Ask HN: How do Tumblr & Posterous make money? | Hacker News Reader

Ask HN: How do Tumblr & Posterous make money?

30 pointsgaiusparx31 comments

Both are free blogging services, no price plan, no add-on charges, free support. And I'm not aware there is ads too. Where do they get their income? Consultation fee? Writing a book about their platforms?

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I seem to remember that Posterous tested changing outgoing links to go through a affiliate program proxy. Not sure if they kept it up.

I just checked. They do appear to still be doing that.

a4agarwal's response at the time http://news.ycombinator.com/item?id=1309849

Opinions obviously differ widely on that one. To me it is unacceptable, especially if done in such a sneaky way. Other people seem to be fine with it. If enough people who are fine with it become their customers, why not.

I don't think they announced this big when they rolled out their massive "all other blogs are stupid" campaign...

VC funding :)

Platforms like posterous and tumblr rely heavily on scale - ie, a large number of users. So, their first priority is to get as much users on board as possible from other publishing platforms. Once they reach a certain threshold, they can start experimenting with revenue generation - be it in form of advertising or premium hosting etc.

Thats similar to the way Wordpress played out.

I noticed that Wordpress.com sites started serving ads too.

If I remember correctly, they've been serving ads occasionally since close to the beginning of the site. It was just a reasonably infrequent occurrence.

Sure. But how the hell do they convince investors to get on board? Any future numbers are so pie-in-the-sky, and revenues so far off, why would anyone touch it?

Unfortunately, I'm not a VC so cant offer a response that'd do justice to your question. Most of the VC investments happen based on the team and little based on the idea (at least thats what I've read everywhere) - so I guess the founders impressed the investors enough to invest.

It's not pie-in-the-sky.

Anyone should be able to make between $4 & $5 per 1000 visitors from just running AdSense.

Use that as a baseline and do the math from there. If you can add-on non-advertising forms of revenue then that is a bonus.

Maybe $4 per year. GOOG keeps reducing AdSense payments to help provide quarter-over-quarter income growth.

Got math?

It's going to depend on your field of course, but it's pretty easy to get between 0.5 & 1% clickthough and 10c per clicks. That's between 50c & $1 per 1000 pageviews, and I said $5 per 1000 visitors (ie, uniques). If you double the CTR (quite doable with optimization) and get 2 pageviews per visitor then that's $4/visitor already...

If you prefer, look at it like this. The lowest Adsense eCPM I've seen over any medium period by anyone I know is $0.70.

Posterous is doing around 1.5 million pageviews per day (http://www.quantcast.com/search.jsp?domain=posterous.com) and Tumblr is doing over 60 million.

Getting revenue with that much traffic wouldn't be too hard.

I was being snarky, but, AdSense payouts are trending endlessly downward as far as I can tell, and that scares investors. At least it should.

OK sure. but how do you estimate your visitor/traffic growth?

Both sites have release traffic numbers in the past.

Shouldn't the question be 'do they make money?'

I would assume that they're building momentum before they introduce premium services. Flickr's probably quite a good example of this. I know Posterous have mentioned that they'll be implementing paid-for extras in the future, but that the current offering will remain free.

Yup, this is a popular option. Offer a free version to get people in the door then add value added features for users who want to do more with the service.

Doesn't seem fair that somebody can come along and offer a service for free/no ads in order to get people to switch over from a provider that charges/has ads, only to eventually switch over and do the same.

Considering that they do not lock you in (they allow to export your content), I see nothing at all unfair about it. If you have your own URL that you point to your blog, switching should be pretty seamless as far as your readers are concerned.

>Flickr's probably quite a good example of this.

Flickr had contextual ads since, I believe, day one. Then they added paid accounts and I subscribed and have never regretted it.

I've been a paid "pro" subscriber to Flickr for many years, trusting them with my media (http://www.flickr.com/photos/dforbes/4657268471/ <- one of my sons nibbled by a goat!) because I had faith that they had a coherent, sustainable business strategy.

Similarly I have faith in Gmail because I can see they aren't struggling to find a revenue model.

I don't trust services that are saving a revenue model until "sometime later", especially where the service has any sort of lock-in or inconvenience if they get bored and move on. Such a make-money-later strategy usually arrives with very negative changes when the day of reckoning comes: It is essentially a bait and switch tactic (one that PG is a big advocate of), and really I view as deceptive, even if it gets a big enough user base that you can flip it to some VCs.

"All blogs now served with free pop-under advertisements!"

> I don't trust services that are saving a revenue model until "sometime later" ... essentially a bait and switch tactic

Ning! Ning! We have a winner!

Tumblr has launched a number of premium add-ons, like themes and getting featured in their directory.

"Coca-Cola is using Posterous for its NCAA “Dept of Fannovation” where people can come up with ideas to improve the experience of being a fan, and a chance to win $10,000."

http://ycombinator.posterous.com/posterous-s08-jumps-on-the-...

I recently started using tumblr and its mind blowing how much they allow you to do for free. There have very little limitations, if any. They allow you to put ads on you blog with no string attached AFAIK, custom domains (other do it too).

I think they make a decent amount of money on premium theme and get your blog listed on featured directories and other paid features.

I was hoping that they would allow API access to password-protected blogs. I use marsedit to post on my blog, but can't do it on my private blog.

Posterous is selling domains for around $25 per year (with discount for more years).

I don't believe they make all the money from that though, but I'm sure it helps.

Wholesale cost on domains has got to be less than $5 or so for them so they make a little. Not much though.

It's a classic freemium model. Their modus operandi is going to be get as many hyper-engaged users as possible, and hope to monetize by either introducing premium-type features, or gathering user data and advertising (but probably a combination of all available options).

They don't have a clear income. They aim to get big and then think of income after that. I don't like this model, because at first, I'll have to rely heavily on Buzz and VCs.

Tumblr now has some premium features such us paid themes and blog promotions

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