For a good user-generated content comparable, YouTube wasn't profitable until around 2010-2011[1], 7 years after its founding. It is, of course, very profitable now and looks like one of the best acquisitions ever made in the internet space. Google only had to fork out $1.65Bn in an all-stock transaction for a company which would now be worth many, many times that (some numbers would say over $50Bn [assuming $5Bn income at a conservative 10x P/E],[2] I would say many times more).
Revenue is, of course, a massive lagging indicator in the software industry. I think anyone who sees Tumblr as being overvalued greatly underestimates the sheer size of their user-generated content library, especially because most popular externally-facing Tumblr sites have custom URLs which hide the true size of the network. Most regular internet users will visit Tumblr many times throughout the day without noticing it. You have to remember that its Alexa rank has been climbing non stop over the last few years, and it is now at 19 in the US with a steady pageviews/user count (which not even Facebook can claim).[3]
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In response to some of the critics:
For a good user-generated content comparable, YouTube wasn't profitable until around 2010-2011[1], 7 years after its founding. It is, of course, very profitable now and looks like one of the best acquisitions ever made in the internet space. Google only had to fork out $1.65Bn in an all-stock transaction for a company which would now be worth many, many times that (some numbers would say over $50Bn [assuming $5Bn income at a conservative 10x P/E],[2] I would say many times more).
Revenue is, of course, a massive lagging indicator in the software industry. I think anyone who sees Tumblr as being overvalued greatly underestimates the sheer size of their user-generated content library, especially because most popular externally-facing Tumblr sites have custom URLs which hide the true size of the network. Most regular internet users will visit Tumblr many times throughout the day without noticing it. You have to remember that its Alexa rank has been climbing non stop over the last few years, and it is now at 19 in the US with a steady pageviews/user count (which not even Facebook can claim).[3]
[1] http://www.reelseo.com/google-ceo-eric-schmidt-claims-youtub...
[2] http://www.benzinga.com/analyst-ratings/analyst-color/13/05/...
[3] http://www.alexa.com/siteinfo/tumblr.com
How much money does YouTube make? After paying content providers and bandwidth what is the profit margin?
Google owns a LOT of fiber, so they pay pennies on the dollar for bandwidth. It's a pretty perfect marriage.