Reddit CEO says app founders who are shutting down in protest made millions
businessinsider.com
businessinsider.com
This was always about control - having the only app, forcing users to use only that app, forcing them to accept the enshittification of the platform - but like many other platforms before it, it fails to remember that users can and have abandoned prior platforms.
Remember Digg? It used to be the top dog. Now it’s circling the drain of irrelevancy after the vast majority of its users just up and left. All that’s left of them is 75 employees and less than $5M in revenue a year. 5 Million. Even Linus Tech Tips is a bigger company, and he’s just a YouTuber.
Digg is Reddit’s future, if they continue to abuse their users.
The above are all middle men to global activities, but like you say he's in a psychological downturn, whether he bounces back remains to be seen. All of the above have undergone downturns in one form or another before changing and adapting. Plus the Press are doom and gloom merchants for short term gain.
"Either the API gets blocked for third-party clients, or you purchase a high price for it." [0]
This is for sure!
Shutting them down will bring back most users (get real, not many will quit altogether) to the official app and will be served Reddit's ads, so Reddit will get the money.
How exactly is it not going to work in Reddit's favor?
It's not just about the ads. It's about the telemetry/etc and being able to link the user via other apps that collect data to correlate.
> How exactly is it not going to work in Reddit's favor?
- Reddit's official app is kinda trash. (I do use it, but it's so bad I usually just browse HN instead.)
- It's a reminder that Reddit has been getting more and more user hostile since Huffman took over as CEO again.
- Tying to above, I don't personally have confidence that Reddit will follow through on their promises of better mod tools in a timely fashion. This (along with recent developments) means a lot of dedicated mods are just going to give up, and the overall content quality will get worse still.
It might help their IPO but I doubt it will help the long term viability.
Betting the house on the fact that nobody will leave seems reckless to me.
What did reddit provide?
I want to create an alternative platform now. This is really inspiring.
Let's do a little back of the envelope calculation – the wording of the original quote is a bit vague ("Folks have made millions"[0]), but for the sake of argument, let's assume that reddit determined that an app like Apollo has had $3 M in total revenue. We also know that Apollo launched in October of 2017, which was around 5.5 years ago. That would imply that Apollo has made, on average, ~$550 K per year gross (I recognize there's probably a growth curve and revenue was lower in the early years and higher later on, but don't think it matters for the sake of this argument).
Now, let's take a closer look at that $550 K:
– 30% goes to app stores right off the bat..but let's call it 25% to account for some of the revenue coming from ads
– That leaves ~$412 K per year in revenue. To be honest, I have no idea what other expenses the devs have to build and maintain an app like Apollo, though I assume there's database/hosting fees, fees for other APIs (e.g., Imgur), designer fees if needed, etc. Let's call all of this $50 K a year
– Once you subtract out other expenses, you are left with $350,000, which could presumably be going directly to the developer. To me, that feels like completely reasonable compensation to provide in exchange for an app that's being used by so many people
There's one other piece of data that's important here, and that's the fact that Steve has also publicly stated that "the 'pure infrastructure costs' of supporting these apps costs Reddit about $10 million each year" [2]. Let's assume that Apollo accounts for 30% of all third party app API usage, which would mean Apollo's cost to Reddit is ~$3 M annually (feel free to correct me if someone has a more accurate breakdown here).
So, armed with the knowledge that Apollo costs them $3 M a year and that the Apollo dev makes ~$350,000 in profit, Reddit comes to them and essentially says, "you need to pay us >50x your current profit, aka ~7x more than what it costs us to provide you with the API, or else you will no longer have access. Oh and BTW, you have 30 days to figure it out."
That request is essentially the complete opposite of what Steve said in the Verge article: "we'll allow them to continue to exist if it's fair, if they're on equal footing, which is paying for their data in the same way that we have to." Sorry, Steve, asking third party apps to pay 7x more than what you are paying is NOT putting them on "equal footing." It's very clear that this is an emotional issue for him, but he's just digging is own grave deeper and deeper with each interview…
[0]: https://www.theverge.com/2023/6/15/23762868/reddit-ceo-steve... [1]: https://www.macrumors.com/2017/10/23/apollo-reddit-app/ [2]: https://apnews.com/article/reddit-blackout-steve-huffman-ceo...