The question for reddit isn't whether or not people enjoy it and want to spend time on it, but whether or not the owners can make money selling those people's attention. The traffic to reddit - while admirably large - is relatively unattractive to most advertisers.
"Reach" (impressions/eyeballs) are only important insofar as you're talking to someone who might buy what you're selling (see "relevancy"). The sub-reddit system could theoretically segment the audience in interesting ways, but other than r/gaming, there aren't many natural industry fits amongst popular sub-reddits.
Anecdotally, the audience would also seem to be advertisement-averse. An advertiser should be willing to pay network prices for the audience (i.e. pennies CPM), which makes it a nice living for a small group of folks living off their passion, but pretty useless to a Condé Nast trying to run a media empire.
I think the business model in a reddit-like site could be selling curated content in other media, e.g. a meme-series of coffee table books. Think Harry Potter, not Oprah.
If you're in the content game, your business's value is in having the attention of a group of people. Your first attempt to monetize that asset needn't be to sell your audience's attention to someone else, in this case undermining your ability to keep their attention. Instead, you should focus on bringing things your audience wants - and would pay for - to them. Sometimes that means you need to make the things they want to buy instead of shilling them for someone else, because no one sells what your people want.
Nailed it, joshklein. In fact, publishing xkcd and SMBC (along with the other breadpig products) has taught me a few things about that world. I'm hoping reddit makes good use of them.
Buyer of Reddit self-serve ads here, and I think that their approach is interesting, even exciting, and in the long-term potentially very profitable. Some of the issues come down to the ad averse culture (as you pointed out), not just of the community at large but even of the staff on the back-end.
There are great little ideas that are not being managed effectively in my opinion. For instance, it costs more to target a particular subreddit than the whole website, which is not particularly good for the kinds of small businesses that could really benefit from the service (there's also a daily minimum -- $20/day for site-wide, and $30/day for subreddit buys -- compared to Google, and Facebook's $1/day minimum).
Secondly, the true genius of the Reddit ad system is that your ad looks a lot like a regular submission. Think about the power of Adwords -- your ad looks just like the content your potential buyers came to consume anyway.
Thirdly, and here is the double-edged sword -- in the comments, a conversation (actually, a long-term, multiparty conversation) can build around your company. The power of this is truly great; however the implementation has been spotty. Every post on Reddit is submitted via a community with rules, and moderators. The one exception to this is self serve ads. What you end up with is a lot of spam and trolling in your self-serve ad, which defeats the whole purpose of having the comments in the first place.
Unfortunately, in my experience, the admins aren't sure what to say and fallback on free speech adherence, etc. although many posts and comments are taken down in various subreddits due to a lack of observance on the part of the commentor or OP to that sub's rules.
TL;DR: Reddit's self-serve ad system is a billion dollar idea in the making, but only if the culture of the community and more importantly the admins allow it to be so.
Even something like coffee table books would be a nightmare to get all the rights lined up. Having users post content on an open website allows you to shrug off a lot of these problems compared to actually publishing it yourself. A lot of the content on Reddit consists in writing from people using throwaway accounts they'll never check again (i.e. /r/IAmA, /r/AskReddit, etc.) or in "borrowing" images from pop culture or random strangers where it may be impossible to ever track down or secure the rights for (i.e. /r/vertical and /r/adviceanimals).
And there's nothing stopping someone other than Reddit from monetizing all that content the same way. If I wanted to, I could send private messages to hundreds of Redditors and get permission to include their comments in a self-help book gleaned from AskReddit comments, and Reddit would have absolutely no advantage over me in doing this, nor any way to stop me. As far as any content on Reddit goes, the story is the same way. Just as Hacker Weekly operates independent of YC and the people who run HN.
I think if you want to monetize Reddit, monetizing the audience isn't the only way. There's no reason Reddit can't, aside from having subreddits, sell paid hosting for completely separate, possibly private reddits that don't connect to Reddit itself.
>...you agree that by posting messages...you grant us a royalty-free, perpetual, non-exclusive, unrestricted, worldwide license to use, reproduce, modify, adapt, translate, enhance, transmit, distribute, publicly perform, display, or sublicense any such communication in any medium (now in existence or hereinafter developed) and for any purpose, including commercial purposes, and to authorize others to do so.
OK, that straightens out most cases, unless you're posting something that doesn't belong to you anyway. AMA compilations are in, but meme picture coffee table books are out.
Indeed. Merch definitely hasn't reached its full potential. And that /r/dragonage sponsorship was indeed paid; I wish more advertisers saw the value of a branded subreddit. That's something for us to do a better job explaining.
As a small business advertiser on Reddit, I feel as if this would be a good idea, especially for big businesses; however as I wrote before (http://news.ycombinator.com/threads?id=shoham), there are a couple of little things that I think you guys could be doing to be more business friendly with self serve ads for small businesses like my own: http://www.feed-forward.net
The three main ideas are: (1) lower the cost per day for ads (for a small business, with less than 100K a year in revenue, Reddit ads don't scale well). Facebook, and Google have a $1/day minimum. (2) Let the OPss of self serve ads moderate their post. It defeats the purpose of spending money on an ad, and having such an awesome idea such as the SSA program if the comments section is hounded by trolls, and moderated by no one. I've been told by admins that Reddit has a long history of free speech adherence, which is great, but posts are removed from subreddits all the time for not complying with the subreddits' rules, at the mods discretion. My proposition is that you guys extend this courtesy to buyers of SSAs.
Third, allow advertisers who have been advertising for a while to focus their impressions on people who have already clicked on their ads. Again, this is a small business-friendly idea -- I've focused most of my ad buys on r/music , a huge subreddit of 150K people. If after a month or two I could focus my buys on those users I've already engaged with in that r/, that would help bolster two objectives: keep the ad conversational, and help advertisers create a community around their submission/business. Once a few thousand people have seen my ad every day for two or three months, I can maybe even invite them to a sponsored r/...
I'm very late in responding here, but maybe someone will still see this... Instead of a branded subreddit, do you know what I (as an advertiser) really, really want? A branded novelty account. I want to have a novelty account where I can post comments that are relevant and engaging with an occasional link back to my site, and I'd like for the users of reddit to somehow know that I am a sponsored account (perhaps through a "sponsored account icon" next to my username). My comments would be subject to downvotes and upvotes just like any other comment.
If you, or someone else at Reddit, would like to discuss more, my contact info is in my profile. Cheers.
"The sub-reddit system could theoretically segment the audience in interesting ways, but other than r/gaming, there aren't many natural industry fits amongst popular sub-reddits." In my opinion this is only true for a few (admittedly most popular) subreddits like r/funny and r/wtf and everything nsfw . Nearly every subreddit that I read has an industry that fits, r/photography -> photo gear, r/parenting -> baby stuff, r/science -> journals and books, r/somethingimade -> etsy, etc. I'm also sure that reddit knows a lot more about my interests than google and facebook together. But maybe that's just me...
You're not wrong by any means, but it's also a question of scale and purchasing power. There's no doubt that r/parenting is filled with people worth talking to about, say, baby products. But then look at the advertising sales minisite for Babycenter.com[1]; a company like Johnson & Johnson isn't going to bother with r/parenting. Smaller companies might be interested, but small companies don't spend much money on ads. When they do, they mostly spend it on Adwords.
Of course the joke here is that J&J bought Babycenter. If I were a category-specific CPG company, I'd cut out the publisher middleman, too.
Ad networks & exchanges lead us to think there's a perfectly efficient & liquid market for ad space, but there's a real scaling problem for big advertisers that leads them to stick with big publishers. Quality control on r/parenting would be a concern.
> a company like Johnson & Johnson isn't going to bother with r/parenting
This is false. My girlfriend works in social media at a Fortune 100 company. Just a few of their many products are geared toward babies and other things of interest to parents. She attends "mommy blogger" conferences, reaches out to people on Twitter and Facebook, and otherwise works with people who have a substantial audience in order to advertise with them.
Big companies are much more likely than small companies to even have such a role. They are very interested in promoting themselves and increasing their profits in any way possible. There's absolutely no reason they wouldn't be interested in something like r/parenting
> This is false. My girlfriend works in social media at a Fortune 100 company. Just a few of their many products are geared toward babies and other things of interest to parents. She attends "mommy blogger" conferences, reaches out to people on Twitter and Facebook, and otherwise works with people who have a substantial audience in order to advertise with them.
By bother he meant spend a bunch of cash, not @reply to people on Twitter. They can hire your girlfriend to submit stuff and comment on reddit all day, but that doesn't give reddit any revenue.
You apparently missed the part where I said, "and otherwise works with people who have a substantial audience in order to advertise with them."
My girlfriend doesn't work the spammer role that you seem to be envisioning. Her job is to discover an audience that is actually interested in the products her company offers and to reach out to them. Part of that job is to manage the Facebook presence for products that have well over 100,000 followers. Another part, as I said, is to find relevant blogs and other websites frequented by visitors of an appropriate demographic as a platform for their ad campaigns.
I brought real information to this thread. There was no reason whatsoever for you to shit on that.
Paying someone to reply to people on twitter cost 20000 + benefits per person. Not to mention conference tickets, transportation to conferences. Maybe some facebook ads?
Exactly, Some more examples: r/motorcycles r/programming r/$PROGRAMMING_LANGUAGE r/linux etc.
The NSFW ones are tricky. On one hand there's a lot of money in porn. But most of the content there is either stuff from porn companies (that would be paying for ads), or amateur stuff, and would an amateur audience like porn company ads?
Some time ago, the Reddit community expressed their interest to have an @reddit email account (they were willing to pay for POP access, etc.). I tried to contact the Reddit admins by Reddit messages, email, Facebook, etc, because we can provide them with @reddit mail accounts in no time and scalability is not an issue (we have installations in some of the biggest ISPs in the world) and it would cost them nothing as we were wanting to do a rev-share deal. Sadly I never heard back.
There's an opportunity to monetize Reddit users, even if they seem somewhat far from the core product.
It's not really that far from their core product. To me, Reddit is this big clubhouse where you get all of the references and in-jokes. Having a Reddit email address is just one more thing that shows you belong.
In my experience, I've gotten really poor responses from the Reddit admins almost every time. When I say poor I mean 'none'.
I don't think it's a function of them being bad or lazy, but being such a small team for such an enormous site. I can't imagine being the sole community manager for such a monster. You have to triage between "will answer tersely" and "will ignore". And unless it's a lawsuit or a fire about to burn down the server room, almost everybody seems to end up in "will ignore".
How much have people said they'd pay? I doubt it'll be that much. How can you do it for free? The email market seems to free now, can you really make money by selling email?
Cheezburger Network seems to be scooping up the business model you're mentioning, bringing the 4chan and reddit memes that are likely to have a broad audience into the mainstream and monetizing them.
I wonder if then that speaks to interesting business opportunities? There appears then to be a misalignment between traditional industries and what people are actually interested in.
Well, r/trees suggests an interesting business opportunity, but that's illegal. Lots of other subreddits (/r/mensrights, /r/politics, /r/worldnews, /r/atheism) are hotbeds of demagoguery and outrage, which may be good for political fundraising but little else. (It's possible to sell demagoguery and outrage--Rupert Murdoch and Arianna Huffington have taught us that much--but I don't know about selling it people who are already getting it for free.) And then of course, pictures of cats and formulaic jokes are another thing.
Sad to see them hiring an outside CEO instead of promoting from within. I don't think hired CEOs work so well for products that are still at the stage Reddit is at.
They need someone with deep, intimate knowledge of the community and the product. The best source for that in my opinion would be internal.
Reddit is currently a small team of developers, so there's really no "within" to promote from. I don't know them personally, but I somehow doubt any of the developers wants to be CEO.
I didn't say they can't. But the guys you mentioned showed clear signs of wanting to lead right from the start. Zuckerberg and Gates in particular started off with big egos, big ambitions and a clear desire to spearhead a technological vision. Again, I don't know the Reddit team, but have you seen any of their developers taking any kind of leadship initiative?
Like hueypriest hasn't become enough of an egotistical megalomaniac as it is, he has been banning entire reddits, creating an army of super mods and shadow banning anyone who questions his decisions. Great CEO material right there...
Can someone with more business know-how tell me how a company like Condé Nast benefits from making Reddit an incorporated subsidiary? It doesn't sound like all that much is changing, honestly.
Condé Nast seems to have every intention of 'funding' this new company itself (that is, without raising outside investment), so it's really just removing the "Condé Nast" from the process but maintaining ownership.
Granted, they were rather autonomous (one reason why I know I stayed until the end of my contract) but with money in the bank, the new CEO can simply do things as easily as any of the other startups in the top 50. Before, that money would be going through some other big company approval process -- e.g., if reddit wants to hire away a fabulous programmer, it simply gets done.
If things go well, reddit continues to grow and increase its value, at which point, it could potentially be acquired, IPO [RDIT?], or just become a cash cow for Condé Nast.
Instead of Reddit being a division on the Org. chart of C.N., Reddit Inc. shares are held by C.N. This means that Reddit can take on equity investors to finance operations and operate externally of any organizational influence Conde Nast had (which may not have been much anyways).
Reddit, Inc., will be owned by Advance Publications, which also owns Condé Nast, so it will be a corporate sibling of CN and more independent of it. Advance Publications owns other divisions in addition to CN, including a newspaper division that presumably does not is not influenced very much by the magazine folks:
I suspect Condé Nast's advertising operations didn't mesh well with Reddit's audience. Within Condé Nast, they were likely just an irritating drain on resources.
If Reddit's going to monetize effectively (and that's a big 'if'), it needs to be operationally independent so it can get creative.
One issue not mentioned here is that Condé Nast has particular rules about staffing that are good for magazines but bad for web sites. These kinds of issues need to be worked through politically every single time they come up.
As a stand-alone entity, they won't be subject to those rules, and Condé Nast doesn't have to worry about the rest of its companies saying, "but reddit did it".
Selling a minority stake to outside investors is a good way to capitalize the company and give it the resources it needs to grow. Reddit has been notoriously resource-starved. A few hundred million dollars in a partial equity sale fixes that without draining Conde Nast.
If they keep Reddit as part of the mothership they can't sell it whole or in part. This is the first step in a process of divestment. The valuation that they are tossing around should be seen as the asking price if and when they do. It would highly surprise me if that asking price was met or even approached by an outside party.
Note that a deal at that valuation did not go through, and that likely that valuation was an important reason why it didn't.
Reddit could become an email replacement. My college campus has all-campus email that anyone can send to. Discussions in email simply don't turn out well, there's no good way to respond to just one person while letting everyone view it, there's no good way to voice agreement or disagreement, and it's mixed in with much more important information.
Reddit would be perfect for it, and for campuses with less generous email policies. It doesn't interfere with work communication and its better suited for the sort of discussions and arguments that email often plays host to.
As a student, I can't speak much for companies. And I'm aware of Reddit's recent College promotion and how easy it is to make, moderate, etc a new Reddit. But a dedicated Reddit integrated with college websites or email could be a profit stream.
My thoughts exactly... Reddit is a misfit in the overall organization and with the current exponential growth it's experiencing, it's the best and most leveraged time to sell it off. Would be a strategically good decision IMO.. I'm surprised this comment isn't voted higher..
I would like to see reddit release a product where I, can implement a forum system much like reddit but completely autonomous and hosted on their own service - basically a replacement to the dreaded phpBB. Hell, I'd pay for it.
That's true, however it's not really in a highly usable state. I believe it's one of their aims (although, that's been the case for a while) to remedy that situation, but you'd have a tough time using it in this way at the moment.
You underestimate the ability of a large media company to squash innovation and morale. They might get outside investment so they can iterate harder/better/faster but Advance wants to hold onto this goldmine.
Greater independence will mean reddit can go to a new board, which includes reddit OG Alexix Ohanian, who had been serving as an “advisor,” as well as representatives from Conde and Advance, with proposals instead of jockeying within Conde’s budget. Reddit doesn’t plan to seek outside funding at this time, Mr. Martin said, but it’s not out of the question. “It’s a lot more more of a startup,” he said. “It’s able to happen faster with less overhead.”
Hmm, in that case they seem to be making a reasonable move: remove to some extent the overhead of Conde Nast. If that's the primary motivation, then I am impressed that Conde Nast can recognize it's limitations, and give reddit a chance to grow outside of their oversight. That being said, my impression was that Conde Nast was remarkably hands off.
As the user base grows there is a growing amount of thinly disguised commercial content that sneaks in, often through strategic product placement in pictures.
Since the community is less vigilant than it used to, I assume that the newcomers are less concerned about commerce.
It doesn't take much to send a fickle user base like Reddit's running for the next Internet hangout. There are plenty of examples from the recent past. Remember Digg?
Sure, it´s not easy. But there are and will be many reveue sources. http://mashable.com/2011/02/08/reddit-hires/ once said: "This kind of traffic growth has helped the site lure “big-ticket” advertisers, according to site admins; another rising source of revenue is the site’s sponsored link system, which is used to promote SMBs, startups, blog posts, YouTube videos and other kinds of content. And Reddit Gold continues to be a success, too."
I have to say, although Reddit is a large and possibly even influential service. I can't agree that they will be able to influence the news industry greatly (I use greatly loosely as the industry is so large).
I think an online service could revolutionise the way we all read and digest news, Reddit is the first stepping stone in this revolution but I expect it to be overtaken soon by a superior service (The same way Facebook has MySpace).
For years the cat was bored with the mouse so it just kept it caged up and starving. But the mouse got fat and juicy anyway. Now the cat is licking its lips.
They have also, in my opinion, implemented mainstream and niche news so well (via subreddits) that they're not in immediate danger of being replaced by another aggregate news and/or niche site.
so was Digg, and Fark before it, and Slashdot before that.
Am I wrong? History shows that these sites are basically popular for a certain amount of time, and then they lose huge market share when they inevitably do something to sour the community-at-large (like trying to monetize).
The thing is, Reddit started at the same time Digg did. It's been growing slowly and consistently ever since. Their growth rate actually hasn't changed much over time.
Reddit figured out how to support subcommunities in a way that those other sites never did. In my opinion that's what's different.
See also: social networks. Every social network was a passing fad...until Facebook wasn't.
You meant it hasn't so far. That's not a dig at Facebook, or a prediction of death, but on the short timescale we're looking at (a few years really) it's much to soon to know whether they've stopped the cycle, or made it slower. And therefore you can extent that to Reddit, the fact that they've gone longer without decline doesn't mean they won't start their decline tomorrow, or the next day.
Is it growing slowly and consistently, or experiencing explosive growth? The link I was replying to shows that while Reddit and Digg started at about the same time, Reddit really only took off when Digg committed suicide.
Traffic growth is a cost, not a revenue. Usually there's some revenue associated with that traffic growth, but there's no indication Reddit's infamously anti-commercial user base is very easy to monetize.
I have no idea how open they are to exploiting it, but I'd bet just having a high-traffic social hub has significant monetary value in the data and analytics. Twitter makes millions selling analytics and feeds, and will probably increase that in the future. I'd personally pay something for all sorts of slices of Reddit data; for example, a real-time feed of pageview info, or a firehose of all comments, would be great. Of course, the real question is whether people with more money than me would pay.
>they're not in immediate danger of being replaced by another aggregate news and/or niche site //
I'd say they're not in immediate danger because they're not making a profit and most businesses that have the sort of money needed to support such an effort (ie the large traffic) don't want to waste money on something that's not going to make a profit. Indeed Conde Nast appear to have only recently and quite reluctantly allowed reddit some more resources.
Explosive growth in traffic, yes, what's the balance sheet look like.
I've never really looked at Reddit as a company that wanted to grow under Conde Naste. They were able to demonstrate their value through influence. Now that they are a separated from Conde and under new expectations one level above from Advance, we can see what it is they're made of and if they're really going to be able to be profitable.
In terms of traffic and user base, they're killing it. In terms of revenue (and most importantly, profit), I'm sure they've been a massive let down for Conde Nast.
Now they spun them out so other people can finance it without it being their sole burden.
I can't tell if you're serious or not. In case you are...what makes you think reddit is dying? All indications point to continued explosive growth. I've been on reddit for about 5 or 6 years and it's pretty clear the site goes through growing pains but consistently gets over them. Overall it is better and better every day, with more lively intelligent discussion than even in the beginning days.
There might be a really cool cafe on my block, and I might go in there and have lively discussions with intelligent people, and there might be more and more people in that cafe every day, but if the cafe doesn't sell any coffee it goes out of business.
Sure. But to suggest that the site might be dying at the (so far) height of its popularity seems odd, which is why I was asking for clarification. Would you describe Twitter as dying? Or YouTube? Or any other sites that have been infamously unprofitable for years and years before eventually turning it around?
Twitter is well funded and big enough that there would be signs of collapse before it started to die. YouTube is owned by Google and has tons of advertising. I'm not worried about either of them.
Reddit is owned by a publishing company that's lost interest in keeping it around, it's not nearly as big as Twitter or YouTube yet, and it has one of the worst audiences imaginable for monetization. I wouldn't say it's dying per se, but they have to start thinking about how they're going to pay for all those new servers and all that new staff.
"Reach" (impressions/eyeballs) are only important insofar as you're talking to someone who might buy what you're selling (see "relevancy"). The sub-reddit system could theoretically segment the audience in interesting ways, but other than r/gaming, there aren't many natural industry fits amongst popular sub-reddits.
Anecdotally, the audience would also seem to be advertisement-averse. An advertiser should be willing to pay network prices for the audience (i.e. pennies CPM), which makes it a nice living for a small group of folks living off their passion, but pretty useless to a Condé Nast trying to run a media empire.
I think the business model in a reddit-like site could be selling curated content in other media, e.g. a meme-series of coffee table books. Think Harry Potter, not Oprah.
If you're in the content game, your business's value is in having the attention of a group of people. Your first attempt to monetize that asset needn't be to sell your audience's attention to someone else, in this case undermining your ability to keep their attention. Instead, you should focus on bringing things your audience wants - and would pay for - to them. Sometimes that means you need to make the things they want to buy instead of shilling them for someone else, because no one sells what your people want.
Condé Nast isn't built to do this.