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The same story it always is. Reddit, like so many other places, believes it has a right to extract the value the community creates. But it doesn't. It didn't
by DannyBee 3y ago
The same story it always is.
Reddit, like so many other places, believes it has a right to extract the value the community creates.
But it doesn't. It didn't create the value, the community did. It convinces itself it has a right to profit here, but it really created almost none of the value.
It is then surprised when it can't just sit and extract value from the community without pushback.
This kind of value extraction only works (If at all), when the value being provided by the company is somewhere near that being provided by the community.
Then people are a little more willing to feel like you deserve something.
In reddit's case, it's very uneven. Despite providing the website and bandwidth, Reddit feels to most of its community like a large scale freeloader, as funny as that may sound.
That sort of relationship eventually goes south, though it takes a while sometimes.
All of these places eventually discover that they are not the thing driving real value.
Those that are smart realize this early on, try to make as much as they can while they can, and diversify before it all goes to shit.
Reddit is not one of those.
- travisjungroth 3y agoThis is a really interesting take because it’s so opposite of how Reddit sees things. Of course they own all the communities? But, no, not really. It’s like your landlord thinking they own your business.
- mongol 3y agoIt is a thought-provoking analogy. To take it further, would Reddit be like a shopping mall, and the apps would be the shops and the moderators be the sales staff? Or would the subreddits be the shops, and the apps be ... yes what would they be? It is just a fun thought experiment. But I think Reddit the company has been more than just a landlord. They have made more than just rented out space to make Reddit what it is.
- rightbyte 3y agoReddit have used VC money to artificially put rent at zero, destroying community driven forums in the progress. In a landlord analogy, it would be like opening a big mall and lure shops and consumers at a loss, making the city centre a void, then raise prices when the original functional community in the city is lost.
- yanderekko 3y ago>Reddit, like so many other places, believes it has a right to extract the value the community creates. >But it doesn't. I'm sorry, but it absolutely does. Yes, it has to do this subject to brand risk constraints. But the idea that investors should just expect to make losses on the site is insane. That trying to turn a profit on their own platform represents "freeloading". I guess normally I'd feel sorry for whatever platforms are afflicted with people who hold this sort of ideology, but Reddit has done a lot to cater to people who think like this.
- ng12 3y agoRight, the investors are the problem. Reddit made a deal with the devil and now the community that made it bears the cost.
- calf 3y ago[flagged]
- yanderekko 3y agoI guess you should pray that the CCP invests more money in Reddit in order to make sure it's no longer subjected to the "whims of capitalist forces". Of course, I have trouble taking this seriously when I suspect there's a huge amount of overlap between people decrying profit-seeking behavior here but who also are fine with wrongthink communities being banned out of advertiser revenue concerns.
- satvikpendem 3y agoYou can host your own community then. At the end of the day, someone has to pay for hosting all of that data. Trying to not lose money from hosting said data is not a "distort[ion] at the whim of capitalist forces."
- bcrack 3y ago"You can host your own community then"; Sorry but I'm not really a fan of this "make your own (...)" attitude, especially when excusing corporate behavior against volunteers I mean that there is a spectrum ranging from paying the bills and making profit to blatantly exploiting everyone involved. Based on the Apollo logistics, reddit API pricing seems to fall on the greedy end of the spectrum. At the same time we have examples with high-traffic websites (e.g. Wikipedia) which manage to build upon volunteer effort and be sustainable without pissing everyone off within a few days.
- duxup 3y agoThe community has provided Reddit value for free. It is Reddit’s to use at that point, right or wrong. Unless the community were to just up and leave, I’m not sure anything changes. People provide other social media services their content for free too, even those they don’t like.
- ddtaylor 3y agoI agree entirely about how Reddit is essentially become a parasite on it's communities. It does sound odd, but IMO it's very true. I look at these situations where growth is the main goal and it's always a matter of time before the goal outgrows the actual utility or function of the company itself. Reddit really has a job of just keeping the servers online and being there to enforce basic "property" rights. They make a boat load of money from the dumb cosmetic features of the site.
- p-e-w 3y ago> It convinces itself it has a right to profit here, but it really created almost none of the value. I used to believe that too, but reality has convinced me of the opposite. There isn't, and there has never been, a large (hundreds of millions of active users) online community that wasn't run by a for-profit entity. So the really difficult part, the one where the value ultimately comes from, does seem to lie in hosting and running such a community, and in attracting users. If that wasn't so immensely difficult and expensive, everyone would be doing it. The demise of Reddit has been a long time coming, and now that it is actually happening, there is once again no plan for "the community" to move forward. The open source alternatives are all effectively worthless, with Lemmy apparently telling people not to sign up (yep, seriously!) because they can't handle the influx. No doubt Facebook & Co, or perhaps new commercial competitors, are going to pick up the slack as usual, because the real value is in the infrastructure and network effects that make platforms like Reddit possible in the first place.
- dirkt 3y ago> There isn't, and there has never been, a large (hundreds of millions of active users) online community that wasn't run by a for-profit entity. Usenet.
- istillwritecode 3y agoDon't forget that the vast majority of users don't use third party apps.
- ako 3y agoIf Reddit is that unimportant, it should be easy to take those communities and move them elsewhere, but that isn’t happening. The reality is that without Reddit a large part of those communities wouldn’t exist, and they only exist because of Reddit. For the long term survival of Reddit it is essential they become profitable, otherwise they’ll go bankrupt. And seeing that these communities depend on the existence of Reddit it’s also in the interest of these communities that Reddit turns a profit. They seem to have serious revenue, about 500M in 2021 (https://businessmodelanalyst.com/reddit-business-model/ https://businessmodelanalyst.com/reddit-business-model/), you’d think they could make a profit based on that. They had 2000 employees in June 2023 (https://en.wikipedia.org/wiki/Reddit https://en.wikipedia.org/wiki/Reddit), assuming average of 100K cost per employee, that already adds up to 200M. That may seem excessive for running some community website, but they get 400M+ from ads. Just running an organization to handle a 400M+ business for ads will require lots of people, infra, marketing, etc. I can see the reasoning behind the thought that if you’ve created all this to enable these communities, someone doing less than 1% of the work, by simply putting an app on top of your APIs and infra and starting to make a profit seems unfair. What i don’t understand is why they can’t outcompete these apps by providing a better app.
- bscphil 3y ago> What i don’t understand is why they can’t outcompete these apps by providing a better app. The good apps are (a) free, and (b) don't show any ads. Pretty much by definition they can't compete with that and make money.
- ako 3y agoIf they cant compete because the competition is freeloading on their APIs and community building efforts then it’s clear that they need to compensate the lost revenue by charging for the API usage. It seems Reddit has about 1.5b active monthly users, guess Reddit costs are about $0.3 per year per user. Would be fair to charge that for API usage. If the apps don’t like it, they’re free to create and host the community themselves, shouldn’t be too hard, as Reddit offers little value…
- hobbescotch 3y agoI am going to take a different stance here but these platforms do provide HUGE value. Hosting is a massive cost and so is moderating the volunteer moderators. These 3rd party apps were free loading, some getting billions of requests in a single month and acting like victims, while reddit bears the burden of OpEx costs. On a CPM basis reddit API fees are actually quite cheap and fair for 3rd party devs. 3rd party apps can turn a profit with app redesign, but, from their comments seems like something they were not willing to do. Reddit has just laid off employees and is probably paying 4-5x it was before for financing due to interest rates and has to find new sources of revenue, and quickly, IPO or not. Users are great for building communities but they can just as easily turn into a non-rational mob like is being done here.
- astrobe_ 3y agoLong story short, the game with free services has always been to exploit them more than they exploit you.
- mnming 3y agoDo you have some examples of the smart one that realize it early and diversify successfully?
- MacroChip 3y agoYou think Reddit is surprised? For all we know, this is going better than they expected.