[n3m4c]

Advertisers just aren't running away from Reddit. They were never there in the first place. Reddit's revenue is tiny considering it's userbase. And their data is categorized well, by default, for free by a volunteer force of moderators. And still they're not making money. How is that even possible?

[Terretta]

I paid for Reddit Premium for an ad-free experience. Reddit makes no ad revenue from me. All these moves won't change that for Reddit.

Spez's claim that "the app" is "generating" API calls is nonsense. It's users like you and me that generate API calls using an https client that, in this case, speaks API. Reddit Premium users are their highest ARPU class, over 10x what they claim they can get from advertisers.

It therefore seems obvious to partner with premium app devs, to allow the apps to support Reddit Premium users as a perk of Reddit Premium. Subscribing to both Reddit Premium (paying for ad free access) and app (supporting the app developer) is not a problem for these users.

The Venn Diagram for these two premium spends is clear -- and Reddit is attacking it to no possible gain. There is no alternative business model on the table better for them (and their IPO price) than a premium user remaining a premium user.

By killing my ability to pay for Apollo, they will not gain a single ad view from me, because I pay to not see the ads already.

Further, they will now also lose 10 users worth of ad views, because I will no longer pay for Reddit Premium.

Instead, let Premium accounts access through API, Reddit's Premium user count will balloon, and quality apps will gain a new audience of ready-to-spend subscribers, all with no impact on Reddit's ability to sell ads which make strictly less money than Premium accounts.

(I am confused why this obvious solve is never discussed. News reporting is accepting the premise apps issue API calls instead of users, Spez's AMA is terrible, and community threads are missing this. Apollo dev also fails to help the press understand the framing that Apollo is a user agent and "the web" was intended for use by user-agents. None of this is coming up.)

[Rudism]

While it is confusing why Reddit wouldn't offer it as an olive branch, I don't think allowing Reddit Premium subscribers to access the API for free would be an ideal solution. It would be extremely confusing for the majority of users if they had to both 1) subscribe to Reddit Premium in order to use 3rd party apps at all, and then 2) also pay (likely via a second subscription) to use each specific 3rd party app. Both Reddit and the app developers would probably have to spend a significant amount of user support effort to explain why users need to pay twice (or more if they want to use more than one app) to access Reddit.

Imagine it from the perspective of a user who is new to Reddit and downloads one of those apps off the app store (possibly paying money to do so). After they fire it up they'll discover that they can't even use it until they subscribe to Reddit Premium. Due to app store policies the app can't offer the opportunity to subscribe from within the app, so the best they can do (on Android, at least, Apple doesn't even allow this) is to direct the user to sign up for an account and buy a premium subscription on Reddit itself first. Assume they get past this hurdle and then discover after a week or two that in order to continue using that app they have to sign up for a new, separate subscription through the app store so that the developer can get paid. I imagine a not insubstantial number of users would get extremely frustrated by all of this and take their frustration out on either the app developers or Reddit.

[nnf]

This could be solved by the app developers paying Reddit a portion of what they collect from the users. If Reddit wants $5/mo for each third-party app user, then the app developers could charge what they want above that amount. e.g., Apollo could charge $7.99/mo, of which Reddit gets $5.00 and Apollo gets $2.99 minus Apple’s App Store cut. Different developers could charge different amounts based on the value they provide, but Reddit would get the same amount per user from every app developer.

[PogoPuppy]

This would require a substantial increase in workforce for Reddit. I’m not sure this is plausible.

[ericd]

Why would it require an increase in the workforce? Automatic provisioning and charging monthly per API key isn’t rocket science. I’m sure they have enough engineers to tackle this if the revenue opportunity is significant.

[Terretta]

> confusing for users to both 1) subscribe to Reddit Premium and 2) also pay via 2nd subscription to use each 3rd party app

Except that's already how it works, so no change. And users are not confused.

[sterwill]

My Reddit user experience is similar to yours. I paid for rif years ago because it's simple and fast, and I don't want to see ads. I'll gladly pay Reddit for an ad-free experience if I can use an app that's better than their own, but if they don't want to take my money, they'll lose me as a user.

[BoxOfRain]

I'd love to be a fly on the wall at Reddit HQ at the moment, also I wonder what it's like to be a dev on the Reddit app too? Don't get me wrong I'm not downplaying how poor the app is (I've gone desktop-only based on how much I dislike it) but it can't be fun having the entire web panning your daily work every time it comes up.

[JohnFen]

I'm guessing that the devs working on Reddit's app are fully aware of why people talk poorly about it. I'm further guessing that it's the way it is because of requirements being imposed on them rather than their own decisionmaking.

I also have to assume they're fine with it all, or they'd take their skills elsewhere.

[refulgentis]

The "obvious" solve was never discussed because:

- there's a vanishingly small minority who pay for apps

- Apollo volunteered to be the asserter of what 3Ps thought and they were extremely aggro

- It's a Solomon's baby situation, it's a worse outcome from all sides: 3P would be _more_ irate, their customer base gets slashed to nothing. Reddit needs to be able to charge for the API without having elaborate carve-outs for monetization schemes from years ago that didn't work

- People aren't thinking straight and are extremely aggressive in discounting others. Sure, the user generates API calls. That doesn't mean the app doesn't make API calls

[joshstrange]

> How is that even possible?

Incompetence. Pure and simple. It was clear before Huffman really decided to go full-Elon and it's crystal clear now. He has no business running a company. The revenue that Reddit brough it in 2021 ($350M) should be able to cover the staff and servers for Reddit easily. Of course they got VC money which means you overhire and spend like no tomorrow which is partly to blame (bad leadership being the other). Reddit is just not that complicated and they only things they've put time/resources into in the last few years are gimmicks that no one uses (Chat) and/or gross cash grabs (NFTs) that also lie abandoned all while ignoring what users were asking for until it directly affected them (things like being able to wrest control of a sub from a mod). Also "better mod tools" is pretty much the same as "infrastructure week" to the last US administration.

But yeah, I have zero doubt they could be profitable but they can't be profitable-enough for investors so instead we get this shit.

[hersko]

> Huffman really decided to go full-Elon

I bet investors wish he went full Elon.

[slama]

Considering twitter's worth a third of what he paid for it, probably not

https://www.bloomberg.com/news/articles/2023-05-30/twitter-i...

[dbg3386]

…And Fidelity deepened its valuation cut in Reddit again, today.

https://techcrunch.com/2023/06/30/fidelity-deepens-valuation...

[E39M5S62]

That's the article that the comments are all about, yes.

[FormerBandmate]

Tesla is a wildly different story because they're quickly becoming the Apple of cars. They've convinced all the American automakers to use the Tesla charger, they're setting themselves up to basically own road charging

[tourmalinetaco]

Keep in mind the $44B number was a joke offer he was forced to pay out. He knew it wasn’t worth as much, but he fucked around and found out.

According to NASDAQ, pre-purchase it was around $13B. And Elon claims it’s at $20B. So supposedly he has improved the net worth, but yes obviously he’s still $20B in the hole.

https://www.nasdaq.com/articles/what-is-twitters-net-worth

[covercash]

>How is that even possible?

Reddit has never really had a competent CEO and that has never been more apparent than with Steve Huffman who has no background or skill as a leader. He also was never the one responsible for building and fostering the community side of things, that was Alexis’ department. One could argue that even as a developer he was second fiddle to Aaron. “What would you say you do here, Steve?” - The Bobs

I wouldn’t be sad if OpenAi or Google acquired Reddit as a source for training future models. Don’t try to optimize it for advertising, the value is in the human-created content.

[eli]

I think the value of owning reddit as a data source for training AIs is vastly overstated.

[onlyrealcuzzo]

Ads don't work well on a site like Reddit.

That's why Digg 2.0 happened (and destroyed Digg) and why Reddit is hell bent on getting rid of Old Reddit and all 3rd parties that have any experience like it.

You need something like Facebook or Instagram to successfully sell a TON of ads (in social), which is the opposite of what Reddit is.

Either Reddit needs to realize they're not going to make FB money (spoiler, they're not going to accept that) or they're going to try to completely change their product to make FB money (spoiler, it's probably not going to work - if people wanted FB, they'd just use FB, not Reddit).

My crystal ball doesn't work. Who knows what will happen. That's just all my uncreative brain can imagine.

[eli]

Many (most?) of the categories are not desirable to advertisers and the user base is hostile to advertising.

A google ad that appears when someone searches "car insurance" is very different from an ad in a car insurance subreddit. It's also different from Facebook where you could target based on demographics.

[joshstrange]

Are you joking? Reddit has hyper-focused niche communities, this should be a cake walk to advertise to. You can see exactly which book series I'm reading, which TV shows I'm watching, what my hobbies are, what my profession is, etc. If you can't figure out how to advertise to Reddit users then I can't help you.

In addition to ads they have Reddit Gold (or whatever their membership program is called, it's bad that I've been on the platform for a decade and I have no idea). They made the same mistake Twitter did with Twitter Blue: "Why would I subscribe?". At least Reddit gives you "No ads", Twitter gives you "Less ads". Ok, so no ads but the UI/UX of the official app is trash, it's messy and inconsistent. If they had said "Buy our subscription to keep using 3rd party apps" I would have paid in a heartbeat.

[rchaud]

> You can see exactly which book series I'm reading, which TV shows I'm watching, what my hobbies are, what my profession is, etc. If you can't figure out how to advertise to Reddit users then I can't help you.

These are very bold claims to make, considering that Reddit is at the bottom of every advertiser's priority list, despite being a lot cheaper.

Have you considered that Reddit users simply do not like being advertised to? Asking for a product recommendation on a message board is fundamentally different from seeing an ad for a product on said board.

[slipshady]

> Have you considered that Reddit users simply do not like being advertised to?

Does anyone like being advertised to?

[eli]

Sure. All of HN is marketing for YCombinator.

[eli]

Not joking at all. Reddit has had a self-service platform that lets you target ads to subreddits for a very long time. Why do you think it's not popular?

[disgruntledphd2]

If I had to guess, because their self service tools suck and they haven't invested in agency relationships.

If you want a successful internet ad business you need to do one of those, but preferably both.

That being said, it's wild to me that Twitter never managed to build a DR (i.e. selling clicks/conversions) business, so maybe Reddit is equally as badly managed (which again, is really surprising to me).

[jfrbfbreudh]

Advertisers specifically avoid Reddit. Ask anyone who’s run an ad campaign on Reddit vs. literally anywhere else. The conversion rate is absolute trash.

Shockingly, the average Redditor doesn’t have (or isn’t willing to part with their) disposable income.