, anyway.
In summation: God Bless Short Box. That’s the only sub box I’m interested in these days.