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Tumblr is losing $30M each year, CEO says
(techcrunch.com)
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They sort of kinda did. You can post nudity now. Not porn, but nudity.
And the dirty little secret about Tumblr is, people were still posting porn, this whole time, they just weren't caught because Tumblr wasn't actually looking for it that hard.
So in the end all that decision did was hurt them for no reason. Doing nothing would have been better.