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Comment by steveBK123 | Hacker News Reader

$60M/year for GOOG to access all their data when they purport to be targeting a $5B valuation at IPO is really cheap.

Arguably Reddit's value is it's data, and GOOG is renting it for 1.2%/year?

1. It is pointless to compare total company value with an annual payment.

2. It isn't an exclusive license. There are dozens of companies training language models, and if they are all forced to pay the same amount then that's some serious cash.

It’s going to be a sad day when /u/cumbuster69 doesn’t get the attribution they deserve for their excellent financial advice

>1. It is pointless to compare total company value with an annual payment.

Mozilla being an exception, I suppose?

Mozilla has a billion in the bank and half a billion annual revenue with a 19 year track record on that contract. They spend most of that revenue each year, but any that's left over finds its way into the bank growing that sum. I'd wager Mozilla is worth considerably more than a single year of revenue if that's what you were suggesting. At a minimum they're worth their cash on hand, and some multiple of that revenue, perhaps 10x or even 20x so that would put Mozilla's company value at least around $6B, and I'd expect the Mozilla Foundation could easily get that kind of money for MoCo+Firefox if it decided to sell. Mozilla doesn't have growth, but it's got regular and significant income and has had that for longer than most of today's SV companies earning similar amounts.

I'm not suggesting they are worth a single year of revenue.

But 80+% of their revenue, and probably the highest margin bit of revenue, comes from that Google payment. So whatever their value is, hinges on that contract payment. Thus, the multiple is interesting....where you might "compare total company value with an annual payment" to see what that mathematical relationship is. Especially given their rapidly declining market share.

I thought that's really cheap too. Tacking on "wiki" and "reddit" probably accounts for ~50+% of my google searches now. From that perspective $60M annually feels really low-- reddit search is probably a quarter of the value that google search offers me as a consumer.

Reddit data is already part of Google's search index for free, and there is zero chance they are going to block that. This added payment is specifically for training AI models.

Companies are generally valued based on cash flows, and some multiples based on profit/growth/etc.

Is this being announced as permanently exclusive?

Otherwise, Reddit is productizing its data, which was the obvious next step after closing public API access. This establishes a market price that at least one buyer was willing to accept, and shapes the terms for later deals with more customers.

Presumably, they think they can sell this kind of access many time over as one of their major revenue channels while also benefiting from the incoming traffic it should generate.

Google are already indexing Reddit, so this might reflect the incremental value of direct API access plus keeping everyone happy. I would be surprised if Reddit’s threats to block Google’s crawler were all that credible.

It's 100% this - Google is going out and shopping so they can get easy access and avoid any future lawsuits if things change in the AI training space.

I imagine this wont be the last announcement in this space.

It wouldn't surprise me either if something like half of Reddit's traffic was Google constantly crawling them.

> Arguably Reddit's value is it's data

Reddit has a chicken and egg problem - nobody knows what the value of it's data even is. They've never sold it before. You can sell pet rocks for 1 billion dollars, but nobody will value them if there's been 0 sales. (ask vs bid vs last sale price).

I'm guessing reddit is rushing to sell their data so they can show that their data is worth anything at all.

> They've never sold it before.

Do we know this?

I'm pretty confident they haven't until at least 6 months ago when they freaked out about api usage.

It's possible they've sold it and we haven't heard about it since then. I would think they'd want to brag about it publicly though.

I figure in this case, Google was the one that wanted to be public about it (to appear as relevant when AI is the hot thing). I could totally see other orgs happy to keep their data-source private.

A. Nothing said it was exclusive.

B. Reddit's value is in the community more than the data. A company with Reddit's data but not Reddit's users is worth relatively little.

How do you extract the value from the community?

Sell access to the community-generated data for $60M ARR per license...

Sell ads, Senator.

Sell narrative, Senator. Now how much can we put you down for?

Well, I've known several people over the years who have created a multitude of accounts for the purpose of selling them when they reach around 100K karma to various activist and political groups. He didn't care what they were doing with the accounts, but it seems there's been a black market for user data and user profiles with high Karma counts for a long time now.

The only things I can think of Google using that data for are for nefarious purposes.

No, arguably it’s worth some subset of $60M. That number includes future access, but it also includes a license to all that has already been written.

I think in the race for AI dominance that human generated data is extremely valuable. The community is valuable only to the extent that is contains lots of human generated responses on specific topics.

I’m not in AI research so I know I could be completely off base.

If the value of Reddit was its data, then it should have encouraged more people to use it, instead of e.g. cutting off almost every Android and iPhone app.

My usage went completely downhill and my posts/comments as well

The flipside to this argument is that paying Reddit $60M to access data which was posted to the public internet for public viewing and consumption, by people who don't work for Reddit, is obscene and antithetical to how the Internet is supposed to work. Why on earth should Reddit get paid for this, especially if they're not giving the users who made the value a cut?

Because they developed and hosted the site and the users agreed to it.

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