There would have been a huge uproar if they did that too. Most Apollo users don't pay. I'd be surprised if they would get even a 2% conversion rate. The other 98% of users would be angry about losing access. Reddit would still be accused of effectively killing off 3rd party apps.
The economics are basically the same. Apollo could charge their users $0.25 per thousand requests and continue to operate. They don't want to do so.
It is a burden for the app developers to implement payment processing. And one month was not enough notice. But fundamentally, this is killing apps because most users won't be willing to pay.
(Also, 1000 API requests isn't that little. For example, getting the top 25 posts of a subreddit is just 1 API request. Posting a comment is 1 request.)
Unpaid users are important to these apps because it's what drives adoption. You can release a new paid app to browse Reddit and get maybe 1000 users, or release a free app and get 1 million users, of which 1% convert to paying customers (i.e. 10,000 customers. These numbers are just made up for illustrative purposes).
I don’t see how that would work. A fraction of Reddit users use Apollo. A fraction of Apollo users pay Apollo. A fraction of those users would be open to also pay Reddit on top of that.
Why would the Apollo developer keep working on their app if this subset of users bring in $500/month at best?
I do agree however that it would have probably caused less trouble, because suddenly the users have to pay Reddit rather than the developers.
In the recent AMA, they claimed that the average cost per user would be around $1/month. Apollo dev believes it will be much more than.
I feel Reddit could have easily come up with a model where the API usage gets tied to premium account and that decouples apps from API charges.
Reddit has now created a new problem for itself which is that a huge user base that previously didn't bother to look at third-party apps has suddenly become aware of third-party apps. So now, they will start bypassing Reddit's official apps that generate revenue for Reddit in favor of third-party apps that seemingly have a better UX and are ad-free.
The trick is the end user of the third party app doesn’t have to pay. The app developer is the one being charged by Reddit.
If you have 10,000 users that Reddit in 30 days is going to charge you $250,000 per month to continue allowing your third party app to operate and you only had 5-10% of your users paying for a premium version you could see how that becomes somewhat unreasonable.
A bit more of a heads up is all the Apollo developer wanted. He understood that the API no longer being free is reasonable. The timing is what he objects. No assistance in allowing premium Reddit accounts that use Third Party Apps to cover API costs, etc.
I personally don’t understand the outrage. Reddit obviously has costs, and if it wants to make a profit it should not subsidise third party apps that cost double - both no revenue and no ad views.
The cost of 0,00024 per request seems reasonable, and according to Apollo’s creator the cost per app user would be just 2,5 a month. Keep in mind that currently this app probably has no incentive to go light on the requests, so with some tinkering the creator could probably get that down. Maybe some proxy caching or what not.
Of course free is going away, but paying users at say 5/mo or 50/yr should still work for Apollo.
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.
I'm not a webdev so I understand if this point is naive. The Apollo dev said the cost will be about 20x what Reddit pays for its user. Obviously Reddit needs and can maintain a competitive advantage by having a native app. So charging more per user for a 3rd party app is not unreasonable.
For the sake of simplicity let's say that reddit makes $1.00 per user per month that uses their app. Currently they make no money on third party apps. All third party app devs seem fine paying a price to use the API as that is standard practice for different websites. It seems like Reddit could have just charged them 3.00 Per user per month, so they get a healthy margin off of the third party apps. They would actually be making money off of third party apps, and if everyone used the third party app over the native one, then they would be making 3x what they would with users using the native one.
3x seems like a healthy enough margin for me, and they win whether we use their app or not. Devs like Apollo would have a lot more options for monetizing it's users at 3x Reddit's price per user than at 20x. Everyone seems to win. Instead they went with the move that is obviously intended to kill third party apps, and face major backlash from its most devoted users in a self own. The path seems simple to me but maybe that's why I'm not a CEO.
Reddit told the Apollo developer the API pricing was more opportunity cost than actual cost. And many people suggested Reddit could make 3rd party access a subscription feature.
This was extensively discusseds by Apollo developers themselves, also in HN threads. There are technical hurdles on how to implement this (don't remember the details atm) but the more important point is that Reddit is not interested. They don't want money from subscriptions. Serving the API costs them nothing. They want the much bigger ad/tracking income -> having the userbase use 1st party apps.
the actual price Apollo charged would likely have to be much higher. The average number of API calls for the users who are deep enough into reddit addiction to be willing to pay for it would be substantially higher without the casual user who views 10 pages a month to average it out.
The problem is casuals are not going to pay, only powerusers would pay and they're making hundreds of calls per day/thousands per month. Take that $2.50 number and 10-100x it, and then add in App Store payment processing costs.
Sibling comment already addresses it. But to add, I’d happily pay and I want to pay $5 or more to Reddit. But not everyone is like that. Reddit cornered third party apps into a single subscription model with very little time to adapt. I think Apollo could have accommodated these changes over 6 months. Reddit could have also added an ad based tier. Instead they forced a huge price hike with less than a month to react to it.
That’s the end goal already with their API fees. They just handled the entire execution and messaging poorly.
I think the Apollo developer mentioned that in order to break even with the new fees, they’d have to have subscribers who are paying $5/mo. To make a profit, third party apps would need subscribers who pay within the $60-100/yr range that you mentioned.
Reddit probably knew this would cull the number of third party apps out there, which is to their benefit since their mobile app would have fewer competitors. I bet they’re also banking on most people not caring, or eventually coming back to the platform after a short period of time.
I sincerely hope that they’re wrong and the user base doesn’t return.
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.
Eh, at some threshold, of course a lower price would have changed the outcome. It sounds like the Apollo dev thought API costs came in at 10-20x what he’d been expecting. I think there’s obviously a huge difference between paying Reddit, say, 50 cents of a $3 net payment (assuming a sub for the app is $5/month) and having a $5/user/month cover charge to Reddit as the price of admission, and then having to build a viable app business over that. Seems dubious.
A point that has gotten lost in the discussion; The CEO is saying the "average" user would only cost $1 a month and therefore the pricing is fair. But users of apps like Apollo are not average, they are super users (and include a high percentage of mods). The Apollo app developer says he would have to pay $2.50 a month per user.
If he was able to pass through $1 a month to users and given a reasonable time to do so, Apollo would likely still be alive. Or better yet, require a $10-12 a year subscription on each Reddit user account, paid directly to Reddit, to use 3rd party apps.
Apollo’s developer has stated multiple times that he has no problem with Reddit charging for API access.
The problem is that they are charging so much for it that it will kill all of the third party apps, which is likely one of reddits main goals with the change.
I don't understand the outrage at all. So he is saying that the average user will cost him $2.50 in API fees/month. Since Apollo users are probably significantly more active than the average reddit user I can only assume that the same user is worth significantly in add revenue per month to Reddit. Apollo could easily be a $5/month app as a premium experience and make money.
> Apollo made 7 billion requests last month, which would put it at about 1.7 million dollars per month, or 20 million US dollars per year. Even if I only kept subscription users, the average Apollo user uses 344 requests per day, which would cost $2.50 per month, which is over double what the subscription currently costs, so I'd be in the red every month.
> I'm deeply disappointed in this price. Reddit iterated that the price would be A) reasonable and based in reality, and B) they would not operate like Twitter. Twitter's pricing was publicly ridiculed for its obscene price of $42,000 for 50 million tweets. Reddit's is still $12,000. For reference, I pay Imgur (a site similar to Reddit in user base and media) $166 for the same 50 million API calls.
> For Apollo, the average user uses 344 requests daily, or 10.6K monthly. With the proposed API pricing, the average user in Apollo would cost $2.50, which is is 20x higher than a generous estimate of what each users brings Reddit in revenue.
I'm looking forward to this outcome. Reddit and Apollo both need to get paid, on a recurring basis, for their recurring services that require recurring maintenance and updates.
Reddit gets paid either through ad revenue displayed to non-paying visitors to the website, or through API calls for access to their dataset. Apps that enable user access via the API will need to pass along this charge to their users.
Apollo must become a paid-subscriptions-only app, as Reddit now charges for usage. This is fine. Apollo needs to constantly be updated to keep up with Reddit API changes over time anyways, so neither 'free' nor 'one-time purchase' are acceptable ways to provide a continuous living wage for keeping up with reddit API (and mobile OS) updates.
There's a third (paid) option, which is that Apollo sells the app to Brave or Firefox, where it's integrated into a paid "Reader Mode" subscription — because a team of developers will need recurring revenue for living wages in order to maintain the website rendering overlay and overcome Reddit's attempts to block or break it, and will need a team of lawyers to defend against the eventual lawsuit Reddit will bring against them (even if they'll lose due to the LinkedIn precedent from a few months ago — but, I am not their lawyer, this is not legal advice).
There are no good free outcomes that are not advertising-supported, and the API is incompatible with advertising, which is why so many people use it. I'm glad to see that Reddit has realized this, and I'm glad they are still offering the free ad-supported website rather than a paywall. I hope that Apollo is willing to charge me for their app, and isn't demoralized by their users complaining about this. We'll see.
The economics are basically the same. Apollo could charge their users $0.25 per thousand requests and continue to operate. They don't want to do so.
It is a burden for the app developers to implement payment processing. And one month was not enough notice. But fundamentally, this is killing apps because most users won't be willing to pay.
(Also, 1000 API requests isn't that little. For example, getting the top 25 posts of a subreddit is just 1 API request. Posting a comment is 1 request.)
Unpaid users are important to these apps because it's what drives adoption. You can release a new paid app to browse Reddit and get maybe 1000 users, or release a free app and get 1 million users, of which 1% convert to paying customers (i.e. 10,000 customers. These numbers are just made up for illustrative purposes).
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