>To be fair, they could have operated a simple and effectively profitable business
How? I don't see a way from Imgur to monetize on sharing images directly.
How? I don't see a way from Imgur to monetize on sharing images directly.
They did it by building a community around the non-reddit related traffic. Basically redditor's would share imgur links outside the reddit ecosystem (Facebook etc), then other people would visit imgur directly instead of going through reddit. These secondary users are monetizable.
Imgur had to eat the costs of supporting reddit's hotlinking (though not all reddit posts are hotlinked) but that was more or less imgur's "marketing budget."
If I can see you viewed an image referred from /r/woodwork I might offer you some woodworking tools and drive up the conversation rate of my advertisements.
It is. The wealth of images alone, the sheer amount, from memes to vacation pics is worth so much now that image recognition is taking off.