this post was submitted on 25 Jun 2023
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Can anyone explain to me, please, how is this good (financially) for the reddit investors? I mean, I ran from reddit since I only accessed it from sync. Didn't really care for the 'politics'. Now I get here and see there's a lot more to it than just the shut down of 3rd party apps (which I understood as a financial decision). If money's the motivation for all of this, how is it financially healthy?
If Reddit kills 3rd party apps it can absorb (or at least hope to do so) users of those apps and have complete control over how they access Reddit. Reddit can then feed them more ads, trackers and whatnot, all of which would translate into more revenue for Reddit, which is a net positive for shareholders.
There's also the fact that companies training LLMs would be interested in paying those exorbitant fees to get training data as they likely can afford those fees.
So in short, Reddit likely wants to become a content farm for LLMs. As for the users, Reddit doesn't care given their recent statements. So if some c*cks stay on Reddit, spez will just inundate them with more ads because why not, free money is free money, until everyone leaves.
Maybe, the problem with old reddit is that it's as much about the comments as it is the content. Comments are hard to advertise on. Where card style scrolling content is great for advertising. Scroll a couple cards with a 20-60 second engagement, look at an ad, scroll a little more. . ..
However, I don't see this as being a great way to farm content for language models, the content engagement tends to drop significantly with the endless scrolling so my guess is that it's a short term play to prove they can sell ads before the IPO.
Third party app users only made up ~3% of total reddit traffic. The revenue potential there is miniscule. It was never about the money, but about control.
I don't trust reddit reporting that value accurately. Not saying it is a huge percentage, but they likely doing some things to minimize the numerator and maximize the denominator.
But yeah, definitely about control. They could have monetized users on third party apps with more reasonable API pricing. People would probably have barely noticed and that'd be new revenue for reddit that didn't exist before.
If they charged 1/3 of what they are for third party clients to access the API and required Reddit Premium for API access…. They could have made a mint! Plus they could have reported huge upticks in subscribers to their service. THAT would have looked good to Wall Street for an IPO.
Instead we get this fuster cluck.
Yeah, that would have been smart. But Huffman has publicly (and unwisely) admitted that he admires Elon, which means he is currently not at home to Mr. Smart.
Please correct me if I'm mistaken but isn't the reddit dataset used to train LLMs from before Chat GPT became widely known? I was under the impression data from that point onwards was poisoned and not useful for training purposes
I can't seem to find it now but I remember there being a ~90gb .zip megadb upload that got passed around a lot on machine learning reddit subs that was a snapshot of reddit before x date
Reddit totally has the potential to compete with tiktok in the mindless scrolling for a much more massive audience.
They can consolidate all their users and better track their routines and serve them more mindless addicting content which advertisers love.
I expect there will be major changes to how the app works in a few months to the point it becomes completely unrecognisable. Kind of like how musical.ly turned into tiktok overnight
It's not clear to me that this decision is financially healthy for Reddit. Even aside from the consequences of upsetting a lot of users (which has already made advertisers unhappy, since they prefer to advertise to people who aren't upset; there's been a noticeable decrease in ad spending on the site lately), Reddit only makes money from this move if anyone actually pays for the API, and/or they can force more people to use the official app. Whether they get more takers for the app, I don't know. We'll find out next week. But I don't think a lot of people are going to pay for the API. Most third-party apps can't, and neither can a lot of people who might use the API for research.
Basically, only big companies can afford the new prices, and if big companies pay, Reddit will make a profit. But big companies don't become big companies by paying for overpriced commodities. API access for sites that have similar content costs a lot less than what Reddit wants. So, of the big companies that could pay, Microsoft is quietly modifying its products to avoid paying (you can't upload from their hardware directly to Reddit anymore, for example). Google is introducing a service that is meant to take traffic away from Reddit, I doubt they'll want to buy overpriced API data. AIs have already slurped up a lot of Reddit data, and can just scrape the site if they want more. The API is not the only way for bots to get access to Reddit's data, just the easiest. Probably someone is going to pay for API access, at least in the short term, but I really don't see this going well in the long run. People just don't buy products that cost more than they're worth. Even if Reddit's data was worth the inflated price they're asking, the API is not the only way to get that data. And I am pretty sure it's not that valuable to anyone except the people who can't afford it.
Third party apps are the only ones who need API access to survive, and therefore the ideal customers for Reddit's API, but Reddit would rather fish for the customers that aren't there than do business with the customers that are. Or, were, until a few weeks ago. Now--not so much. Christian Selig could have put a significant chunk of change in Reddit's pocket on an ongoing basis if they'd negotiated a decent price, since Apollo was doing well, and Selig wanted to work with them, but no, Reddit had to ask a price Selig literally couldn't pay, so Reddit gets nothing, users lose Apollo, and no one is happy. Infinity is going to try to make it work, but I doubt that'll be much money for Reddit, and I doubt it'll last more than a year, tops.
To be fair, in theory, charging for API access would give Reddit an additional revenue stream, which is probably what Huffman told investors. But no company that actually makes money from selling API access does it at this price point, or without, y'know... trying to keep customers instead of chasing them off. This is how Twitter did it, and Twitter is losing more money on a regular basis than Reddit has ever made. But it's not my business, so what do I know... [/Kermit drinking tea]