Tumblr Is Worth $1.1 Billion to Yahoo for One Reason: You

I have nothing against the folks who created Tumblr and managed to get Yahoo to bid a whopping $1.1 billion this week to buy the company. More power to them, I thought as I attended the event they helped sponsor Monday night for winners of this year's Webby Awards, one of which -- best political site -- went to Truthdig, the online news magazine I proudly edit. 

But as I mingled with my fellow honorees, there was a pang of concern that I would like to think is not driven by jealousy. Sites like ours, even when they are hooked to established news organizations, are starved for funding to pay for the journalism they provide. Others do spectacularly well, less because of the eyeballs they attract than for the personal information their readers freely give up that is desired by potential advertisers.

That is the appeal of Tumblr, a 6-year-old social blogging service that has yet to earn much money because it has shunned advertising, thereby gaining the trust of its users who willingly share massive amounts of private data. Tumblr's CEO told the Los Angeles Times in 2010 that he was "pretty opposed to advertising," but Yahoo undoubtedly has other plans. 

"Yahoo believes it could help Tumblr bring in more money by selling ads -- boosting its own revenue in the process," The Wall Street Journal reported, citing Yahoo insiders. The model is one of data mining, exploiting the naive surrender of personal privacy so common on the Internet to better target advertising. As the Journal summarized it: "Data is at the heart of Yahoo's ability to sell online advertising across its sites, based on what it knows about its people's interests."

This is an advertising model well understood by Yahoo CEO Marissa Mayer, who took over the troubled company last summer after 13 years of exploiting such data at Google. The enormous success of Google, and the main model for business success on the Internet, is that of data mining. The societal cost of sorting through people's most personal information with abandon is the end of the very notion of privacy so basic to the functioning of a democratic society.

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