The answer appears to be not much.

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The Web giant submitted a bid for the video site this morning, according to a person familiar with process. Other people looking to buy all or a piece of Hulu include:

• Directv,
• Time Warner Cable
• William Morris Endeavor, along with with PE backer Silverlake
• KKR
• Guggenheim Digital
• The Chernin Group

As AllThingsD reported earlier this month, Yahoo CEO Marissa Mayer and COO Henrique De Castro have met with Hulu’s team recently for a get-to-know-you; Yahoo had previously tried to buy a large stake in French video site DailyMotion, but that bid was stymied by the French government.

Yahoo declined to comment.

The question, as it always is with Hulu, is what its owners — News Corp., Disney and Comcast — are actually willing to sell, and at what price. The three media conglomerates provide the site’s most valuable programming, primarily via shows that have already aired on their broadcast networks. Disney and News Corp. have been at odds about the best way to manage the site for some time; Comcast gave up its management rights as a concession to Federal regulators a few years ago. (News Corp. also owns this website.)

In 2011, Hulu’s owners put the company up for sale and were looking for a bid of at least $2 billion; in exchange, they would offer content licenses that would run for two to three years. But they ended up pulling the site back off the sales block after a few months.

Last month, former News Corp. COO Peter Chernin submitted a starting bid of $500 million, with the understanding that he would be willing to pay more for extended licenses. Bloomberg first reported on the KKR and William Morris Endeavor/Silverlake bids today.

Hulu hasn’t had a formal M&A process, but had asked prospective bidders to make an offer by Wednesday. That deadline apparently isn’t a firm one, so it’s worth wondering if the field will grow more crowded before this over.

Yahoo’s design chief, the effervescent Tim Parsey, will be leaving his job at the Silicon Valley Internet giant, sources said.

As SVP of User Experience Design at Yahoo, which centralized the task under Parsey, he has been part of a range of redesigns of its major properties, including its homepage, Flickr photo-sharing site, email and more.

As I noted when Parsey arrived in early 2011, “in the 67-ring circus that has been Yahoo’s product organization, design was widely dispersed.”

Translation: It was not pretty, unless you enjoyed the Web stylings of 1997.

Parsey certainly had the cred in the design industry, with stints at Apple, Microsoft’s entertainment and devices unit, Mattel and Motorola. Just before Yahoo, he was a principal at a Seattle-based design firm called shiftalliance.

The British native ran Apple’s design studio for five years in the early 1990s and was the main dude behind Motorola’s freaky V70 switchblade mobile phone in 2001.

It’s not clear why he is leaving now, or where the crackerjack designer is headed. But, amid a lot of Yahoo turmoil since he arrived, Parsey certainly stabilized the design culture at the company.

Also in play, according to numerous sources: New Yahoo CEO Marissa Mayer has a very “hands-on” style with regard to design — she pretty much considers herself the last and only stop on that train, among others, based on her experience at Google running a number of products including its pristine and much acclaimed front page search box. No surprise, then, she has involved herself strongly in the design process.

On his LinkedIn profile, which still lists him as working at Yahoo, Parsey talked about his ethos of design there:

“This is about weaving a global UX and UER organization from the existing 200+ designers and researchers that today support an array of different businesses. It’s part of a rather cool broader corporate transition project. It’s also very much about establishing design as a potent, world-class entity that’s fun to be part of.”

He also notes: “These days I’m very excited about the correlation between internal cultures that are truly ‘meaningful’ to designers ( and other functions ), and world-class design innovation.”

Media giant Hearst has hired two senior execs — Demand Media’s Joanne Bradford and former Los Angeles Times CEO Jeffrey Johnson — in a significant move to digitally turbocharge and jumpstart its flagship but long-suffering newspaper, the San Francisco Chronicle and its SFGate.com website.

“They have deep publishing and new media experience and believe in the power of great content with a valued brand,” said Heart CEO Frank Bennack in a statement. “We are excited to work with them to redefine the choices for how and where readers can experience the trusted Chronicle content they depend on.”

In the new leadership, Johnson will be the publisher of the Chronicle, while Bradford will be its president. Both will report to Hearst Newspapers President Mark Aldam. Current publisher Frank Vega — an old-style publisher who has had a controversial tenure at the Chronicle — will retire, though Hearst said he will continue as chairman through the transition.

“The San Francisco Chronicle should be a shining star and use case of how to build a community and cover local news,” said Bradford in a text to me today.

Indeed. While the Chronicle and its website is the largest for local news in the Bay area, it has lagged a lot in aggressively covering key trends — such as tech — and the fast growth of the region. While the area has blossomed, the Chronicle, like many big-city newspapers, has suffered, as digital businesses of all kinds have made incursions on its business.

Its daily print circulation is now 265,000, and combined with its website it reaches close to two million people.

Getting all that a whole lot higher — and, perhaps more importantly, a lot more relevant — will be a tough job and will likely require a major reinvention of the Chronicle brand.

That is especially true since the San Francisco area, including Silicon Valley, is the world’s key digital hub, as well as a leader in a number of areas — from top-notch sports teams to having one of the most innovative food and indie cultures. After a few years of rough economic times, the city is on a bit of a roll, including being the location of some upcoming major events such as the Super Bowl and America’s Cup.

Bradford has a lot of experience in both old and new media and is well known in the online media advertising space, having had top sales and media jobs at BusinessWeek magazine, Microsoft, Yahoo and, now, Demand.

She has been at that content site, where she has been its chief revenue and marketing officer, since 2010. At Yahoo, previous to Demand, she was an SVP in charge of North American revenue and also worked on branded entertainment partnerships. At Microsoft, she was a corporate VP and chief media officer of MSN Media Network.

And, although I have known her well over many years — full disclosure: We are very good friends — I had no idea she had an undergraduate degree in journalism from San Diego State University.

Johnson is also a longtime media exec. He has recently been an operating partner at the Yucaipa Companies — owned by kingpin Ron Burkle — focusing on media investments since 2007. Previous to that, he was president, publisher and CEO of the Los Angeles Times for just a year, but had been its SVP and GM since 2000. At the Times, he was responsible for the newspaper’s digital and print operations including editorial, advertising, circulation, consumer sales and marketing, finance and technology. Johnson has also worked at the Chicago Tribune and Orlando Sentinel and has an undergraduate degree in accounting from the University of Illinois and an MBA from the University of Chicago.

The Chronicle is the largest newspaper in Northern California, founded in 1865 by Charles and Michael de Young. Its owner, the privately-held Hearst, is one of the nation’s largest media companies, with dozens of daily and weekly newspapers; has a huge group of television stations and cable network stakes, such as Lifetime, A&E and ESPN; hundreds of magazines, such as Good Housekeeping, Cosmopolitan and Elle; and many other varied holdings.

Bradford will be replaced at Demand Media by Jeff Dossett.

Ben Ling, a longtime Silicon Valley angel investor and Internet exec, has joined Khosla Ventures as a venture partner.

Ling is the second hire of high-profile operating execs by Khosla. Former Square, Slide and PayPal exec Keith Rabois — who is a close friend of Ling’s — joined the firm in February.

In an interview today, Ling said he has been contemplating his next move, and the idea of becoming a VC after years of operations was appealing.

“I thought a lot about the ability to have impact across a broad set of companies, and was attracted to Khosla’s model of venture assistance,” said Ling, who added that he will focus a lot on the mobile ecosystem. “When I was younger, I thought it would be fascinating to be an investor, and here I can help a lot of companies grow and scale.”

Ling is a former Google and Facebook product exec, as well as an active investor in 80 startups, including such high-profile ones as Fab.com, Square and Quora. He was most recently COO at Badoo, but left the company last fall.

At Google, he worked on search, YouTube and local products, and was closely linked with former Googler Marissa Mayer, whom he followed internally when her responsibilities shifted there. Many thought he might next pop up at Yahoo, where she is now CEO.

Not so, but also not a surprise; Mayer provided Khosla with a lovely statement about Ling: “Ben is an amazing entrepreneurial leader and has a great eye as an investor for both talent and ideas. I’m excited to see him join Khosla Ventures to find and foster the next set of entrepreneurs who will define the technology world.”

In a key hire, Jawbone said today that it had hired Mindy Mount, a top corporate VP at Microsoft, as its president.

The move by the San Francisco-based maker of wireless, music and wearable devices is part of what has been a major upgrading of its management and board. Recently, Jawbone added Yahoo CEO Marissa Mayer and Rob Wiesenthal of Warner Music as directors.

Jawbone has also recently done a big acquisition — purchasing BodyMedia, a wearable health and fitness company, for $100 million. The move comes just a couple months after it bought data and digital-design companies Massive Health and Visere.

All this expansion requires tight organizational efforts and Mount has a lot of financial and operational experience, having held several key jobs at the software giant. She was most recently corporate VP and CFO at Microsoft’s Online Services Division, which includes Bing, MSN and Microsoft Advertising. Before that she held a similar job at the Entertainment and Devices Division, which has the Xbox, Zune and Windows Phone units.

Previous to that, Mount ran AOL’s U.K. unit, worked in strategy at Time Warner and also was an exec at Morgan Stanley. She has an MBA from the Harvard Graduate School of Business and an undergraduate degree from the University of Wisconsin-Madison.

In an interview today, Mount said that what attracted her to Jawbone was the challenge of scaling the fast-growth company, which is helmed by CEO and co-founder Hosain Rahman.

“Right out of the block, I’ll be spending time on business operations, since the scale and scope and complexity of Jawbone has really increased,” she said. “What really attracted me to the role is that it is a really meaty one … It’s a company with great products, where I can come in and have real impact, because consumer electronics companies really have to execute.”

Jawbone products include Jawbone wireless headsets, Jambox speakers and the Up personal fitness wristbands. The company has raised a lot of funding, totaling about $210 million from such venture firms as Andreessen Horowitz, Khosla Ventures, Kleiner Perkins and Sequoia Capital, as well as Deutsche Telekom, investor Yuri Milner and others.

According to an internal memo and now on his LinkedIn profile, Yahoo has just hired longtime McKinsey exec John DeVine as SVP of global operations. He has worked in the marketing and sales practice at the consulting firm since 1999 and has been an advocate there of “how companies need to embrace the customer experience.”

Devine will report to COO Henrique De Castro — who also worked at McKinsey — and will be helming a wide swath of operations, such as advertising solutions. DeCastro has also been searching recently for a head of the key U.S. ad unit and has tried to hire former AOL sales chief Ned Brody. That hire is limbo now, due to Brody’s 14-month non-compete contract with AOL; CEO Tim Armstrong shows no signs of letting him leave sooner.

But DeVine is on board at Yahoo, so to speak. The former submarine officer in the U.S. Navy also has a masters degree in nuclear engineering — batten down the hatches for incoming at ATD HQ! — from the University of California Berkeley and did his undergraduate work at the U.S. Naval Academy.

The “hands-off” promise is both necessary to make and impossible to keep.

I remember hearing the promise from Jim Bankoff, who engineered AOL’s acquisition of Weblogs, Inc. in the fall of 2005, at a Weblogs retreat in New York. (Bankoff is currently CEO of Vox Media.) He meant it, and Weblogs was indeed given a long leash. Jason Calacanis, Brian Alvey and Judith Meskill operated the blog network as before the acquisition, with better technology infrastructure and a better hiring budget.

I was editorial director of Weblogs, and eventually took over business ownership of the unit after the founders left the company. For four post-honeymoon years in that position I had a close-up view of how multiple stakeholders in a large parent company systematically and necessarily break the well-intended “hands-off” promise. Even on a long leash, the startup plays a sometimes ferocious defensive game to maintain cultural and brand integrity.

David Karp will continue to own Tumblr within Yahoo, but he will not be the only owner. Marissa Mayer will be co-owner. Mayer was already — in the same hour as the obligatory “hands-off” covenant — outlining possible changes. Other departmental executives will surface in Tumblr stakeholder roles, especially sales, business development, legal and the editorial team of Yahoo’s main portal. Putting Tumblr into Yahoo is like throwing a boulder into a lake, and many executives will be accountable for maximizing the ripples. They are all co-owners.

Mayer specifically addressed the branding concern, promising that Yahoo would not slap its mark on Tumblr pages. That’s a no-brainer, although Yahoo has fallen into the trap of over-valuing its brand in past acquisitions, notably Flickr. But some degree of co-branding is inevitable, probably immediately, if Yahoo wants to capture comScore recognition of Tumblr’s traffic.

And it surely does. Major Internet properties, and their advertisers, are acutely aware of comScore positioning. At AOL, within minutes of comScore’s release of its monthly traffic report, I watched that thing rip through the company like a viral meme. In March of this year, Yahoo’s total U.S. traffic (that’s the filter most companies and their advertisers look at) put the company in the No. 2 spot, trailing Google by a mere one million unique visitors. That same month, Tumblr was credited with 29 million uniques. A certain post-acquisition bet is that Yahoo will do what it takes to vault over Google into the top slot.

And it takes co-branding. ComScore requires some mark of affiliation to acknowledge and report the traffic roll-up from an independently branded property to its parent entity. That’s why you see AOL’s logo in the footers of Engadget and TechCrunch, two sites where AOL’s mark hardly contributes brand charisma.

ComScore roll-up branding doesn’t really damage a professionally-produced editorial site. But there is greater sensitivity in a UGC (User Generated Content) destination where there is huge overlap of those who consume the content and those who produce it. The uproar among Tumblr bloggers over the acquisition is the first sign that the engine of Tumblr’s success does not want any affiliation with corporate overlords.

Speaking of UGC, it represents all sorts of trouble that will bring new influences to bear within Yahoo. Advertisers do not like appearing next to UGC. They don’t even like comments on pro sites, never mind the roiling swirl of unregulated blogs. Yahoo will create a monetization plan (Mayer is already leaking ideas and aspirations), and the company’s board and executive committee will synchronize Tumblr’s revenue potential with the drumbeat of quarterly reporting. Forecasts, operating budgets, timetables and deliverables will seep into the sales organization like wine into carpet. In meeting after meeting between sales and content, sanctity around Tumblr’s exemption from business as usual will be chipped away. To a category sales director, “hands-off” means not meeting a revenue deliverable, and getting a reduced annual bonus.

Advertising on Tumblr blogs is easy to predict, although who knows when. Run-of-service campaigns are clearly impossible for brand advertisers, and would be even without the heavy load of Tumblr porn blogs. The ability to produce specially-carved campaigns will have to be built into the publishing system, if it isn’t already. That slippery slope leads to possible special arrangements with highly-trafficked blogs, and a possibility of editorial management to some degree.

Enter the lawyer stakeholders. Yahoo’s legal stance for Tumblr will be based on “safe harbor,” a protection in the Digital Millennium Copyright Act that applies to UGC platforms whose owners do not exercise control of the content. Safe harbor is punctured like a balloon with the first bit of content oversight. If that happens, every legal complaint brought over publication of copyrighted media becomes Yahoo’s liability for damages, even if the infringing media is removed. (With safe harbor protection, Yahoo only needs to remove the source of a legal complaint.)

Online advertising is a buyer’s market in which advertisers often dictate terms and conditions. Tumblr will be caught in the tectonic grinding of conflicting interests. Tumblr’s founding principles demand freedom. Yahoo’s business requires revenue from the hordes of Tumblr users. The legal wing values safety above everything. The next quarterly always looms, and the questioning for years will be about Tumblr’s income, just as with AOL’s Patch and other daunting monetization projects.

Let’s not forget about synergy, the great M&A buzzword that informs all discussions leading up to the big purchase. Any company with many moving parts must consider how a major acquisition is going to play nicely with its other brands, technologies and cultures. An acquisition that brings a substantial audience with it is eventually going to be asked (which is to say, required) to share that traffic. If synergy is a dominant pre-acquisition buzzword in large content companies, recirculation is the post-acquisition mandate.

From this essential business goal comes a creeping incremental destruction of purity. The first sign might be a modest, inconspicuous footer on Tumblr blogs with softly-hued links to other Yahoo properties. Giving away that inch could result, a year later, in dreaded “related links” modules in the sidebar. From there it is a bold and victorious leap to universal headers with full co-branding and drop-down promos for Yahoo’s Mail and News enterprises.

I’m being cynical, and these are not explicit predictions. The honeymoon period is characterized by respect and caution. Weblogs brought completely new DNA into the AOL organism. Tumblr is likewise fresh air — loaded with a young demographic — for Yahoo. But Yahoo also has experience with social content (Delicious and Flickr), and Mayer is certainly determined to chart a better roadmap for Tumblr on her watch.

But the pressure will be on, sooner or later. Many jobs are a little more at risk when a company has spent over a billion dollars, and Tumblr will start showing the smudges of many fingerprints. It might all work out well. Nearly all of AOL’s most successful content destinations were acquired. (Others, like Bebo, were catastrophic, and the high burn rate to maintain Patch is controversial.) Tumblr could be Yahoo’s most successful bet, despite the many hands that will inevitably be laid upon it.

Brad Hill is the former VP of Audience Development at AOL, and former General Manager of Weblogs, Inc.

As you must know by now, the staid Silicon Valley Internet giant scooped up the sassy New York blogging site for $1.1 billion this week, with Yahoo CEO Marissa Mayer continuing in her busy quest to inject some don’t-look-at-the-growth-numbers, jazz-hands excitement into the moribund company’s DNA.

Which is where ATD steps in by suggesting some new monikers for the latest effort — kind of like giving the deal a little Brangelina nicknaming glamor.

And, by the way, if this purchase ends badly — as many other Yahoo acquisitions have, such as that of photo-sharing site Flickr — perhaps the best name might be: Fumblr. (Thanks, Arnie Gullov-Singh!)

Until then, take the poll below and enjoy:

View This Poll

Alas, the answer isn’t cut-and-dried.

When Yahoo announced its $1.1 billion purchase of Tumblr yesterday, it said David Karp’s blogging platform had more than 300 million monthly unique visitors.*

But that’s not the same as a “user” number, at least not in the way that modern-day social networks like Twitter, Instagram and Facebook talk about user numbers.

When those guys talk about about users, they’re generally talking about “active users” — people who have created accounts on their networks, and are using those accounts to access the services’ core functions.

And if you’re trying to assess Tumblr’s business prospects, that would be a good number to know. Because, at least for now, the company’s ad strategy revolves around showing ads to registered users who use the service’s core “dashboard” — the equivalent of Twitter and Facebook’s news feeds.

Tumblr doesn’t seem to provide an equivalent number. So, unless they offer one up,** we’ll have to take educated guesses.

I’ve started out by asking someone who knows the company pretty well; that person guesstimates that the total number of monthly users who will see a Tumblr dashboard is at least a third of the company’s 110 million registered user base, and maybe quite a bit higher: “My guess is 30 million to 50 million.”

That number would sound a lot less impressive in the first paragraph of a press release, so it’s understandable that Yahoo would go with 300 million instead. And it’s important to note that Yahoo has already said it may start showing ads beyond the dashboard.

Yesterday, during her call with Wall Street analysts, Marissa Mayer said Yahoo would explore giving Tumblr bloggers the chance to run Yahoo ads on their own pages. You wouldn’t need to be logged in to see those.

If Yahoo did that, and Tumblr users tolerated it, that would certainly expand the company’s revenue stream beyond its active user numbers. Then again, there are a lot of Tumblr pages that are never going to have an ad on them, because porn and other topics aren’t “brand safe.”

Meanwhile, if anyone else wants to take a guess at the number of registered, dashboard-viewing users, be my guest. You can sound off in comments below, or reach me via email (peter@allthingsd.com).

* That number is much bigger than the 117 million estimate comScore provides, but gaps between internal and external Web measurements are as old as Yahoo. By the way: In an ad sales pitch obtained by Business Insider, Tumblr said it had 225 million uniques as of March. That’s a big growth spurt!

** I’ve asked Tumblr’s rep for that info, but I’m still waiting for her to reply to the email I sent her last Thursday. Busy few days, I guess. [UPDATE: Tumblr's rep replied! And no, they're still not providing an active user number. On with the guesses!]

Yahoo, which had dropped off the important BrandZ Top 100 list several years ago, scratched its way on again this year at No. 92.

The Silicon Valley Internet giant had last been on the key list of brands in 2009, when it had a brand value of $7.9 billion. It now has a brand value of $9.8 billion, which is still down from its $11.4 billion in 2008.

And that’s tiny in comparison to Apple, which remains No. 1 on the list with a brand value of $185.1 billion. Google ranked as No. 2 with a brand value of $113.7 billion.

Apple rival Samsung’s brand value rose by by 51 percent to $21.4 billion, clocking in to the No. 30 spot.

In tech, Amazon’s brand value was $45.7 billion, rising 34 percent to No. 14. IBM is No. 3 with a brand value of $112 billion.

And more: Microsoft (No. 7, $69.8 billion, down nine percent); Facebook (No. 31, $21.3 billion, down 36 percent); and eBay (No. 47, $17.7 billion, up 40 percent).

The eight-year-old BrandZ list, which is much watched by marketers, is commissioned by WPP and conducted by Millward Brown Optimor.

Here’s the full chart of the list and report:

Top100BrandZ2013

BrandZ Top 100 Media Deck 2013 U S

And here is a super-cool infographic too:

2013_BrandZ_Top100_Infographic

Justin Sullivan/Getty Images News

Yahoo paid $1.1 billion for Tumblr. How’s it going to make its money back?

A bunch of ways, Marissa Mayer explained on a conference call today. But if you’re a Tumblr user who was hoping that those ways didn’t involve putting more ads on your free blogging service, well … don’t read on.

Still reading? Okay! So: Don’t be surprised when you see more ads on your dashboard, and/or some of the Tumblrs you visit.

First, the stakes: Yahoo said it doesn’t expect Tumblr to generate meaningful money for the Web giant this year. But next year, Yahoo CFO Ken Goldman said, “we do expect this to enhance EBITDA and revenue.” And prior to the Tumblr deal, J.P. Morgan estimated that Yahoo would generate $1.7 in EBITDA on $4.65 billion in revenue in 2014.

In other words: It takes a lot of money to move Yahoo’s needle. And Yahoo thinks Tumblr — which generated all of $13 million last year — will do that within the next 20 months.

On to the ads: Yes, Tumblr users, you’re going to see more of them. Here’s Mayer, with a preview, via a Wall Street conference call this morning:

“On Tumblr, there’s a number of different places where we think we can monetize in a way that is meaningful and really addititive to the user experience.

For example, Tumblr has what’s called the “dashboard”, which is their version of the newsfeed — or in old school terms, an “inbox” for the blogs you follow. So basically different bloggers that you follow can all appear there in your feed.

And today, Tumblr already does some advertising, though minimal, in that feed. We would like to look at them and understand how we could introduce ads — in a very light ad load — where the impact is really created, because the ads really fit the users’ expectations and follow the form and function of the dashboard.

We also see some opportunities to possibly work with bloggers who want ads, to provide ads on their Websites. That would always be done with the blogger’s permission”

Again, Yahoo has promised “not to screw up” Tumblr, and there are plenty of cautionary tales to help them avoid doing that right away. So I wouldn’t expect a flood of ads swamping Tumblr in the next year or so.

On the other hand: It’s a free Web product, which means it’s not really free at all. So if you’re using it, you’re going to pay with your eyeballs. You’re not surprised, right?

Yahoo! to Acquire Tumblr
Promises not to screw it up

SUNNYVALE, Calif. & NEW YORK — (BUSINESS WIRE) — Yahoo! Inc. (NASDAQ: YHOO) and Tumblr announced today that they have reached a definitive agreement for Yahoo! to acquire Tumblr.

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. On mobile, more than half of Tumblr’s users are using the mobile app and do an average of 7 sessions per day. Its tremendous popularity and engagement among creators, curators and audiences of all ages brings a significant new community of users to the Yahoo! network. The combination of Tumblr+Yahoo! is expected to grow Yahoo!’s audience by 50 percent to more than a billion monthly visitors, and to grow traffic by approximately 20 percent.

The deal offers unique opportunities for both companies. Tumblr can deploy Yahoo!’s personalization technology and search infrastructure to help its users discover creators, bloggers, and content they’ll love. In turn, Tumblr brings 50 billion blog posts (and 75 million more arriving each day) to Yahoo!’s media network and search experiences. The two companies will also work together to create advertising opportunities that are seamless and enhance the user experience.

Total consideration is approximately $1.1 billion, substantially all of which is payable in cash.

“Tumblr is redefining creative expression online,” said Yahoo! CEO Marissa Mayer. “On many levels, Tumblr and Yahoo! couldn’t be more different, but, at the same time, they couldn’t be more complementary. Yahoo is the Internet’s original media network. Tumblr is the Internet’s fastest-growing media frenzy. Both companies are homes for brands – established and emerging. And, fundamentally, Tumblr and Yahoo! are both all about users, design, and finding surprise and inspiration amidst the everyday.”

“I’ve long held the view that in all things art and design, you can feel the spirit and demeanor of the creator. That’s why it was no surprise to me that David Karp is one of the nicest, most empathetic people I’ve ever met. He’s also one of the most perceptive, capable entrepreneurs I’ve ever worked with,” continued Mayer. “David’s respect for Tumblr’s community of creators is awesome. I’m absolutely delighted to have him join our team.”

David Karp, CEO of Tumblr, addressed the Tumblr community, “Our team isn’t changing. Our roadmap isn’t changing. And our mission — to empower creators to make their best work and get it in front of the audience they deserve — certainly isn’t changing. But we’re elated to have the support of Yahoo! and their team who share our dream to make the Internet the ultimate creative canvas. Tumblr gets better faster with more resources to draw from.”

The transaction, which is subject to customary closing conditions, is expected to close in the second half of the year.

Yahoo CEO Marissa Mayer has her own announcement, where she repeats most of the same information from the official memo, but also includes an animated GIF.

And here’s Tumblr founder David Karp’s memo, which is even more … Tumblrier.

News!

Everyone, I’m elated to tell you that Tumblr will be joining Yahoo.

Before touching on how awesome this is, let me try to allay any concerns: We’re not turning purple. Our headquarters isn’t moving. Our team isn’t changing. Our roadmap isn’t changing. And our mission — to empower creators to make their best work and get it in front of the audience they deserve — certainly isn’t changing.

So what’s new? Simply, Tumblr gets better faster. The work ahead of us remains the same — and we still have a long way to go! — but with more resources to draw from.

Yahoo is the original Internet company, and Marissa and her team share our dream to make the Internet the ultimate creative canvas. I couldn’t be more excited to have her help. We also share a vision for Tumblr’s business that doesn’t compromise the community and product we love. Plus both our logos end with punctuation!

As always, everything that Tumblr is, we owe to this unbelievable community. We won’t let you down.

Fuck yeah,
David

You can count on it — when a deal works out spectacularly everyone involved will take credit for it. This behavior is particularly annoying to the entrepreneurs who put the sweat, blood, and tears into the Company.

– “Union Square Ventures’ Fred Wilson, one of Tumblr’s earliest investors, celebrating the Yahoo deal without celebrating

Yahoo will announce its $1.1 billion all-cash acquisition of the Tumblr blogging service this morning, said sources, likely just before the markets open.

That means: Very, very soon.

(Update: Looks like sooner than very soon — Yahoo officially said it promised not to screw up Tumblr at 5 am PT.)

But Wall Street likes the deal so far. Yahoo shares were up in pre-market trading this morning, close to 2 percent, to reach $27. The stock of the Silicon Valley Internet giant closed Friday at $26.52.

After the announcement of the news AllThingsD already told you about several times over the past few days, let the opinions begin over a range of the entirely unknowable right now, including:

Whether it is a good deal, or whether Yahoo has just bought themselves GeoCities 2.0; whether Tumblr’s tetchy young audience would bolt at the Yahoo ownership.

Whether Tumblr CEO David Karp — he of the sad-puppy-dog eyes and fantastically floppy hair — would wither or bloom under the leadership of Yahoo CEO Marissa Mayer.

And, of course, who got rich in the whole shebang.

Karp, for sure, garnering $250 million in cash.

So sit tight to get the final word and all the quotes praising the deal as the best thing since, well, Instagram got picked up by Facebook for a mere $1 billion. Apparently, $1.1 billion is the new $1 billion.

We will cover the news, of course, despite not being invited to Yahoo parties (and somehow we’ll survive).

Despite largely anecdotal media speculation, it’s not clear how the acquisition of Tumblr by Yahoo for $1.1 billion will be greeted by users of the New York blogging service.

But rival blogging service WordPress’s founder Matt Mullenweg posted on his blog last night that WordPress imports from Tumblr on Sunday — after news of the deal had been broken by AllThingsD.com — had risen from a typical 400 to 600 blog posts an hour to more than 72,000.

Whoa!

That said, this is not an uncommon occurrence. Some users of Posterous fled the blogging service when Twitter bought it, and some Instagrammers huffed off when Facebook nabbed the photo-sharing site.

And, by comparison, Tumblr says it get 75 million blog posts per day — so 72,000 are just a drop in the ironic blogging ocean.

Plus, Mullenweg thinks the high price paid by the Silicon Valley Internet giant was low.

“I think we’re at the cusp of understanding the ultimate value of web publishing platforms, particularly ones that work cross-domain, and while Yahoo’s all-cash deal by some metrics, like revenue, is very generous, I think it’s a tenth of the value that will be created in these platforms over the coming years,” wrote Mullenweg.

Here’s his post:

It now looks pretty certain that Yahoo has pulled off a deal to buy Tumblr for 1.1B. The relationship between WordPress and Tumblr has always been pretty friendly: Tumblr’s own blog used to be on WP, WordPress.com supports Tumblr as a Publicize option alongside Twitter and Facebook, our Akismet team sends them daily emails of splogs on the service, and there’s healthy import and export traffic both ways. (Imports have actually spiked on the rumors even though it’s Sunday: normally we import 400-600 posts an hour from Tumblr, last hour it was over 72,000.)

News like this, whether from a friend or a competitor, is always bittersweet: I’m curious to see what the creative folks behind Tumblr do with their new resources, both personal and corporate, but I’m more interested to know what they would have done over the next 5-10 years as an independent company. I think we’re at the cusp of understanding the ultimate value of web publishing platforms, particularly ones that work cross-domain, and while Yahoo’s all-cash deal by some metrics, like revenue, is very generous, I think it’s a tenth of the value that will be created in these platforms over the coming years.

According to numerous sources close to the situation, the Tumblr brand will continue on in the wake of its $1.1 billion acquisition by Yahoo.

That includes definitive promises by Yahoo CEO Marissa Mayer to once-sale-shy Tumblr CEO David Karp to allow him to shepherd the fast-growing blogging product, with no forced integration with Yahoo’s many other content properties.

That said, sources added, there will be more back-end changes to marry infrastructure, such as undergirding Tumblr’s nascent advertising business and giving it more distribution opportunities.

“At the beginning, at least, it’ll be hands-off,” said one person close to the situation. “It has to be.”

While that is probably no surprise, it’s still good news for Tumblr employees as well as its very opinionated user base, which is not likely to greet a takeover by a corporate giant of the social, iconoclastic user-generated content service.

That said, Yahoo execs discussed and are aware of issues around porn published on the site, although they believe it to be fixable over time.

As Peter Kafka noted:

To spell that out: Tumblr’s advertisers don’t have to worry about their stuff showing up on blogs like We Want Porn. At worst, it’s possible that they’ll end up advertising to a user whose dashboard includes posts from We Want Porn. But in general, they ought to be pretty well insulated from that stuff.

By the same token, if Yahoo wanted to, it could end up scrubbing Tumblr of porn, and losing a lot of users and views — but it probably wouldn’t lose much in the way of monetizable users. Unless it turns out that the majority of Tumblr’s core users have signed on exclusively to use porn.

Or, as a Tumblr investor also told Kafka: “Non-story. Tumblr is the Internet. It’s a dashboard-follower model, opt-in.”

Moving on from porn, sources close to the situation — okay, pretty much everyone is chit-chatting away now — said that Mayer spent a lot of time with Karp (who was in Silicon Valley last week, in fact, visiting her) about the transition, and about how the new ownership would impact him and the service.

One source called them “kindred spirits” on the issue, and that Mayer has been given great purview by the Yahoo board to foster Tumblr to prevent it from turning out like Flickr, Delicious and many other big acquisitions dating back to GeoCities. (I was there covering that deal way back when, and what a mess that was!)

Mayer is well-liked by product and engineering entrepreneurs, and has often focused on them at Yahoo, over the perhaps more important demands of business and advertising execs.

That would appeal to Karp, who once famously said that online advertising made him physically sick. Still, he has recently begun to embrace ad sales at Tumblr.

Within the last year or so, Tumblr has started selling modestly sized “native ads” promoting brands’ Tumblr pages on users’ dashboards, which has shown promise. Tumblr has said it had $13 million in revenue last year, and sources said it could get to up to $100 million this year.

“We’re going to be very careful here,” said a source with knowledge of the acquisition.

A source at Tumblr agreed: “This will be a very delicate dance, since so much could go wrong if done without care.”

Still, some at Yahoo are worried that the company might be chasing the youthful demographic at Tumblr too assiduously. “This is a very fickle audience,” said another high-ranking Yahoo exec. “Chasing a young one is a very tricky thing.”

Yes, indeed, but Mayer thinks she is the one to be able to pull it off and make Yahoo relevant with an even wider consumer base.

AllThingsD broke news of the deal in the offing last week, which has since been approved by Yahoo’s board.

Billion-dollar-plus price tag? Check!

Yes, all of that describes the Yahoo-Tumblr deal. And it also describes Google’s move to buy YouTube in the fall of 2006.

Which doesn’t mean the two deals are parallel, of course. For starters, the $1.6 billion Google spent on YouTube was a drop in the bucket for the search engine. But $1.1 billion is spending is a very big chunk of Yahoo’s cash pile.

And even back in 2006 it was clear that video would be a crucial part of the Web. You can’t use the same certainty when you talk about cat GIFs.

More important is that, then and now, Google viewed YouTube as a nice complement to its core business, which has never flagged. For Marissa Mayer, it’s a crucial part of her strategy to bring new eyeballs to a faded brand.

Still! Fun to compare and contrast.

Here’s what we know about Tumblr: It’s seven years old, has a lot of users, and last year it lost money on $13 million in revenue. And for YouTube: It turns eight tomorrow, is reportedly on track to generate $4 billion in revenue this year*, and Google executives keep murmuring that it either is or could be profitable.

More interesting for today: Here’s what YouTube’s financials looked like for a two-year period ending August 2006 — shortly before Google bought it (the document comes courtesy of the never-ending Viacom-YouTube copyright fight). Note the sharp uptick in revenue, users and costs at the end. Perhaps Yahoo saw something similar:

youtube pl

*As with all YouTube revenue estimates, take Morgan Stanley’s most recent one with a big chunk of salt.

The Yahoo board has approved a massive $1.1 billion all-cash deal to buy Tumblr.

It’s not clear when the official vote was taken, but sources close to the board said the acquisition was a foregone conclusion and was unanimously approved by the directors of Silicon Valley Internet giant.

The deal will likely be announced Monday morning, said numerous sources.

AllThingsD.com initially broke the story of the acquisition efforts and later followed up with details of the exact price and the board meeting to approve the transaction.

There were no other competing bids, despite reports, to snap up the New York-based social blogging service. That said, Tumblr had held some very preliminary discussions about various deals with Facebook, Google, Microsoft and also Twitter earlier this year.

As part of the Yahoo deal, Tumblr CEO David Karp — who will get a windfall of cash from the acquisition — will stay at Yahoo for four years at least and retain a lot of control over the service, much in the same way Instagram CEO Kevin Systrom does at Facebook. But, as there, Yahoo will undergird Tumblr’s nascent advertising business with its large and established infrastructure, said sources.

Yahoo had been mulling some kind of deal with Tumblr, from a strategic investment to an outright acquisition, for about six weeks. Sources said that Yahoo CEO Marissa Mayer had decided that buying the company was going to be “the stake in the ground of what her strategy is going forward for Yahoo.”

And that is to attract younger audiences with just the kind of user-generated content Tumblr has pioneered to impressive growth.

According to numerous sources, Mayer determined quickly in her research that the site was just the kind of property that Yahoo needed to make it both “cool” and relevant to new consumers.

Yahoo is looking to bolster its strong set of existing media offerings to appeal to a different demographic and also get into the social space via consumer-based software solutions that are both elegant and easy to use.

Tumblr’s mobile usage has also been strong, which also interested Mayer. While Tumblr started as a desktop-based service, its mobile offering has ramped up quickly in the last few years. ComScore says that a quarter of the service’s U.S. visitors now come from mobile devices.

At this price, it will be Mayer’s biggest acquisition so far. Since she became CEO last summer, Mayer has made only a series of small acquisitions of mobile startups at a low cost.

According to sources, the Tumblr brand will continue.

The deal, if consummated, will be a big win for investors. In a series of fundings since 2007, Tumblr has raised $125 million so far and is now at a reported valuation of $800 million. Investors include Spark Capital, Union Square Ventures, Sequoia Capital, Greylock Partners, Insight Venture Partners and the Chernin Group.

While Tumblr’s Karp has resisted various offers for the company over the years, Mayer spent a lot of time with him reassuring him that Yahoo could turbocharge his business. He has also been searching for a COO to help him build out the infrastructure of its business, especially its advertising one.

And as Peter Kafka and I previously wrote, Tumblr could certainly bring Yahoo a big, young audience. Its worldwide traffic was at 117 million visitors in April, according to comScore. On its home page, Tumblr claims it has 107.8 million blogs and 50.6 billion posts. U.S. desktop traffic to Tumblr was 37 million in April, close to LinkedIn and Twitter, although Twitter obviously has much more via mobile.

But figuring out how to make money from that is a task that the company has only recently started to tackle.

Like other recent Web startups that have seen rocketship growth — see: Twitter, Facebook — Tumblr resisted advertising for its formative years, and its user base seems particularly unwilling to accept standard banner ads. In addition, many industry observers think that Tumblr’s pages are packed with porn or other questionable content that would scare off advertisers.

But within the last year or so, Tumblr has started selling modestly sized “native ads” promoting brands’ Tumblr pages, on users’ “dashboards,” which has shown promise. Tumblr has said it had $13 million in revenue last year and sources said it could get up to $100 million this year.

Tumblr has been represented by Qatalyst Partners’ Frank Quattrone, while Yahoo’s Mayer, as well as M&A head Jackie Reses and CFO Ken Goldman, have been on the company’s side.

Interestingly, what got me first focused on Tumblr last week were Goldman’s comments at JP Morgan’s Global Technology conference last week, where he underscored the need for the aging Yahoo to attract more users from the coveted 18-to-24-years-old age bracket. Along with more marketing, he explicitly said Yahoo needed to be “cool again.”

“One of our challenges is we have had an aging demographic,” said Goldman at the Boston event. “Part of it is going to be just visibility again in making ourselves cool, which we got away from for a couple of years.”

Tumblr, apparently, fits the very expensive bill.

How much porn? You’ll have to make something up, because the only people who know how much porn the blogging service hosts work at the blogging service, and they don’t offer up a number.

But let’s stipulate, for argument’s sake, that there is indeed a lot of porn on Tumblr — in fact, the company’s terms of service make a point of saying it’s okay with “not suitable for work” stuff.

Which means there are a lot of pages on Tumblr that advertisers won’t go near. Like “Girls in Yoga Pants,” where the image at the top of this post came from (yes, that’s a tame one).

So why isn’t that an issue for Yahoo, which is very close to spending $1.1 billion on the company?

Here it’s important to pay attention to the way Tumblr actually works — or more precisely, the two ways it works.

Tumblr offers tools to make simple blog pages, which anyone with a Web browser can see. So you don’t have to sign up for Tumblr to check out We Want Porn, but comScore will count you as one of the service’s 117 million monthly users.

Tumblr’s core users, though, log in to the service, and subscribe to different Tumblogs, which they view on a “dashboard” — the equivalent of Twitter and Facebook’s newsfeeds.

Not coincidentally, these are also the only people Tumblr is showing ads to, either via “radar” ads that promote Tumblr pages alongside users’ dashboards, or “spotlight” ads that promote Tumblr pages in a directory of suggested accounts.

To spell that out: Tumblr’s advertisers don’t have to worry about their stuff showing up on blogs like We Want Porn. At worst, it’s possible that they’ll end up advertising to a user whose dashboard includes posts from We Want Porn. But in general, they ought to be pretty well insulated from that stuff.

By the same token, if Yahoo wanted to, it could end up scrubbing Tumblr of porn, and losing a lot of users and views — but it probably wouldn’t lose much in the way of monetizable users. Unless it turns out that the majority of Tumblr’s core users have signed on exclusively to use porn.

So: Problem? Sure. But it doesn’t look like a costly one.

Update: Now that the deal is done, a Tumblr backer has piped up to offer a more concise version of my argument: “Non-story. Tumblr is the Internet. It’s a dashboard follower model, opt-in.” That would have saved me a bunch of typing!

In case you missed anything, here’s a quick roundup of the news that powered AllThingsD this week:

1. As AllThingsD’s Kara Swisher and Peter Kafka were first to report this week, Yahoo is seriously thinking about buying hipster blogging service Tumblr. In fact, Yahoo’s board is scheduled to consider a $1.1 billion all-cash deal on Sunday.
2. Google wanted to dominate the headlines this week during the company’s annual I/O conference … just maybe not like this. By sending Microsoft a cease-and-desist, they helped promote that rival’s anti-Google campaign.
3. That little drama didn’t come up during the official proceedings of I/O, but a lot else did. Here’s a rundown of all the news Google announced in its three-and-a-half-hour opening keynote.
4. Watch this: An interview with Bill Gates, in which the Microsoft founder talks about his longtime relationship with Steve Jobs, on “60 Minutes.”
5. Can productivity apps for the iPad make it as useful as a traditional work PC? Walt Mossberg puts them to the test.
6. Speaking of the iPad, the Justice Department is closing in on Apple with an e-book price fixing case … but one of the seemingly most damning pieces of evidence, a line from a letter from Steve Jobs to James Murdoch, is a little less damning in context.
7. Web video services like Amazon, HBO and Hulu all say they’re seeing significant growth. But is anyone cutting into Netflix’s lead? A new report says: Nope!
8. BlackBerry is bringing its messenger application, BBM, to iPhones and Android phones this summer. But is it too late?
9. Cisco’s earnings only barely beat analysts’ expectations this week, but that beat sent the company’s stock up 9 percent in after-hours trading. Arik Hesseldahl got CEO John Chambers on the phone to talk about where Cisco is and where it’s going.
10. And lastly, if you want more battery life out of your iPhone on the go, you may have considered a special re-juicing case. Product reviewer Lauren Goode tries the battery boosters before you buy.

To stay on top of the latest, follow AllThingsD on Twitter and Facebook, and subscribe to our daily email newsletter.

According to sources close to the situation, the Yahoo board plans to meet Sunday to decide whether to approve a $1.1 billion all-cash offer for New York-based blogging site Tumblr.

As AllThingsD.com first reported yesterday, Yahoo has been mulling some kind of deal with the hip New York-based blogging site, from a strategic investment to an outright acquisition. Sources said that the Silicon Valley Internet giant’s CEO Marissa Mayer has decided that buying Tumblr was going to be “the stake in the ground of what her strategy is going forward for Yahoo.”

And that is to attract younger audiences with just the kind of user-generated content Tumblr has pioneered to huge growth.

As with all big-time acquisition deals, this one could certainly fall apart at the last minute, but source said the agreement was still in place as of today. If approved by Yahoo’s board, it will be announced Monday. Yahoo has already said it has news to announce then.

According to numerous sources, Mayer started an intense focus on Tumblr about six weeks ago and determined quickly that the fast-growing content site, turbocharged by mountains of user-generated content, was just the kind of property that Yahoo needed to make it both “cool” and relevant to new audiences.

Yahoo is looking to undergird its strong set of existing media offerings to appeal to a different audience and also get into the social space via consumer-based software solutions that are both elegant and easy to use.

Tumblr’s mobile usage has also been strong, which also interested Mayer. While Tumblr started as a desktop-based service, its mobile usage has ramped up quickly in the last few years. ComScore says that a quarter of the service’s U.S. visitors now come from mobile devices.

At this price, it will be Mayer’s biggest acquisition so far. Since she became CEO last summer, Mayer has made only a series of small acquisitions of mobile startups.

Sources said that as part of the deal, founder and CEO David Karp would continue to operate the business, with Mayer promising him a level of autonomy, despite the need to integrate closely with Yahoo too. He will be locked in, sources said, via a four-year deal that will reward him for performance of the business.

Presumably, the Tumblr brand will continue.

The deal, if consummated will be a big win for investors. In a series of fundings since 2007, Tumblr has raised $125 million so far and is now at a reported valuation of $800 million. Investors include Spark Capital, Union Square Ventures, Sequoia Capital, Greylock Partners, Insight Venture Partners and the Chernin Group.

While Tumblr’s Karp has resisted various offers for the company over the years, Mayer spent a lot of time with him reassuring him of how Yahoo could turbocharge his business. He has also been searching for a COO to help him build out the infrastructure of its business, especially its advertising one.

And as Peter Kafka and I previously wrote, Tumblr could certainly bring Yahoo a big, young audience. Its worldwide traffic was at 117 million visitors in April, according to comScore. On its home page, Tumblr claims it has 107.8 million blogs and 50.6 billion posts. U.S. desktop traffic to Tumblr was 37 million in April, close to LinkedIn and Twitter, although Twitter obviously has much more via mobile.

But figuring out how to make money from that audience is a task that the company has only recently started to tackle.

Like other recent Web startups that have seen rocket ship growth — see: Twitter, Facebook — Tumblr resisted advertising for its formative years, and its user base seems particularly unwilling to accept standard banner ads. In addition, many industry observers think that Tumblr’s pages are packed with porn and/or other questionable content that would scare off advertisers.

But within the last year or so, Tumblr has started selling modestly sized “native ads” promoting brands’ Tumblr pages, on users’ “dashboards,” which has shown promise. Tumblr has said it had $13 million in revenue last year and sources said it could get to up to $100 million this year.

Tumblr has been represented by Qatalyst Partners’ Frank Quattrone, while Yahoo’s Mayer, as well as M&A head Jackie Reses and CFO Ken Goldman has been on the company’s side.

More to come, obviously.