Reddit has followed in Twitter’s footsteps by announcing that it will start charging for access to its API. However, this is not a blanket policy change. Reddit’s API will remain free for developers looking to build apps or bots that assist Reddit users and researchers studying Reddit for academic or non-commercial purposes. Companies that “crawl” Reddit for data but do not provide any value to users will have to pay. This move comes as Reddit seeks to monetize its vast amount of user-generated content, which has been increasingly used to train high-profile machine learning models like OpenAI’s ChatGPT and GPT-4.
Reddit’s co-founder and CEO, Steve Huffman, believes that Reddit data is particularly valuable because it is continuously updated. As of 2019, Reddit had over 430 million monthly active users across more than 1.2 million special interest communities, 138,000 of which are active. Huffman states that “The Reddit corpus of data is really valuable. More than any other place on the internet, Reddit is a home for authentic conversation.” There is a lot of content on the site that is too personal to be shared anywhere else.
Huffman believes that it’s time for Reddit to “tighten things up” and monetize its content. Reddit’s decision to charge companies that crawl Reddit for data and provide no value to users is fair, according to Huffman. Huffman stated that Reddit does not need to provide all of its value to some of the world’s largest companies for free.
This decision comes after Twitter’s decision to restrict third-party access to its data. It’s clear that Reddit is looking to join the likes of Twitter and monetize its platform. With its continuously updated user-generated content, Reddit’s decision to charge for access to its API is a smart business move.
Reddit’s potential initial public offering (IPO) later this year could be a motivating factor for its decision to charge for access to its API. Shareholders will be looking for growth or entirely new streams of revenue. While Reddit was valued at around $10 billion in August 2021, its estimated revenue of $350 million from ads two years ago pales in comparison to Meta and Twitter’s ad revenues. Meta made $113 billion in 2022, while Twitter earned nearly $7 billion.
In related news, Reddit plans to incorporate more AI into the site’s operations by identifying the use of AI-generated text on the platform and labeling it for users. The company also aims to improve its moderation tools and third-party bots that help moderators monitor the forums. With these changes, Reddit could strengthen its user experience and attract more advertisers, potentially leading to increased revenue in the future.
