After gushing with pride over Storyboard's many accolades, Mr. Karp pivoted, abruptly. The year-old concept "had run its course" and the editorial team, he announced, "will be closing up shop and moving on." Please, he asked, "join us in wishing them well."

But the Storyboard layoffs, which affected three staffers peripheral to internal operations, are hardly the only departures Tumblr has faced over the past six or seven months. Rather, they're the only ones Mr. Karp has spoken about publicly.

Sources close to the company, who requested anonymity, told Betabeat that a handful of high-level deputies have also quietly ended their tenure at Tumblr--leaving a noticeable absence around Mr. Karp where his leadership team should be.

"It’s like the fucking Argentinian government, people just get disappeared," said one source.

The most recent departure is Blake Matheny, Tumblr's VP of engineering, who gave notice in the past few weeks. Another source called it a "huge loss," adding, "Blake was the strongest tech leader there."

Fredrik Nylander, Tumblr's former executive vice president, gave notice last fall, we heard, but was asked to stick around by Mr. Karp, showing up at the office with less and less frequency. His LinkedIn profile states that he started as the CTO of Oscar, a New York City-based startup, this year. Mr. Nylander started as Tumblr's VP of technical operations back in 2011 and was promoted in less than a year to VP of engineering.

As EVP of Tumblr, Mr. Nylander replaced the role of former vice president Andrew McLaughlin, a veteran of Google, ICANN, and former deputy CTO for the Obama administration. Mr. McLaughlin lasted as VP at Tumblr for just nine months.

Marc LaFountain, Tumblr's former vice president of tech support, left in October, following his wife, an executive at R.J. Reynolds, to Switzerland. And last month, advertising veteran Rick Webb, who played a pivotal role consulting on the six-year old company's recent push toward profitability through advertising, announced that he too would be moving on after 10 months.

In the past, Tumblr has also lost lead developer Marco Arment, president John Maloney, and "vice president of people" Charlie Gray, an Xoogler who was with the company for only six months. So for tech leadership, that leaves Derek Gottfrid, VP of product, who may oversee some operations.

"We don't comment on staff moves, however all of the people you've referred to are very different circumstances spread out over months and not related at all to the closure of Storyboard," Tumblr spokesperson Katharine Barna said by email when she heard we were inquiring about the departures. She declined to comment further.

We reached out to each of the execs and will update the post when we hear back. But the sources we spoke with didn't attribute the recent shakeups to cost-cutting due to pressure from the board or even clearing the decks for Tumblr's rumored fundraising. Instead, they cited frustrations with Mr. Karp, who tends to marginalize deputies who disagree with him.

"Some people seem genuinely happy at Tumblr, but most are miserable, largely because Karp is wildly unpredictable and inconsistent," said one source. "Karp seems to treat Tumblr like a junior high lunch room--he sits with his five favorite people of the moment, and treats everyone else like a reject."

Mr. Karp has been encouraged to look for COO for Tumblr. Speculation says the role may go to former News Corp. chief digital officer and AOL CEO Jonathan Miller, who has been consulting for the company--one of the mentors Mr. Karp tends to collect. But Mr. Miller may still be hampered by "golden handcuffs" from his time at News Corp. Watchful observers don't have high hopes. "Even the COO search is a sham," said one source. "He’s not looking for Sheryl Sandberg, he’s looking to sideline that whole thing."

These staffing changes come at a critical time for Tumblr. Business Insider reported last week that Mr. Karp was in Silicon Valley "raising a big round of funding," even though it "doesn't need to raise more money." However, according to a profile in Forbes from January, Tumblr generated just $13 million in 2012, despite traffic of 18 billion page views per month. Forbes also noted that Tumblr shelled out an estimated $25 million in operations in 2012 and expects that figure to increase to $40 million in 2013. The company, which is headquarted in a cushy Flatiron clubhouse, last raised funding in 2011: $85 million at an $800 million valuation. Up until the end of 2012, Tumblr reportedly had a burn rate of $4 million to $5 million a month, before transitioning to its own data center, which lowered the burn rate to $2 million a month.

Given those financial concerns, some seem puzzled at the board's faith in Mr. Karp. "The fact that Tumblr is losing its most experienced people, at a moment when it wants people to believe it's succeeding in a big way, suggests some real incompetence on Karp's part," said a source.

The success Tumblr wants to project--as its Silicon Alley cohorts are trying to avoid down rounds--is related to the monetization strategy it launched for first time last year, which relies on native advertising via the Tumblr Dashboard, rather than traditional display or keyword ads. As head of sales Lee Brown told Bloomberg recently, brands pay for prominent placement of their posts, acting much like other users on the service:

“Marketers have become accustomed to buying scale as opposed to earning it,” Brown said. “We’re not really selling ads, we’re promoting their content.”

That approach has managed to attract big brands like Target, Coca-Cola, Adidas, Lions Gate, and Christian Dior, who average purchases of "just under six figures." Tumblr has begun offering the same service on its mobile app, which it says should lead the company toward since first annual profit since launching in 2007. But often the posts featured in the prominent Tumblr "Radar" spot on the dashboard come from regular users instead of brands, as evidenced by this unofficial archive.

One source was skeptical of the company’s emphasis on pageviews and number of blogs, given its advertising approach. "It has no strategy for monetizing anything other than logged-in dashboard users. Those numbers are much, much lower than what Tumblr's PR would suggest. So they're basically spending VC money to provide a free blogging platform, the vast majority of which can't be monetized."

Others disagreed with that assessment. "Monetizing the dashboard, actually, is the smart move. Why go and try and do deals with 100 million blogs, and share revenue, when you can just monetize the dash, which is bigger and you totally control?"

If Tumblr is indeed seeking another financing round, investors will no doubt be paying attention to its ability to monetize, as well as traffic itself. In November, Mr. Karp boasted that Tumblr had cracked Quantcast's list of top 10 U.S. websites. (It fact, Tumblr mistook the "top ten" badge on Quantcast as its website ranking. Instead, it had cracked no. 9 on Quantcast’s list of top networks and no. 15 on Quantcast’s list of top sites.)

Currently, Tumblr is ranked no. 21 in the top websites. A Quantcast graph shows that traffic appears to be plateauing, bolstered by an uptick in mobile users.

This story is developing, please email tips@betabeat.com with further information.

(Photo: Tumblr/Davidslog)

Earlier this year, Forbes staff writer Jeff Bercovici wrangled some pertinent numbers from Tumblr--in the midst of touring CEO David Karp's $1.6 million minimalist loft in Williamsburg. Despite traffic of 18 billion page views per month (as of January), the company ended 2012 with $13 million in revenue.

For context, when Tumblr raised $85 million in 2011, investors valued the company at $800 million. And that financing was going fast. In addition to its swanky Flatiron headquarters, sources told Business Insider that up until the end of last year, the company was burning $4 million to $5 million per month by using third-party servers. Once its own data center went online in October, the cost was reduced to about $2 million per month.

Then there's the cost of keeping GIFmakers in the ping pong and beer to which they've become accustomed.

So how could Tumblr achieve its stated goal of growing revenue to $100 million by the end of this year? The answer to that is the same as it ever was: Ads on ads on ads. Thus Mr. Karp's disdainful approach to advertising, once permitted or even coddled by investors, has morphed into a more methodical approach.

Last year, the company released its first paid ad products, Radar and Spotlight, as well as metrics on how they were performing--something that's long frustrated brands on Tumblr.

Now, as Bloomberg reports the company is offering a similar service on smartphones, which they've been testing internally. Vice President Derek Gottfrid told the site that the number of people using Tumblr's app, "has quadrupled over the past six months." And with the move to mobile, Tumblr has set its sights beyond just growing revenue and toward profitability, for the first time ever.

The average advertising purchase on Tumblr is now “just under six figures,” said Lee Brown, head of sales. “We expect that the monetization will lead us to profitability this year.”

(PR strategist Ryan Holiday also reported that his client, American Apparel, did "six figures worth of buying" on Tumblr in a recent column for Betabeat.)

But despite the new emphasis on ads, Tumblr is eschewing the display or keyword approach for native advertising, same as it has on the web. Says Bloomberg:

Instead, they have to pay to get their own Tumblr blogs seen by more people. They can measure impact by how many viewers republished the post on their own blogs or “hearted” it.

“We’re not bringing them a template or format to complete,” Brown said. “We’re giving them a canvas. That takes a lot of time and a lot of thought.”

That approach has managed to attract big brands like Target, Coca-Cola, Adidas, Lions Gate, and Christian Dior. According to Bloomberg:

The company is trying to convince customers to use its platform as a starting point to create messages that can then be distributed to other social networks, like Facebook, Twitter and Instagram.

“Marketers have become accustomed to buying scale as opposed to earning it,” Brown said. “We’re not really selling ads, we’re promoting their content.”

For Silicon Alley's sake, here's hoping going native is as lucrative as everyone hopes. Because monetizing otherkins is a hard sell.

For roughly a year now--almost six months since I wrote a wildly popular column about it for The Observer--Facebook has been pushing an utterly duplicitous and embarrassing business model.

The scheme: Facebook posts are seen by only a woeful fraction of a company’s total fans or subscribers (often less than 15 percent). And conveniently, that percentage is controlled by Facebook, while the site simultaneously offers an expensive "service" that allows companies to pay to reach its own fans. This throttling quickly became a source of millions of dollars of revenue for the social network.

It's about as plain and malignant a case of conflict of interest can get. One that only Facebook would dare to try.

Small businesses and entrepreneurs have reacted vehemently against it, even going as far as to create a protest called “I Want My Friends Back”. Mark Cuban threatened to stop using the platform over it. Hell, the whole thing is old enough that the inevitable counter-backlash already came and went.

But only now, when Nick Bilton at the New York Times experienced it himself, did the phenomenon suddenly hit the top of Techmeme.

Some of the tweets from Bilton's colleagues are pretty amazing: "I dunno, I kind of feel like we knew this was coming eventually," writes Anthony De Rosa, a Reuters columnist and social media editor.

Indeed! We knew it because it already happened.

Felix Salmon, also of Reuters, tweeted back to Bilton at the Times, "Insofar as it applies only to fans/subscribers rather than actual friends, surely not a big deal."

Except that's not true either. In October, TechCrunch revealed that Facebook was expanding the program so that users needed (or could choose, depending on your interpretation) to pay $7 to extend the reach about "important announcements" like weddings, garage sales or parties.

I don't mean to pile on any of these well-meaning writers. (Some, like Zach Seward at Quartz, pretty much nailed it with his analysis of how Facebook tweaks "the black box that is EdgeRank," in order to promote and incentivize features). They are right to be outraged and perplexed. Facebook's pay-for-placement program is ridiculous. Except it's been ridiculous for quite some time. And apparently part of the reason Facebook has been able to get away with it is that few media gatekeepers, who are supposed to follow this stuff for a living, know how the platform really works.

The common dismissal I’ve seen from far too many journalists--“how else should Facebook make money?”--implies that they or their sources just don’t understand the ad business. They aren’t able to see that Facebook’s sponsored story play is fundamentally different from most ad models.

Take Tumblr’s new ad platform Radar, on which I have done six-figures worth of buying for my client American Apparel. To create it, Tumblr designed entirely new advertising space on the platform that people have to pay to be a part of. In that case, buyers didn’t previously have access to it so if they want it, they have to pay for it. Tumblr’s interest is to make that space as attractive and valuable as possible to buyers, so they’ll pay for it. In this case, our interests are aligned--however long it took Tumblr to get here.

That’s very different from Facebook’s model, in which the worse Facebook posts ‘work’ for brands, the more brands will need to pay Facebook. That means that Facebook and I now have divergent interests. Intentionally or not, the less my posts show up, the more I need to spend to cover the difference, especially since brands have invested in and become dependent on Facebook over the years.

Facebook has put itself in an ugly position. Even if they’re not doing anything with it right now—it looks like they easily could. To me, it doesn’t seem any different than someone like Goldman Sachs or any financial firm being short a position that they turn around and sell to an unsuspecting client as an investment. The worse it does for their client, the better it is for the house. Why even risk the potential impropriety? Greed is the only answer. I seem to remember we fined a ton of Wall Street analysts during the first dotcom bubble for exactly such a maneuver.

Does Facebook have a ‘right’ to operate this way–to throttle access and charge unequally for passage? As a for-profit company, they absolutely do. It’s just bafflingly shortsighted--and borderline unethical--to anyone who really thinks about it for two seconds.

I’m just starting to realize that most tech media have neglected to do that.

And THAT is why Facebook has gotten away with this appalling bait-and-switch. That's how they’ve been boldly able to be (and remain) broken on purpose.

Ryan Holiday is the bestselling author of  Trust Me I’m Lying: Confessions of a Media Manipulator and a PR strategist for brands and writers.

A few weeks ago, Tumblr founder David Karp rather abruptly announced that he was reversing his long-held anti-advertising stance and opening Tumblr Radar up for sponsorship. According to an email from Tumblr communications rep Katherine Barna, the ad shop is officially open for business.

"We're very excited to announce that Tumblr's first official Sponsor products are now available to advertisers!" Ms. Barna wrote, directing folks to a new page for potential marketers. "We are constantly delighted by the creative ways that brands use Tumblr, and are confident that the world's greatest marketers and media companies will use these products to set a new bar for creative advertising on the web." Mr. Karp seemed a little more contemptuous towards advertisers at the Decoded Fashion conference earlier this week. But, like, in a friendly way, of course!

Sponsorship packages, which will appear on the Tumblr Radar (that little box on the right of the dashboard) as well as on Tumblr Spotlight, start at $25,000. As suspected, The Hunger Games producers have already signed up with an ad for Capital Couture, a marketing site set in the fictional world of film. If Christopher Nolan is reading, we would a 100 percent click on absolutely any The Dark Knight Rises-inspired Tumblrs you want to promote. We'll even pretend to believe you when you call it "augmented reality."