Tumblr deal shows social media's need to stay hip


Yahoo’s recent $1.1 billion deal to buy social blogging service Tumblr wasn’t just a high-priced bid for a bigger audience. It’s another sign of a recurring cycle in the world of social media, where big sites struggle to stay hip as they get older and more mainstream, while newer ones emerge to grab the spotlight.

Younger Internet users, in particular, are “just super finicky,” said Gene Munster, a veteran tech analyst at Piper Jaffray. “They get a little bit tired and they start looking around for what’s new.”

Users who grow tired of the biggest social platforms, like Facebook or Twitter, don’t have to look far for alternatives such as Pinterest, Path or Foursquare — newer social networks that now draw millions of regular visitors. There are also upstart mobile applications that have caught on with teens, from messaging programs like WhatsApp to video-sharing services Vine, Tout and Keek.

And some new social apps are a threat to bigger companies in part because they’re so easy to adopt: It’s a simple matter for teenagers to download a new smartphone app that provides an entertaining way to share a short video clip with friends, or send a text message that’s punctuated with cartoon images, said analyst Richard Greenfield of BTIG Research.

With so many free apps available, Greenfield added, it’s difficult for one or two companies to dominate the social media business.

While Tumblr and some other services are beginning to sell advertising or other products, most are still concentrating on building features and adding users, rather than worrying about making any money. By contrast, the larger, publicly traded Internet companies are under pressure to do both.

Yahoo, in particular, has struggled with shareholder concerns about declining revenue, as online advertisers have shifted to newer Internet platforms such as Google and Facebook. Yahoo’s deal to buy Tumblr is widely viewed as a move to attract younger, hipper Internet users who like to create and share content on the blogging site.

Google’s business is strong, thanks to its dominance of the Internet search business. But its Google Plus network has gained little traction against Facebook.

And while Facebook is the world’s biggest social network, with 1.1 billion active members, there are signs it’s losing appeal for some younger users.

“It’s boring. I don’t really enjoy checking it anymore,” said Bo Field, a 15-year-old Palo Alto (Calif.) High School student, who complained that his account is cluttered with too many posts and updates.

“Facebook is kind of a big drama pool,” added his friend, Kevin Bowers, also 15, although he said, “It’s something we use just to make sure you don’t miss anything.”

A survey of 5,200 teens conducted by Piper Jaffray this spring found 33 percent listed Facebook as their “most important” social network, down from 42 percent in the fall. Twitter, Instagram and Tumblr all showed gains in that period. Other services mentioned by teens included Kik for messaging, Snapchat for sharing photos and Vine for sharing videos.

Another study released last month by the Pew Research Center found teens complaining about the increased presence of adults on Facebook, including teachers and relatives, as well as unwanted social pressure to keep up with cliques and gossip online.

Teens said they had more fun using photo-sharing apps such as Instagram and Snapchat, according to Pew researcher Mary Madden. Facebook has let Instagram continue operating as a stand-alone service, after buying it last year, while promoting its use to Facebook members.

Researchers on both studies stressed the results don’t mean Facebook is losing its audience overnight. But Munster added that for Facebook, “it’s a danger sign, longer term. Eventually, the youths become adults. That’s why Facebook bought Instagram. They saw this trend.”


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