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Aomngst all the dicsussion of reddit's flawed business model, I haven't seen much conjecture into how they _should have done it_. Clearly they need to make mone

• blitzar 3y ago
  They could accept that "reddit the product" (in its current form) is a 2-5bn market cap business with solid 0.5bn revenue; run the business on that basis (all values in today $$'s). Not every product / market is a trillion dollar business. Trees dont grow to the sky. This isnt to say dont innovate. If they invented a new product; the VR Meta TikTok Shorts iPhone Satellite Headset Watch (TM), then one can reevaluate what "reddit the product" means, but charging for your API or introducing a paid verified badge isnt changing that definition.
  • dumpsterdiver 3y ago
    The revenue doesn't matter though if their expenses exceed it. Reddit is not a profitable company. So the parent poster's question remains valid: was there ever going to be a way to "make money" (i.e. profit) without alienating the user base?
    • wasmitnetzen 3y ago
      Why is Reddit not already profitable? They don't pay their moderators, they don't pay for their content, it's mostly text- and image based, very little video, they have a userbase which buys meaningless awards for real money, they should have "native advertising" deals to no end, and very high CPR for their ads since the userbase tells them about their interests. Sounds to me like they're just bad at running a business.
      • dumpsterdiver 3y ago
        I don't know. I can only guess that it's because it was created by two college students with the intent of allowing people to share interesting content with each other (a pet project), and then became more popular than they could ever have imagined. Server costs went up in order to keep the site alive, and investors saw the potential and subsidized those costs, and everything ticked along swimmingly until the investors became impatient. Again, this is just speculation.
      • ghosty141 3y ago
        You are wrong in that they DO host videos and images and quite a lot at that. Originally they only allowed text posts but that changed a while ago and now a lot content is hosted on reddit itself. I personally think that was a huge mistake. If where is one thing you have to know on the internet is that you should stay away from being a hosting site, it almost never works out.
        • blitzar 3y ago
          Imgur was profitably hosting images until reddit brought image hosting in house.
        • beowulfey 3y ago
          It’s kind of silly, to be honest. They basically had free video and image hosting, and Reddit decided to say screw that, lets increase our server fees dramatically. I still don’t really understand what motivated that decision. Did they really gain so much by self-hosting content?
          • bombcar 3y ago
            I believe they are trying to protect themselves from imgur or YouTube deciding they don’t like being an unpaid data store. It’s stupid and premature in my opinion; they should have bought Imgur instead. And the Reddit video player:host was notoriously crappy.
            • dumpsterdiver 3y ago
              > they should have bought Imgur instead In that case, wouldn't they still be paying for the hosting?
          • wasmitnetzen 3y ago
            I do understand that business decision though. You don't want your business model to depend on a dominant supplier who then can extort high API fees from you... does that sound familiar, somehow?
      • 8ig0unce 3y ago
        Couldn't agree more. A web site who's content is freely provided, moderated for free and pretty much just linked to other content and they still can't make money without charging extortionate amounts of money. So many suitable options were voiced for the 3pa such as profit shares or just reasonable priced API fees. It baffles me that Reddit didn't already turn a profit. So over bloated and the shit they have actually paid people for such as the official app and desktop site, is just sub standard
    • LeoNatan25 3y ago
      Trim the workforce. How many engineers, UI/UX, product and QA do you need to run a reddit.com? Likely, 200-300, not 2000! Focus on the core product and the profit will come.
      • flangola7 3y ago
        Someone pointed out that 90% of that 2000 is probably ad sales teams. Their actual software and UI people are likely appropriately sized.
        • LeoNatan25 3y ago
          I don’t think that’s true. I remember, for several years now, how after each VC capital, they boast how they are to “double in size”. That’s not just ad sales.
      • hutzlibu 3y ago
        I would also think, the numbers could be reduced - but then I never run a plattform of that size. And they are operating worldwide, processing take down notes, handling court orders alone, is a big deal.
        • LeoNatan25 3y ago
          I am sure that this part of the business is a tiny, tiny fraction of the current bloated workforce. Know what, agree, it’s a hard job, keep all those people in. I think they are mostly relying on the volunteer mod force, rather than internal people, but whatever. Keep them all. Still 200-300 is more than enough.
      • whywhywhywhy 3y ago
        Fraction of that if we just run old.reddit.com instead, you know the good version of the site that actually loads and works.
        • LeoNatan25 3y ago
    • blitzar 3y ago
      > run the business on that basis How do people live on only 500k a year.... They dont buy a private jet and a $50million house. Reddit does not have to spend half a billion dollars every year to satisfy their users (which is what its entire valuation was in 2014).
    • lawn 3y ago
      The point was this: Reddit should have held costs down to be profitable. Growing at all costs is not a great way towards profitability, believe it or not.
      • dagw 3y ago
        Growing at all costs is not a great way towards profitability, believe it or not. Depends on whose profits you care about. Growing WeWork at all costs was wildly more profitable for Adam Neumann than trying to slowly grow a sustainable commercial real estate company ever would have been. The core problem is that no one in charge at Reddit HQ 'wins' if reddit where to become a much smaller, but profitable, company.
    • Macha 3y ago
      If Reddit's goal is " is a 2-5bn market cap business with solid 0.5bn revenue", then do they need an order of magnitude more staff than say, 5 years ago? My understanding is their, rather dramatic, scale up was to chase Twitter/Instagram/TikTok. If they're going to drown in expenses before achieving it, then it seems pursuing that was a poor business decision driven by investor expectations of hyper scale (never mind its effects on the product for users).
    • midoridensha 3y ago
      Reddit isn't profitable because its management runs it in an unprofitable way, because they're chasing even bigger profits. They have way too many employees, namely. Their infrastructure costs can't be much different than archive.org, but archive.org doesn't try to get huge profits and doesn't have many employees.
• nickstinemates 3y ago
  Discords monetization is lightyears ahead of Reddit. There are alternate clients and a rich ecosystem of plugins. There's zero value in Reddit Gold. It's such a meme. Access to a private subreddit. Give posts badges? Who cares. They're ephemeral. Up today gone tomorrow. They need to rethink this bullshit instead of just selling more ads.
  • smrq 3y ago
    If Reddit was a business I wanted to give money to, then Reddit Gold would be a perfectly fine way to do so. Ephemeral is just fine when all you want to say is: hey, poster, I liked your words. Hey, website, I liked how you enabled me to read those words. The trouble is, Reddit is not such a business.
    • rkangel 3y ago
      > If Reddit was a business I wanted to give money to, then Reddit Gold would be a perfectly fine way to do so I think people underestimate this. I'm always much happier for my cash to go to a business that I like. Where "like" includes both quality of product and their ethics/attitude.
      • hutzlibu 3y ago
        If you voluntarily give money to a buisness, and this should be the buisness modell, wouldn't that buisness be better a non profit in the first place?
    • bombcar 3y ago
      Good comment! Have some hackernews gold on me!
  • themacguffinman 3y ago
    Users who use alternative clients are banned the moment Discord finds out about them, not a great example. Discord Nitro's perks seem just as valueless as Reddit Gold to me. The top listed features are ephemeral stuff like custom emojis and stickers and super reactions. You could argue stuff like 50+ MB uploads and HD streaming is more valuable but few users would really use those features often. Like Discord, Reddit is a community, there's limitations to what you can charge for because you don't want to raise the barrier to entry. I suspect Reddit Gold and custom emojis actually earns Reddit and Discord quite a fair bit, I think a key difference is that Discord has 750 employees to feed while Reddit has 2000.
• zmmmmm 3y ago
  The Craigslist model? After all, it's a list of links and for years Reddit operated exactly like that - a skeleton crew running bare bones infrastructure to serve up basic pages full of links. Yeah, you need more now because of regulation and more sophisticated bots etc. But not that much more.
• Rebelgecko 3y ago
  Here's my thoughts for some different options that would've maybe ruffled some feathers but not to the same extent 1. Same thing, but with 80% lower API pricing, keeping "NSFW" content, and 3 months notice 2. Start serving ads via the API and don't charge for API calls, revoke keys for apps that strip out ads 3. Limit API usage to premium accounts (beyond some nominal threshold of calls per day to let people play with the API)
  • rundll 3y ago
    These all sounds great and if nothing else would be great starting points. And most importantly would be a basis for win/win solution. I’ve listened to the Apollo guy on a Vergecast interview and he went out of his way to compliment the Reddit CEO and never took any of the opportunities given to fuel the fire. Maybe this Canadian thing is real? =) Thinking out loud… or my latest random thought… Reddit Premium users can use 3rd party apps effectively unrestricted and with no ads. In turn, Reddit would pay the 3rd apps say 25 to 35% of the premium fees they collect to the 3rd party app. Non-premium users can use 3rd party apps but ads must be pushed through and NSFW related material is blocked.
    • contrarian1234 3y ago
      Why gate NSFW content? You'd have to be nuts to use a credit card and your real identity to pay for that ... And then in effect consent to being tracked around their website with a key Your bank and all their friends will have a record of that till the end of time
      • hutzlibu 3y ago
        Some people don’t care, others think with their dick and ignore it, when they urgently want to access something - which is the reason MANY people pay for porn with credit cards. But I would think, the majority of reddit users would not. In theory you could offer anonymous payment, paysafe and co. but more and more governments implement age restriction for porn anyway. No one cares for small sites (yet), but reddit could be pressured to not accept anonymous payments as the are big.
• nbadg 3y ago
  Charge for commercial usage. The goal would be to re-capture value from commercial entities that use plain reddit posts (not paid reddit advertising) for commercial gain. A prime example would be a publicity firm hosting an AMA with actors to promote the release of an upcoming movie. Update the standard user ToS to allow for only non-commercial use. Introduce paid plans for commercial usage. Introduce terms that allow for legal remedies to prevent companies from opening accounts only for the one month they want to host an AMA. Just like mods can decide whether or not a particular post is wearing a "mod hat", let commercial accounts decide whether or not users can wear the "commercial hat". Etc. Price the plans such that the revenue reddit generates scales alongside the value that the commercial entity gets from the account.
  • marcinzm 3y ago
    That would block every small business owner, independent artist, indie game developer, twitch streamer, open source developer with a donation link, etc. from the platform. The legal hassle alone would make them not want to deal with it.
  • dmix 3y ago
    When you run out of ideas in your B2C business the answer is always pigeonhole some B2B model on top of it whether it fits or not. Reddit is an ad business. Increasingly a mobile ad business. 3rd party apps do not fit that business model and never has. Everyone is blowing it out of proportion because Spez didn't want to be honest about it. AI/LLM is just a sweetner on top but probably not a billion dollar API business. What Reddit should be doing is making a better mobile app (and web app at that). Design and software dev in general has not their strong suit and hasn't been for the last decade.
    • EnragedParrot 3y ago
      I think you nailed it. In reality from a business standpoint, Reddit should have taken Selig's offer and bought out Apollo and built the main app around it and injected ads, maybe offered an overpriced subscription to minimize ads for premium users. I think nobody would have complained a bit.
• HlessClaudesman 3y ago
  They could still do a Jimmy Wales: go open source nonprofit.
  • kramerger 3y ago
    Wikipedia has a big pile of money in the bank, probably more than $100M by now while still nagging me to donate more.
  • crubier 3y ago
    Would you take this decision if you invested in Reddit yourself?
    • HlessClaudesman 3y ago
      Yes, because I'm not motivated by money. That's why I'm not in the position invest in the first place ;-)
• czx4f4bd 3y ago
  I'm pretty sure just giving app developers more time to prepare for price increases would've been enough. If they'd given Apollo and RIF 6 months notice of the new pricing instead of 30 days, the devs would probably have adapted to a paid model and moved on. There would still have been plenty of grumbling, but not nearly as much outrage.
• AmericanOP 3y ago
  All of this is happening because Reddit Coins is a meme of a paid tier. Discord understands its not about comments, its about communities. Give users a way to boost/upgrade the subreddits they love, so users have a better experience on those subreddits.
• Arn_Thor 3y ago
  I don’t know munch about business but it sounds from all parties concerned like they could easily (i) introduce API pricing at 20% of what they want to charge now, (ii) give a three-month runway so app developers could turn up prices and generate revenue flow ahead of sudden outlays, and if they really wanted to milk it (iii) serve ads alongside content in the API. That has the benefit of generating revenue higher than the cost of running Reddit, reduce the opportunity cost of not having people on their own platform but still generate a neat profit. People would complain a little about the cost and a little about the ads but it would be fine.
• 14 3y ago
  I heard a lot of people say their main app is trash and lacks many of the basic features you see in third party apps. They could have focused on fixing their app and only charging a fair amount to api access so they had a slight advantage over their data. It reminds me of iPhones to be honest. All the best jailbroken apps and features were slowly added to the iPhone over time. Reddit could have been following the same route and slowly killed off their competitors. There are many ways they could have added value to their app and thus get ad revenue and data but ignored it this entire time.