It also opened the door for a more premium non-Reddit app that charges monthly and directly competes with Reddit. From everything I've seen so far there might be enough of the existing Reddit community who are upset enough with the recent direction to make that leap viable and if the reported figures are accurate then the finances might also work if enough people jump ship to establish a new community.
Would people maybe have been more okay with this, if the change was that you needed to pay for Reddit premium to be able to use API/other apps with your user? Then it was not be a bill forwarded to other apps, but a bill to each individual user using these apps?
They would probably have been able to reduce the price of Reddit premium at the same time.
There is little doubt in my mind I would have paid for Reddit and for my 3rd party app had they gone this route. Now? I’m working on breaking a heavily ingrained habit of over a decade. Heck I had also set my personal max at around $10 if I had to pay my 3rd party app for API costs. Reddit really shit the bed here.
This isn't over one app. Many (most?) the app makers have noted the change is unsustainable for them.
One way to look at it is that Apollo, the app you're referencing that was able to charge $10 a year, would have to charge 2.5 times as much just to cover the access fees, and not any of their own overhead, much less allow for profit.
The issue here is that the ARPU calculation and assumptions are wrong. Is reddit losing out on that entirely if someone comes to them from a separate interface but still is served through them? Also, it's just too optimistic. Reddit has revenue of less than a dollar per site user (or maybe slightly more than a dollar now?). Most references I'm seeing showed reddit with an ARPU of well under $1 in 2021, closer to half a dollar. Are we expected to believe there's been a 40x increase in a year, or that after all the years reddit has functioned they'll be able to achieve that in the near future?
First being Reddit wouldn't have suddenly needed to stop supporting 3rd party apps for free - apps that only cost Reddit money and generate no income. If the API made Reddit money, instead of costing them money, there would be no need for a sudden change. The "suddenness" of this change is due, in no small part, to the cost of supporting basically free-loading 3rd party apps that consume resources but offer nothing in exchange.
Secondly, Apollo would have formed a business model that supported paying for API access, be it monthly subscriptions, freemium, etc. The current model of pay-once-use-forever is simply unsustainable (on an obvious level) - and the $12.99 annual subscription equally so. The Apollo model, as it was, required free API access.
Even if Apollo had been paying for API access all along, and Reddit decided to suddenly hike the prices - Apollo would have been in a better position to raise their own prices accordingly, and would have had a userbase more accepting of paying.
Paying for API access also compels the business to be more efficient in their calls. As it was, there was little-to-no incentive to operate large content caching on your own servers/services, etc. I have seen, but do not know their credibility, that Apollo was not very efficient in it's API calls and essentially hammered the API far more than was necessary. If you're not paying for it, why would you bother designing a more efficient system?
The API fees were inevitable. More are coming - be sure of that, as corporations tighten their figurative belts and look for ways to stop bleeding money.
Another thing that probably irked Reddit was that Apollo, RedditIsFun, and the other popular clients were monetizing their apps by including their own ads, charging a one-time or monthly fee. I'm surprised that wasn't against their API terms.
Reddit Premium costs more per month ($7) than the expected cost per user for the API ($2). If third party apps can’t make it work with the request-based pricing model, limiting access to just premium users isn’t going to work any better.
They could have changed their API or keys to require an adserve API included and given the app makers time to adapt to the new setup.
Premium users would only see the ads from Reddit, where non-premium would also have seen ads from the app maker.
It would have increased the ads shown to users, added more money into reddit's pocket, and increased the liklihood of users paying cash for the platform while pissing off fewer people.
do you think 3rd party developers would be okay with this? in this scenario, the Reddit premium subscription fee would be a price floor and developers would have to charge a separate fee to use their app.
Sorry I wasn't clear, but I meant the current system is putting a big burden on app developers. This proposal does make that easier.
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.
I think they should call it off, and announce that they will go back to the drawing board. Then restart talks with the API users and third party app developers.
What if they reduced the price of Reddit premium to $3/month and made API and third party apps only available for Reddit premium subscribers?
- Reddit would get many more premium subscribers
- App developers would be able to avoid managing subscription fee’s themselves and continue as before
- Users of the official Reddit app would not be affected
- Users of third party apps would have to pay for Reddit Premium - but maybe at a discount
I was a Reddit Premium subscriber and had been since the only thing it did was remove ads, give you access to /r/lounge, and a shiny badge on your user page.
The fact that it never crossed their mind that a half hearted attempt like allowing Premium members, who pay more every month than a free user generates in ad revenue, to continue using whatever apps they want might stymie some of the outrage show how out of touch the execs are. It still would be a bullshit solution, but making a developer like Christian pay for API requests while I was already paying Reddit ~$5/mo was stupid.
(Needless to say, I’m not longer subscribed to Premium)
Certainly, this will kill free usage of 3rd party Reddit apps. How much revenue will be lost for Apollo when non-paying users cease using it? Will the Apollo developer be affected in any significant way when those non-paying users go away?
$2.50/user/month for Apollo usage is considerably less than the $6/user/month charged by Reddit to users directly for an ad-free website experience.
Is $2.50/month an unreasonable price for an ad-free Reddit experience? If that’s how much Reddit is being paid for advertising per Reddit user, then how many Reddit users will voluntarily pay that to use ad-free third-party apps?
This is more likely to kill Reddit Premium, than to kill paid third-party apps. Apollo is a better experience than Reddit Premium, and at a theoretical $2.50/month versus the known $6/month, would save me $42/year over Reddit premium. Sign me up.
Like many apps, Apollo had (a small number of) paid users and (a large number of ) free users. And because they were competing with the Reddit app (which is free) their pricing model was only $10/year.
Reddit's changes would mean that they would have to cut off all of their free users entirely, and 10x the cost of the paid users. Also, they would have to lose money on all of their existing yearly paid paid users until renewal time.
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