Having a "free trial" of premium for 3rd party apps would mitigate this issue a little bit. You can use Apollo, for example, for 3 months free and then you have to pay for Premium. In fact, a good arrangement would be for both the app develop and Reddit to take their respective cuts.
But then that kind of payment infrastructure requires effort to setup and development and Reddit seems unable to execute on much.
Why is this an issue? 3rd party apps exist to solve a problem for users running into limitations of the web interface or Reddits own abomination of an app. So this will just drive existing users into premium accounts and provides a better UX for them with barely any extra cost for Reddit. If the need exists and the opportunity exists in the form of an API someone will build that app and could still collect money on that on top of Reddit premium fee. Just keep the two separated.
I assume they'll kill off old reddit shortly here, once they implement the API changes.
Am I missing something here? It seems like a blatantly obvious compromise.
reddit's ceo does not behave like a logical actor but instead is driven by emotions, mostly negative ones towards 3rd party apps.
It appears that the eng at reddit is so incompetent that they have newer, better, more efficient internal APIs available only to their house apps.
So basically, the public APIs in question have both serious compute and eng costs that -- per a mod comment I can't find again -- are costing more than $10m annually. They can't amortize those costs across their first party apps as well, because those apps are on different APIs. They're looking -- again per a mod comment -- to make money on both the compute and eng costs for these APIs.
Add to this some incredible stupidity, as they continue to underinvest in mod tools and appear not to realize -- though I really can't understand how they could not, since it's been a point of incredible contention with their mod community for many years -- how many mods, particularly those of the biggest forums, are using tools reliant on the current apis to effectively moderate.
tl;dr: it's a big mess. They want to kill 3rd party front ends, and are unwilling to just say so; they continue to not build the tools mods need; they've lost trust with the mod community because of 10 years of lying about investing in mod tools; and they don't want to get everyone onto their internal APIs for reasons they haven't shared.
Oh, and meanwhile, they're launching a new dev platform because... they think someone smart would want to build a business with them after this? I don't know.
The economics are basically the same. Apollo could charge their users $0.25 per thousand requests and continue to operate. They don't want to do so.
It is a burden for the app developers to implement payment processing. And one month was not enough notice. But fundamentally, this is killing apps because most users won't be willing to pay.
(Also, 1000 API requests isn't that little. For example, getting the top 25 posts of a subreddit is just 1 API request. Posting a comment is 1 request.)
Unpaid users are important to these apps because it's what drives adoption. You can release a new paid app to browse Reddit and get maybe 1000 users, or release a free app and get 1 million users, of which 1% convert to paying customers (i.e. 10,000 customers. These numbers are just made up for illustrative purposes).
But they wouldn't have had to. Most of them (all?) don't have registration features, you're meant to have a Reddit account already. A system where only Premium accounts get API access would have just required a way for Reddit to say "sorry, this user needs to upgrade to use 3rd-party clients" when challenged. That's a very simple change, nowhere near the complexity of implementing a payment-processing flow.
A good strategy would have been something like Reddit saying "API users from now on will have to pay, and the price is 2-3x of a Premium subscription, because <bullshit about them taxing the backend more>", wait for the blowback, then say "alright, we listened to you and decided it will simply require any Premium subscription".
But it doesn't change the fundamental problem that most Apollo users won't pay. Having a free app is what drives their growth. There would still be massive anger against Reddit, and redditors would discourage each other from rewarding Reddit for this move. They'd say don't buy premium subscriptions, we need to send Reddit a message. Reddit ends up in the same mess it's in now.
This system doesn't address the angry comments I've seen in this thread or on Reddit. There are several types of comments. Some people here say Reddit doesn't have a right to exploit value that was created by the community. Some people are angry because there was a dispute between the Apollo dev and the Reddit CEO and they feel the CEO's characterization of the Apollo dev is slanderous. (It seems the Apollo dev implied that if Reddit didn't buy them out, they'd publicly make a stink and Reddit called this blackmail. I'm not sure of the details.) Some people think Reddit is a lying, greedy corporation and doesn't need to charge for their API.
Other disadvantages are that system wouldn't discourage apps from making hundreds of API requests per user per minute and there's no guarantee the cost of a premium subscription covers the cost of all the apps a user has. Heavy users get subsidized by light users with premium subscriptions.
Subscriptions are high-friction, low uptake, and you're always battling churn. Ads are low-friction and everybody gets them. Plus they can goose the ad revenue whenever they want by just showing more of them.
They might grumble about AI training, but its not really affecting their bottom line. I doubt they'll care much until they start selling their own AI sizzle to investors.
Edit: Oh, and I doubt they care about the hardware needed to serve posts. Guarentee they're using 10-to-100x that for the ads. Ad bidding is complex and has tight timing requirements. Tracking ad/user view data is a big firehose. If they host any of the ads themselves that will absolutely dwarf the text or even video posts. And even then, if they have any kind of a compentent backend engineering team, all those costs will be a smallish fraction of total costs.
The purpose is to lock down API access to extract value from AI training.
Why would the Apollo developer keep working on their app if this subset of users bring in $500/month at best?
I do agree however that it would have probably caused less trouble, because suddenly the users have to pay Reddit rather than the developers.