Reddit reaches for profits through a geek-culture bazaar
reuters.com
reuters.com
Making money on the Internet is a solved problem. You just need to sell ads. Please suspend these nerdy business experiments and just focus on improving and promoting your ad platform. That is literally all you need to do.
And even if you choose not to do that, you can achieve profitability within the next 2 months by merely moving away from AWS to a more cost-effective website hosting platform, since hosting costs are your greatest expense.
Since you can easily raise revenue and cut costs at the same time, if you're not profitable in the next 2 months, it's only because you don't want to be profitable. And, hey, that's cool if your investors don't care.
I'm actually with you about them finding more cost effective ways to serve all that content. I wonder if they should think about using peer-to-peer caching using HTML5/webworkers and other distributed caching methods. Given that the community has strong support for reddit (they even give money freely via the donation bar), maybe they would be okay with allowing spare bandwidth to be used to keep the site running.
On the ads side, I think the proprietary system they have is not doing them any favors when it comes to getting a piece of the ad spend pie during RFPs. I don't even know how an advertiser would begin to figure out which subreddits they should target w/o having to sit down and dive into all the stats. The other core issue I think is that reddit specifically touts the fact that you target by subreddit not by demographics/users/behavior, etc. but I think that data is extremely important to most advertisers.
What actually happens: the old timers complain for three days then just put up with it.
People still conflate online complaining with meaning and desires of the entire user base. Sadly, online comments aren't independent statistical samples from your entire user base.
What's the rate again? 2% of users actively participate in sites while 98% happily browse and put up with ads?
That idea cuts both ways. Sadly, also because they are not independent, the chance that those that comment and participate are probably also the ones that drive the community and make for nice discussion, which those other 98% who just browse end up reading. What else is Reddit if not links to contents followed by comments.
Those 2% stop, the site goes to crap.
I was part of another forum-based company that went from zero advertising to full display advertising with banners and adsense (the ads brought in another $200k to $500k per month). Some of the vocal members (read: always bitchy about everything, even mild color or margin changes) complained at first, then went back to their normal bitching about everything else in the world.
All changes hurt at first, but we can't not change everything forever.
Again, you're assuming that the presence of additional advertising will have no effect on the content. Perhaps your example webboard always sucked, you know?
One additional way to look at it is to gauge whether your webboard is more popular and/or more highly trafficked than its related subreddits. This last point doesn't necessarily speak to content quality, but it does relate to the relationship and motivations of its community.
A tenet of advertising is to maintain a blindspot for self-reflectivity, to assume that everything would be the same whether they were present or not. Leaving aside the economics of production, for a simple example of TV shows, a lack of advertising would enable longer shows and thus more content, which is what people presumably watch these shows for. A negligible number of people watch TV only for the advertising content, and I think we can agree that a station that is only comprised of advertising would not be very popular. QVC will never get the ratings that "Duck Dynasty" does, much less one composed entirely of 30sec spots.
As Kant said: "view people always as a means, never as an end."
In their eyes, you only exist as "traffic" for them to exploit. You are not an individual. You have no life. You are a finger attached to a pointing device attached to a credit card.
Their goal in life is to divert Internet traffic to their own sites by any means necessary to increase their own traffic numbers (views, hits, sessions, clicks, impressions, ...) thereby increasing their own perceived worth so they can spout their vanity asshole metrics off to boards/investors/audiences.
[Note: I may be bitter about jerks exploiting the world raking in more success/money/exposure than non-exploiting builders.]
http://en.wikipedia.org/wiki/Ave_Caesar_morituri_te_salutant
Rule of thumb: if you're business is selling your users to advertisers, don't piss off your users, because then you'll have no product.
You have Digg as an example of what happens.
The reddit ads system could be far better and without the corruption. It does cost more and is less effective than Facebook ads even for very specific subreddits, and it costs a ton more than it's worth even when there is no one else buying ad space in a subreddit.
Correct me if I'm wrong if this has changed.
I really like the fact you can comment on the adverts as if they were a post, this lets people discuss (and hopefully praise) your company.
But that assumption is based on the premise that your visitors are coming to your site because you offer something of value. They need to refocus on doing exactly that - offering value to people, not just entertainment. Entertainment drives ads, but true value drives direct cash flow.
The gifts are really just a variation on the ad theme - get enough traffic that people will leave the core functions of the site, and go buy something. This is dangerous - both gifts and gold subscriptions are making an income by monetizing the pop culture value of reddit. If/when reddit is no longer a hub of pop culture, those income streams will vanish.
They have some time, while those income streams still work, to develop core functions that are a valuable product in their own right, and learn how to monetize those functions. I'd encourage them to start on that path immediately, so they can stabilize themselves as a real business before their pop culture status fades.
Wow, are they really doing that???!
I can understand Netflix doing it, but for Reddit it's like flushing money
really
Rackspace, make them an offer!
I think they're afraid of adblock
Non-redditors need to understand the overwhelming revolt against any sort of advertisement in the reddit community. Yishan Wong (CEO) had to respond to one of the "top" comments when this article was posted in r/technology[1].
While reddit "fans" will support the company through "Reddit Gold"[2], advertisements in the form of "sponsored links" or "feed ads" doesn't seem to work under the beloved format [ex: 3]. If you're interested in learning about Condé Nast and other investors , I found a "myth busters" blog post [4].
[1]http://www.reddit.com/r/technology/comments/1tvfze/reddit_is...
[2]http://blog.reddit.com/2013/10/thanks-for-gold.html
[3]http://www.reddit.com/comments/1o6f63/now_you_can_fly_histor...
[4]http://blog.reddit.com/2013/08/reddit-myth-busters_6.html
[1] - http://beta.fool.com/ddelony/2012/09/20/will-selling-slashdo...
But making profit off selling stuff is only half the challenge. As the sale of Slashdot to Dice Holdings illustrates, the Internet doesn't quite like cross-subsidies. That's what's undoing traditional media: in newspapers, the cartoon page attracted viewers and the real estate listings attracted paying advertisers, and between those the paper rag could pay for the foreign correspondents, or for the reporter at Town Hall. Now it's everyone for themselves, and some outlets make writers responsible for their own traffic, article per article. That's how we end up with listicles all over the place.
But I digress. Reddit has two challenges: one, make the profit off sales that it can't make off running The Front Page of the Internet. Two, maintain the cross-subsidy once the managers realise they have a profitable store weighed down by this money-losing forum, so hey, "couldn't we make more profit if we didn't have the forum?"
It works for Facebook, it works for Twitter, it will work for you. The only thing is you have to be careful how you present it and design it into the existing platform.
Reddit is caught between a rock and a hard place since users like Reddit because of the nonintrusive ads.
That only happens if there is somewhere else to jump to. What else is there?
We don't use the best of all possible systems, we use the best available system, which is always highly imperfect.
===== Reddit Users =====
● Advertising on Reddit is equivalent to a business hustler in a suit approaching you at a hackathon. Ads are unwelcome because no one on Reddit is there to buy anything.
● Even if you get lots of traffic, there's no conversion. Out of 1,000 unique visits I've had ->1<- person actually bought a calendar. I joked around saying "I'd probably get more sales advertising on a porn site" and just for the hell of it actually went through with it. Gay porn sites seem to be the cheapest on blogads.com with the lowest cost per impressions + high impressions & big community. So I booked a 1 week spot on "TheBananaBlog". I actually got 3 sales from it. So advertising a calendar on a gay porn site is more cost effective than advertising on Reddit. Think about that next time before you try to buy ads on Reddit.
===== Reddit's Ad Methods Flaws =====
● Reddit doesn't understand what an "ad" is. Plain and simple. It tries to fit "ads" into a "content" form factor and group them into the "content feed" where they DO-NOT-BELONG. Users don't like this. They don't like this on Reddit and they don't like it anywhere else on the web.
● By mixing ads and content Reddit is making their advertisers seem deceitful and dishonest. Like we're trying to sneak a money making scheme into their pristine community of readers. When really we're supporting their community.
● Reddit lacks version control and the ability to test out different ad type content.
● Too many Reddit users tend to be "dough bags". The type that always ask you for food/pizza/ride/cigarette/drink and never repay you. I'm sorry but it's true. They'll rip images from people's personal blogs and link to them directly rather than linking to that person's page with the entirety of the content. Or they'll just re-upload stolen content to imgur where all their images are hosted. Their excuse is that they won't want "blog-spam". Everything to them is blog-spam -_-. They like to take and not give back when it comes to content. So advertising to this crowd will get you no where.
===== Possible Solution =====
● Use 1 traditional ad on the right side with "Today's Community Supporter:" above it. Make sure the ad doesn't use "ad like code", rotate, and is a static image that way it's much less likely to get blocked by ad blockers.
● Nothing. Reddit was like this since the beginning. I remember Reddit back when it was just 1 reddit (before subreddits) and the community behavior was similar. Snarky, condescending, anti-entrepreneur.
What makes Hacker News awesome is the community's understanding of self promotion: Posting a link or plug to your startup/business when relevant is acceptable: The calendar I mentioned above is here at my custom webstore: http://dayonepp.com/ you can use coupon code: "hn" to get $3 off.
How does this translate into dollars and cents? Reddit could use its platform to popularize new hip counterculture products. When advertisers purchase ad space, the real ads would be in the links and comments.
All it takes is about a dozen people to upvote something within the first 8-10 minutes after it is posted and it stands a good chance of "going viral." That's harder to sell than ads, but perhaps more valuable.
I disagree. Their strength (in my view) is that its a build your own community DIY. If you feel strongly about turnips then start a turnip subreddit. vb forum etc doesn't have that flexibility.
EDIT: FML...someone claimed /r/turnips already.
I think it's both. Your turnip site instantly becomes the hippest turnip site due to it's location on Reddit.
The other thing I just realized is that the smaller subreddits benefit from elitism - as ugly as that sounds. i.e. /r/pics is driven by raw masses, while /r/turnips would likely be driven by a small group of die-hards.