The problem is the business model is terrible. You need to sell ads to survive and the ads ruin the site.
I find the targeting to be good enough that I look forward to the ads to a certain extent as I have found all sorts of fun products that way.
Not sure if that is enough, but does Reddit really need 2000 employees and hundreds of millions of CV money? I have a hard time estimating what it costs to run a site like Reddit.
The development they've done in the past 5 years could have been done with like 50-100 people, including keeping all the SRE going. Insane.
There is no one problem with Reddit, and that is the problem. They have to reboot and build Facebook 2.0 (or whatever) without a highly fickle user base turning tail and running. Rock, meet hard place.
Actually there is one singular problem ... money.
They could accept that "reddit the product" is a 2-5bn market cap business with solid 0.5bn revenue; staff up on that basis, scale their infrastructure on that basis, M&A on that basis, set investor expectations on that basis.
And Reddit's response is to block web browsers almost entirely (on mobile), and try to force people to use the app.
Maybe their next step will be to force use of a desktop app and disappear from the web entirely...
So if ad revenue isn't going to do it. Then it needs to be a freemium model with subscriptions. They probably get 25% of their revenue from reddit premium. That also means, charging for the API.
The problem for many of the third party apps is they've also been running a freemium model with very low overheads due to the fact Reddit has been largely funding their freemium model. They've been charging next to nothing for their premium options ($1.50 a month) and they have massive amount of very active users. They're so big that paying a reasonable per API request fee results in a massive bill. A bill they can't pay due to a freemium model and super low fees that don't pay for the freemium users. Third party apps directly compete with Reddit, therefore it's fair they pay Reddit for the resources they use as well as the lost potential of the users they did take. Those paying for premium on an app would probably pay premium on Reddit.
Then comes in the low value users, who are outraged the free toy they have wants to make a profit. "It's too much money" - funny enough Reddit users think they're worthless - was one of the main cries. "This third party app IS REDDIT" - well if they're Reddit they shouldn't need Reddit access. A userbase who resists being monetised. Either they're monetisable or they're not. If they're not the company can't survive. What the Reddit users need/want is a non-profit.
Realistically, there are a large amount of people who don't care about the protests. They're going to be creating content. I wouldn't be surprised if the people most outraged are the ones who don't even comment that often.
Otherwise wealth correlates somehow with both caring about your interests, and caring about abstract causes, for different reasons and often not in the same people. This is why 1) businesses catering to affluent people are often more cautious about the cheapest tactics (even if they ultimately go for the same results), 2) there is so much public faux political idealism from companies.
The biggest issue most vocal users (including many mods and developers of third party apps like Apollo) have, is that the prices are much higher then the expections reddit set beforehand and that everything was only communicated 30 days in advance.
If reddit wanted to keep third party apps, but have them pay for the users use of reddit, they could have implemented a transition plan. Or make it work another way. Or charge a realistic amount (you yourself state reddit's users are low value, but reddits is asking for $20 million per year in missed monetisation just for Apollo's users, which is very high value).
Instead, reddit seems to approach this aggressively, signalling through their actions that they intend to kill off all third party apps. That's what the the subs going dark are protesting against. Especially since reddit's own site and app are of significant lower quality.
But there's plenty of avenues they have for generating revenue that doesn't involve shutting down 3rd party clients, e.g. commercial promotions, signal / post / comment boosting, subscriptions for advanced / exclusive features, etc.
There is no reason reddit can't be profitable if they did these things. They don't need 100,000,000 users watching videos to bring in ad revenue. They need 10,000,000 users generating good content that ends up as top google results and they can find clever ways to monetize product tie-ins, annual meetups (those were a thing in a lot of cities a while ago), events, merch, and subscriptions. It isn't rocket science. The top stockholders just have to be satisfied to be millionaires instead of billionaires.
It'd pretty easy to be a profitable company with a $10 million turnover, but you're not going to be a unicorn this way. Founders and VC wants high return on their equity, and today being enormous without profitability is valued more than being reasonable and profitable.
There was once an age where investors would buy in simply on the belief of unicornedness, but that ship sailed several months ago. Investors have become much more critical of tech businesses, showing substantially less interest in tech companies that aren't displaying strong fundamentals. A recent Fidelity report indicates Reddit's own valuation has dropped by 41% on that change in sentiment.
In fact, if profitability was the goal, then he should have been ousted at this point, because he's been back for 8 years now without succeeding to make the company profitable.
I don't think he is that inapt, and that his board is stupid to let him in charge despite such a failure, profitability was just never the goal. Getting the biggest possible IPO is the goal, but the timing is actually very bad for them for the reason you mention and now they're trying as hard as they can, including by creating fake subreddits with translated old content for non-English speakers (at least French and German speakers).
Just fyi, reddit rose around the same time as Facebook so it’s likely they share a similar governance model, where founders control an outsized part of the board/voting shares. Since Uber and wework semi-imploded investors are less forgiving of that sort of thing but legacy companies like Reddit likely still are run that way.
Reddit needs 300 people max to run, and they got like 1500.
But did they try to be?
The feeds are definitely not cacheable (except for maybe on a per user basis with a low ttl). Popular and all are never the same upon reload. And every user is going to have a different combination of subreddits. Those feeds have to be generated on the fly. Most of the data is too dynamic and ever-changing to cache effectively.
Also a lot of their content is not "hot" and "commentable" anymore.
- Cache of most popular topics (again, even a 10s invalidation time) would help
For the logged users you could do something more dynamic, for example, cache the front-page snippets of the main subs + add the ones for the user. And again cache that
(unless the 'new reddit' makes this harder, to which I would say - well deserved! ;) )
1. They are not "reining in" expenses, they are purposely pricing out 3rd-party clients (which probably has the goal to show more ads, not less)
2. The $10M buyout comments was a reasonable comment countering the statement that reddit loses $20M each year by users using Apollo. A comment which was a half-joke, as the audio recording shows clearly. In that case, buying Appolo for $10M would have been a steal and Reddit would have jumped on it. They didn't, their prior statement was probably a lie.
3. There were no suggestions for reasonable optimizations of API calls. Apollo claims they already optimized whenever possible and whenever they were asked for it, and that client was specifically not listed in an earlier discussion about ineffective API usage. Reported measurements confirm that, the official API uses more calls. Regardless, later Reddit made this accusation, showing that they are not truthful in this discussion.
Your pro-reddit position is not reasonable.
If something loses me 20M$ per year and I have an option to buy it for 10M$ or kill it for 0$, I would choose the latter without much thinking. And that seems to be exactly what Reddit is doing.
And that is something that any client using a third-party platform should expect that will happen eventually.
Sounds to me that shutting it down is the one sure way to lose money, but I also don't trust that the reddit team had made that calculation properly. This all seems like a short term profit or like a power play to me.
Weren’t the $20M reddit claimed they are losing, missed opportunity costs? I.e. if Apollo users wouldn‘t use Apollo but the official app, they would make that amount of money off of them. So buying that amount of revenue for $10M sounds definitely reasonable to me. If what reddit claims would be truthful that would be a guaranteed 100% ROI.
> A comment which was a half-joke, as the audio recording shows clearly.
…at some point people need to understand that jokes are about timing, about audience, about place, and the subjects of the joke.
again, i have no dog in the fight, but the number of times i’ve heard “it was clearly a joke” is wild. we’ve all seen people from every political corner from every walk of life proclaim “clearly that was a joke” when repeatedly it wasn’t received this way by those involved.
jokes are about timing.
all of that said, i do wish the founder of apollo well, if old.reddit wasn’t your thing apollo truly was one of the better alternatives.
slight tangent, but this is another lesson on how we inevitably screw ourselves when relying on non-open source.
if it isn’t ours, the thing is someone else’s. we have to face this. we repeatedly see the repercussions of ignoring this fact.
[citation needed]
(and not from someone known for lying and editing comments made by other people using their root access)
Reddit already bought a third party app with Alien Blue, and they ruined it so badly that they had to close it down and start again. Nobody wants Reddit in charge of the third party clients, they have awful UI designers and a user hostile UX team. The whole point of a third party client is that it has to actually design a UI that it's users like, or it dies.