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The rumours were correct. Yahoo will buy blogging site Tumblr for US$1.1 million in cash. The deal was announced on Tumblr founder David Karp’s 26th birthday.

Yahoo made it official in a statement in which it said: “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.”

Tumblr has very little in the way of revenues – but that could be said of Google and Facebook when they were young companies. It attracts more than 300 million unique visitors every month, and has 120,000 signups every day, making it one of the fastest-growing media networks in the world.

Yahoo’s announcement included some other interesting statistics. Tumblr averages 900 posts a second, with 24 billion minutes spent on the site each month. More than half of Tumblr's users are using the mobile app, with an average of seven sessions per day.

It’s all about eyeballs. The deal offers unique opportunities for both companies. Tumblr will be able to deploy Yahoo's personalisation technology and search infrastructure to help its users discover creators, bloggers, and conten. And Tumblr brings 50 existing billion blog posts, 75 million more each day) to Yahoo's.

“Tumblr’s tremendous popularity and engagement among creators, curators and audiences of all ages brings a significant new community of users to the Yahoo network," said Yahoo CEO Marissa Mayer. “The combination of Tumblr plus Yahoo is expected to grow our audience by 50% to more than a billion monthly visitors, and to grow traffic by approximately 20%.” Those eyeballs again.

“The two companies will also work together to create advertising opportunities that are seamless and enhance the user experience,” said Mayer. "Tumblr is redefining creative expression online. 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 demeanour 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. Marissa Mayer has been CEO for less than a year, and had impressed many in the industry with her determination to turn Yahoo around. David Karp was 26 years old on the very day the deal was announced – it was the billion dollar birthday present.

There will be quite a few people hoping Yahoo doesn’t screw up.

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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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