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Comment by fernandotakai | Hacker News Reader

what puzzles me the most is that reddit's reasoning for charging money for their API is that "it's bad that other people are profiting from our work and it's too expensive to maintain without someone paying it".

hey, guess what? reddit "profits" a LOT from unpaid work from their moderators. if you wanna charge for API access, you should also pay your moderators since you are profiting from their work.

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Another thing is that many moderators are paid but by other companies and PR firms. Reddit doesn't see any of it.

A lot of the content on Reddit is promotion and semi-hidden forms of advertising. Again Reddit doesn't see any of this spend.

In both cases Reddit is paying other companies for using their platform for making money.

Why would a corporation pay hundreds of thousands for ads when they could spend tens of thousands on some employee time to post, comment or moderate and get better results?

I imagine that the commercial entities using Reddit are using third party tools but the changes will hurt normal users more visibly.

I agree that there is a lot of commercial use of reddit that reddit fails to monetize. I have no idea how much of that is moderation, but it doesn't really matter: restricting API usage is the wrong way to solve this problem Instead, the easy fix is to update the standard ToS to be non-commercial use only and introduce paid plans for commercial use. I'm pretty confident that would be way more lucrative than advertising anyways.

Optionally, follow up with a badge or something that tags all content from commercial accounts as such, and allow users and mods to report commercial content that doesn't have such a badge.

This is pretty much what Reddit is doing. All the major 3rd party apps fall under commercial usage. The main issue is the price is insanely high for commercial apps.

https://www.theverge.com/2023/6/7/23752804/reddit-exempt-acc...

I guess FOSS apps are also commercial, cause 0 income is more than... 0? Maybe reddit uses floats...

Those third party apps aren't commercial use of Reddit. I am the user, not the app. That's like saying you can't use Chrome to view some website that prohibits commercial usage. That argument makes no sense.

They are seeing it as commercial use because those alternative apps have their own advertisements from which they make the majority of their money, which is specifically banned under the new terms.

Ads have nothing to do with the API changes. First of all, there's bot, to which ads are completely irrelevant, yet they're still affected by the API changes. Second, although there are 3rd party Reddit apps with ads, not all do. For example, Infinity for Reddit is ad-free (and open source), yet they're also affected by the API changes. In fact, Infinity's only monetization is via Infinity+, which has no extra features whatsoever, and only exists as a way to support Infinity's developer. Ads, or monetization at all, should have nothing to do with this.

Edit: sorry if I phrased something badly or was contradictory, I'm a bit tired :P - good night!

You're missing my point here. I realize that the broader discussion is about the API, but this specific thread is about a different kind of commercial use, which could be using the official reddit app or web client. We're talking about user behaviors that are inherently commercial; that's orthogonal to the way those behaviors are actually implemented (official client vs direct API access vs indirect API via third party apps vs...). For example, a PR firm could organize an AMA with an actor to promote an upcoming movie, but that actor could be using the official Reddit client. That's clearly commercial use, but Reddit gets nothing from that.

My point is twofold: first, I think this kind of commercial use is probably the much larger missed financial opportunity for Reddit. Second, if Reddit's intent with API restriction actually is, in fact, to try and capture some revenue from these kinds of behaviors, then they're clearly ignoring the much more targeted, and much more effective, approach of updating the ToS and directly restricting commercial use.

Using the above example, the PR firm would be required to have a commercial account, and Reddit would be free to set the pricing for that commercial account however they wanted. This is better for Reddit (they can charge way more than they would earn via API calls), it's better for users (more transparency re: what is or isn't commercial content), it doesn't affect third-party apps (no restrictions of API usage), and, if the pricing was right, it would be acceptable for the PR firm as well (paying for commercial exposure is standard practice basically everywhere else).

This would also give them a way to distinguish between commercial API usage like third-party clients, where the API is acting on behalf of individual users, vs commercial API usage like "scan reddit for mentions of this keyword and notify me", which is providing a direct commercial service without ever actually interacting with other users. These different kinds of usages could then be funneled into different pricing tiers for API access.

From a strategic perspective, I can't imagine a scenario in which Reddit's current approach is the right move here.

Is there list what subreddits are probably moderated some pr or other companies.

Many mods are paid?

I think the situation is the opposite of what people believe is going on. Reddit just wants its biggest profiteers to start paying for what they’re taking.

The changes actually won’t hurt normal users at all. Users somehow don’t understand that this is not about them. The proposed changes are about limiting exploitstion from a handful of commercializing individuals.

Free access to the API is getting expanded, from 60 calls to 100 calls per minute. Developer resources will continue to be protected for non-commercial use. And bots and mod extensions are to remain unaffected.

But yeah, meanwhile regular users somehow think they need a call to action, even though nothing will change for them… except maybe the guy who runs Apollo will kill his app, but not because Reddit killed it. It’s because he doesn’t have the time to rewrite his code to be more efficient.

> the guy who runs Apollo will kill his app, but not because Reddit killed it. It’s because he doesn’t have the time to rewrite his code to be more efficient.

That’s not a fair summary of his position. If you read his testament, they really screwed him over, lied to him, and didn’t give him a realistic chance to turn any reasonable amount of his revenue to Reddit.

Even if he could lower the average number of API calls per daily user, they’re not even in the same ballpark, expense-wise.

> he doesn’t have the time to rewrite his code to be more efficient.

Reddit demands so much to make it impossible

I started a sub with 100k users and nobody has ever contacted our mod team to try and pay for placement

Maybe this is happening for subs over a million only?

Companies don't need to pay for mod placement.

Mods are given to most active and helpful users, those who are paid to be on Reddit for a living have an advantage.

Additionally, mods are not needed for influencing the content of a subreddit. Active users are.

It's worth saying that commercial moderators are against mod guidelines or TOS.

The pre-IPO process often involves all kinds of fun short-term profit maximizing activities.

Yeah, I have personally seen companies inflicting hundreds of millions worth of damages to themselves of not billions as part of pre-IPO work. Extra hilarious and sad to watch when the IPO has to be aborted.

Why is it so predictable? I know investors don't care about anything other than returns, but what returns do you get when you tank companies in such diametrically opposed ways from how they've operated before?

There are different kinds of investors involved in an IPO process.

The investors that have pre-IPO stock and who are looking to sell as quickly as possible, gain from IPO pops, so it's in their best interest to maximize short-term profits. That group of investors include a lot of the existing investors, and in almost all cases the founders and C-suite of the company.

Honest question, does this include artificial inflation of costs? I have seen figures that Reddit used to run with 20 people, and inflated to 2000 in 10 years. Old reddit is also superlight in bandwidth. New reddit is not.

In at least one real life example I have personal insight into: yes. They hired tons of devs to make the company look bigger and look like they were aiming for continued quick growth post IPO. Reality was that they did not have enough tasks for all people they had quickly hired.

Yeah, they're probably somewhat bloated like Twitter was, just like Twitter they don't deliver nearly as many new features to justify the large employee count, they don't do much of their own moderation either.

A large portion of those might be for checking reports etc, since reddit at least does seem to do a slightly better job trying to keep humans in the loop there.

Yeah some things I read in the Apollo thread was about their global advertising department that grew quite big.

Looks like selling company you helped build because you believed in the idea to people who are only interested in profits often leads to worse service and dissatisfied customers. Who would have thunk.

Is it securities fraud if your pre-ipo profit maximization moves cause your user base to relocate, and you didn't disclose that your filings?

Yes, they will need to be completely transparent about their outlook at the time of the IPO, and disclosing the current and historical active user counts is a pivotal figure in that data.

I wouldn't be surprised if this move actually damages Reddit enough that they can't IPO because the user engagement numbers will take such a sharp negative turn.

Highly likely that one of the risk factors they disclose in their prospectus is that the revenues are highly correllated with active user numbers and traffic and if those things change, revenues will be impacted. Even without this latest drama it would be amazing if they didn't have something like that in there.

Every IPO files paperwork that basically says "The SEC requires us to say we're completely full of shit, everything we do is a lie, and you will lose all your money."

And then it's perfectly legal.

And they continue to do that, go read any prospectus, it's all about how everything will die and the company is dead.

I'm curious: how does Reddit profits from anything?

It seems to me the only revenue they seem to have is ads?? But I use it on the web and never seen ads (except for actual posts that are ads, but those usually get quickly downvoted and I don't even see most of them)... I think people who use Apollo or other apps also like to use Reddit on those because, among other things (like nicer UI) they do not show ads (and probably don't make any money either). Hence, it seems to me, perhaps naively, Reddit is giving us stuff literally for free.. they can't even monetise user data like Facebook, as most of us are anonymous users...

So, would be really interesting to understand how they're making money, which could help understand their motivations here.

They also have paid awards, no idea how much revenue they generate but it's something

There are definitely sponsored ads that pop up in a feed by default. Downvoting them doesn't change their placement.

There's also reddit premium (no ads, customizable avatar, reddit coins) along with a award system where people can give awards that cost reddit coins to exceptional comments. These awards cost reddit coins which can be gained through either getting awards on comments, or subscribing to reddit premium.

> it's too expensive to maintain

I would love to hear someone elaborate on this part. The API returns the same information as you get from the HTML interface right, but structured? If the API and the website had the same traffic, then wouldn't the HTML part (which is more complex I guess), but more expensive? If the API disappeared, wouldn't the HTML rendering require the same infrastructure? I'm not clear on how maintaining the API adds much overhead, except maybe compatibility inertia because it's a public interface. But infrastructure-wise?

The Website has ads, bringing in significant money.

That's not the same. The mods work out by their own choice, and usually have no bills to pay for this work. Reddit on the other is a company, and has bills to pay. And Reddit is not tiny. Not sure how big their costs are, and what they earn, but from my understanding, it's not a money-printer wasting bills on golden keyboards and parties, not are really profitable yet. So they are probably on a thin line, still struggling to survive long term without external money.

> hey, guess what? reddit "profits" a LOT from unpaid work from their moderators.

That work is not forced, they all choose to "work" for free and can quit any time they want.

And that work may be unpaid in monetary terms, but many of those moderators enjoy their share of internet fame or a sense of power over "commoners" or their feeling they are doing something for a common good, that they are happy to continue working unpaid.

I didn't realize Reddit API development was "forced".

Whether they enjoy it or not is beside the point.

Moderators are providing value to Reddit. If all mods quit, and no one stepped up to take their place, what would happen? Now who deserves to take profit monetarily for that value?

As far as Reddit "development" they should have stopped a long time ago, the site is horrible to use and has been for a long time.

They will double... no, wait, quadruple their salary!

Reddit isn’t profitable therefore technically it doesn’t profit from anything.

So by their logic they should close their company.

I assume this "their logic" is some made up "their logic" for a straw man argument.

Their logic is they should make other for-profit companies who make money using their APIs pay for using their APIs?

Do you reckon their C-suite are not waged? (What revenue are they working with?)

This is a common issue with discussion of companies, people say "look they're not making any money" just because the company accounts are not recording profits.

But if you pay out all your money as C-suite wages (for example) then you have "no profits" as a company but people are certainly profiting.

Another angle is political steer; you can make profit outside the company, or make social change, and so forego intrinsic profit.

No doubt they are waged and have a substantial number of shares, which is why they are desperately and rather scummily trying to juice short-term profits pre-IPO. There's a big pay day in the offing, and they don't care who they roll over to line their pockets.

So you're saying the C-suite aren't profiting from their work? They do no work?

C-suite and other employees profit from selling their time to to Reddit. It's kinda weird to start acting like that isn't how employment works.

That’s what they’re saying. They aren’t saying that’s not how it works.

u/skinnymuch had it right, sorry if I made it confusing. Basically I'm saying even if the company report no profit, then the executives are probably making bank (earning large personal "profits"!).

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