Not at all. But it seems like the Apollo dev’s argument was “if it actually costs reddit $20m they why not buy Apollo for only $10m”, which doesn’t make sense.
This doesn’t make what reddit is doing any more reasonable though, imo.
The post mentions that Reddit calculates a $20M/yr opportunity cost to allowing Apollo to continue running as-is. Apollo is trying to say that $10M one-time is a bargain if Reddit truly believes the users are worth $20M/yr.
I don't think Apollo is using this argument as some sort of leverage. Reading through the post, they seem well aware that they are defenseless. They only have the court of public opinion.
It's not strange at all. At least the Reddit CEO heard and understood perfectly well what the Apollo dev said in that call and there's a recording to prove that.
Your first sentence misrepresents what the Apollo dev said. Actually, it's the exact same misrepresentation that the Reddit CEO knowingly made in public.
First off, it's abundantly clear that the Apollo dev wasn't actually demanding money. It was a pointed statement that revealed the CEO wasn't being honest about the costs.
The CEO, in contradiction with publicly available data, claimed that Apollo was costing Reddit $20 million per year in lost opportunity. So the dev jokingly offered to sell Apollo for half that price. Then Reddit would be able to recoup the cost in half a year and gain an additional $20 million yearly. What a great deal, right? Except they both knew that the $20 million price tag was complete bogus.
The Apollo dev “joked” that Reddit should buy Apollo for $10 million dollars because, according to Reddit’s pricing of their API, the opportunity cost of Apollo existing to Reddit was $20 million.
That doesn't make sense. Reddit is (charitably) arguing that Apollo is costing them $20m/year. "Splitting the difference" and just losing $10m on a one-time basis doesn't make sense when Reddit can of course just cut off API access.
If Apollo were delivering $20m/year of incremental value to Reddit, then this would've been a sensical bargaining strategy. But the Apollo dev wasn't prepared to make this argument.
He's saying that he wants a fair deal where he can make money running his app. If Reddit has a good-faith belief that he can do $20M in revenue on his app, then they should be happy to buy the app for $10M and use it to drive $20M in revenue that goes to Reddit. In-context this seems pretty clear. Also in-context it seems pretty clear that Reddit is aware that their sudden price increase has made the Apollo app's value negative with no chance to keep it going.
Ah, that makes much more sense. But, it could be the case that reddit thinks someone will end up paying their outrageous fees, just not him. It doesn’t necessarily follow that they think Apollo is actually worth that much. Then again, if that’s the case it would be reasonable to work out some sort of discount that reflects the true value of the Apollo user base.
The cost for reddit as stated in another part of the call is an opportunity cost. By acquiring Apollo instead of shutting it down they would seamlessly acquire a lot of users who would have a hard time adjusting to the native app and potentially leave the platform, so this call is still a cost to them.
My point was less so about whether or not the price was fair, but that it illustrates issues with Reddit's leadership. Whether or not the prices quoted during negotiations between Reddit and Apollo are fair is somewhat orthogonal to the issue of weaponizing those negotiations to score PR points.
Also Apollo doesn't cost them shit. Unless they're arguing that they lost $20m/yr in ad revenue you can't do the math like that. Reddit users cost Reddit $20m/yr.
> "If third-party apps are costing Reddit so much money, why don't they just buy them out like they did Alien Blue?" That was the point I brought up. If running Apollo as it stands now would cost you $20 million yearly as you quote, I suggested you cut a check to me to end Apollo. I said I'd even do it for half that or six months worth: $10 million, what a deal!
And it would have been a deal: 6 months of opportunity cost upfront to then turn into real profit. Instead they are permanently lose the [possibly] majority of that opportunity when those users lose access to Reddit.
Everyone knows what profit motive is, cost of doing business, etc. Assume you're talking to people who know what it takes to run a website, and start, first, with the numbers that have been calculated.
According to apollo app, to keep their 3rd party app running, reddit was requesting about $20 million dollars. If you go look at what apollo charges, it's significantly less than that.
Reddit's defense of that charge isnt: Apollo is taking our users, our ad revenue and we want that to be in-house, in our own app, etc. They're saying "this is the cost of the API".
Now, start there, and dial in your criticism to some actual details.
If Apollo keeps operating, it charges its users more and pays reddit $20 million for one year, and presumably continues paying that into the future.
If Reddit purchases Apollo for $10 million, then those customers now belong to Reddit. For the first year, Reddit would "only" earn $20 - $10 = $10 million, but after that those customers would continue directly earning revenue.
It's all about reasoning with the value of the app in terms of the api rates. Either the rates are unreasonable, or that would be a reasonable sale to Reddit.
"the Apollo guy" mentioned that they were willing to pay for their API usage and were in multiple discussions on pricing over a period of months with teams at Reddit.
Imagine if you were willing to pay for API usage and asked a company what the costs would be, and they gave a number that was infeasible for you to the extent that it wasn't even considerable, such as $1 million per user. Obviously you wouldn't be able to pay that amount if you were making far less money per user of your app, and would feel as the Apollo creator does.
If you can agree to that, then it seems like you just disagree on what a reasonable cost for this service is, which is fine, but I wouldn't call it entitlement.
I agree that Reddit ain't a charity. And I agree that HN isn't either. But I'd also add that Apollo isn't.
It's certainly a strange call. Hey, you want to charge me $20 million per year, so why don't we make it easy and you just pay me $10 million to go quiet?
It's really confusing. He wants Reddit to pay $10 million so he isn't "loud" with API usage? He wants them to buy and takeover the app? He's wants a payment to shutdown? Is he even serious about any of this? I get the impression he lacks the confidence to ask for a $10 million acquisition, so instead he approaches the subject casually as a joke, and the entire conversation spirals into confusion due to the lack of clarity.
Either way, that's not a great deal for Reddit. They might as well charge the $20 million, and if he can't find a way to pay it then Apollo shuts down and the majority of users return to the official Reddit site/app for free. There's no benefit to paying $10 million.
The call was a failure between the two parties and likely destroyed any future negotiations. I think the best suggestion was from another user here. Only allow Reddit official subscribers to use third party apps. Reddit can charge users whatever they want, and app developers can monetize their apps however they choose.
It sounds to me like the conversation went in a way that it could be interpreted as a threat.
This is from the Apollo developer's own telling of the story:
> As said, a common suggestion across the many threads on this topic was "If third-party apps are costing Reddit so much money, why don't they just buy them out like they did Alien Blue?" That was the point I brought up. If running Apollo as it stands now would cost you $20 million yearly as you quote, I suggested you cut a check to me to end Apollo. I said I'd even do it for half that or six months worth: $10 million, what a deal!
If someone said that to me, i.e. "hey, just give me $10 million and I'll stop making things difficult for you," I would interpret that as a threat, even if they denied that it was.
Yes, that makes sense. But do you think Reddit would actually do that? Apollo has a better UX. Reddit has proven they don’t want to build a good UX. If they bought Apollo they would only ruin it.
That's assuming that Apollo brings in enough revenue to cover the costs and they want to run a business.
I'm not a user of that App so excuse me if I am mistaken, if Apollo is currently free and without ads then the developer had a lot less to worry about then than now.
Additionally the outrage, as far as I am aware, has less to do with Reddit needing to make money rather it's way of going about making money is killing the user experience which kills the point of the website.
I'm not sure that math is right? If the API access actually costs reddit $20m/year then charging Apollo users $20m/year just offsets those costs. So in the first year they actually lose $10m, and just break even in following years. It only makes sense to buy Apollo if the api costs are low.
The author doesn't want to look at it this way, but this is a really weird thing to say. My interpretation was that they'd make an offer to sell the app to reddit, but the specific phrasing there really is not that.
edit: I still think it was the wrong way to approach the situation. Consider this from reddit's perspective,
it would only make sense for Reddit to pay for the traffic if they think they would lose it if it Apollo went away, but then it's not opportunity cost.
It doesn't make the change any better of a look for reddit, and you can certainly question whether it's true that Apollo users would just use reddit, but if you accept that then I don't think you can claim the moral high ground if you offer to accept payment to "make it go away". The developer should have approached this from the perspective of the value that Apollo offers users and reddit instead of the cost to make the problem go away. I imagine the dev doesn't accept that Apollo users would just switch over, but they shouldn't have made their statement in those terms then, and I think that was a mistake.
This doesn’t make what reddit is doing any more reasonable though, imo.
reply