This is kind of like the Twitter fiasco where in the eye of the storm a lot of loud people are pressuring more people to make this seem a lot bigger than it is.
Unless you have some alternative that has Reddit functionality, but can somehow operate without revenue, I'm just going to assume there isn't and Reddit will continue operating as normal.
Just doing the math $2.50 seems reasonable if you're going to redistribute the data to users while bypassing the ads.
It's not $2 per month to the end user. Reddit wants to charge the wholesaler$2.50 per month. The developer needs to keep the lights on, so they need to charge more than that. There are server costs for Apollo, tech support, accounting, refunds, etc. Apple and Android take their 15-30% cut. The developer indicated a break-even price of between $5-$7. I'd be perfectly happy to pay $2/m for Reddit, and I'm happily donating to kbin.social to keep them running. The interface is much better than Reddit. Despite the lack of funding, their incentive is to create a great user experience.
It's important to remember that that $2.50 Reddit is charging isn't their cost. They're a business and they're baking in a health profit margin on that. The actual cost to them is a fraction of that, though of course they will never disclose the actual amount.
You might recall that back in 2000 we didn't have Reddit. It was lots of little forums hosted on machines in basements and with relatively cheap online hosts. Lemmy and Mastodon allows us to do that again, but this time, they're all connected together. This distributes costs across hundreds of thousands of people, instead of trying to make one giant platform the only choice.
Reddit announced this price 30-days before they planned to enforce/charge it. If there was any doubt at all that Reddit wasn't trying to ban third-party apps with deniability, then that should settle it. That isn't reasonable.
Plus $2.5 to Reddit, means that apps need to charge $3.60 before 30% App-Store fees. But the app developer also needs new infrastructure to handle the billing, payment, and tracking, between end-users & Reddit along with their existing overhead. So the current $1/month aka $0.70/month after fees they're operating on likely isn't sustainable.
So now we're looking at $3.60 to Reddit + the existing $1/month = $4.6, but also all this new payment/billing infrastructure. Could easily exceed $5/month which frankly nobody is going to pay, and then get all this done in just 30-days even though that date is completely arbitrary from Reddit's end.
Or just charge a reasonable price for API access that offsets the lost ad revenue. I think Reddit's ad revenue is something like $0.12/mo for an average user. If their API pricing averaged out to $0.15/month/user they would still be coming out ahead.
This would still hurt free third party apps, but I'm sure power users wouldn't mind paying $1/month to keep their favorite third party app going.
Instead, Reddit went for insane API pricing that app developers can't realistically afford at the subscription rates people are willing to pay.
Any attempt at monetization through the "normal" means, such as increasing the number of ads or selling user data, would completely undermine the things that make Reddit such a valuable site. We've already seen a few examples of Reddit moving toward a more legitimate, financially viable social media model, and each one of those moves has been met with significant backlash. It seems that they're in a lose-lose situation: either run out of money to keep the site running, or lose all their users.
I think he's bullshitting even on API costs to maintain. They could just put it into reddit premium "want to use API ? Pay few bucks and use app of your choosing". Even $2 would easily cover the cost of lost ads and such. Then a much more expensive tier above for "data ingestors".
The solution is only allowing 3rd party access to Reddit subscribers, to avoid the need to monetize through ads.
If Reddit is asking 12000$ for 50M requests, then a regular Reddit user (344 reqs/day) would be paying around 2,5$/month, which seems more reasonable than putting the burden on the 3rd party developer.
Reddit could just charge its users $5 a month, offer a $10 a month tier for some extra features and co-offers, and keep the API free.
It's a spectacularly stupid move, almost on a par with Musk >50% of Twitter's value and Waves trying to force their customers onto a subscription model by making old versions obsolete.
Reddit will lose a huge number of users, its brand will be trashed, and the app companies will be forced out of business.
I remember people saying years ago that reddit's redesign is not a problem because it has API access and you can use third party clients...
The $7 is the current price, it does not reflect future changes. If the pool of potential customers is dry, they will try other means of increasing revenue, including increases of that price.
They might also turn the $7 into a requirement to watch YouTube at all, and show ads anyways.
There's absolutely merit to this. If Reddit can't fund itself, and goes under, all users loses a valuable community resource.
That Reddit have decided to end free access to their APIs isn't itself an issue.
The way they're doing it, and the significant departure from the decade and a half long de-facto agreement that a large body of the user base believe themselves to be party trading user generated content and user sourced moderation in exchange for platform access does seem to have missed the mark though.
It doesn't take much creative thought to conceive of a scheme whereby the paid Reddit Gold includes API access, for example. Which should be a bit like a YouTube Premium or Spotify Premium kind of deal - direct contribution as alternative to advertising to achieve per user monetization.
It's not even a stretch to partner with third party apps and let them collect the user payments as an alternative to requiring users to pay for the app and Reddit Gold separately.
But the very short notice period and seemingly unpalatable pricing, together with some of the reported questionable comments and actions from Reddit, don't come across as reasonable from any rational perspective.
Well, charging for it. Yes, they'd lose a big chunk of the userbase who value it a little bit but not really. But is it worth, say, $1/year to most users? Probably! And Reddit has 330 million users. Even if your conversion rate at that price is only 10% you should be able to run it for $33 million / year - it deals primarily with text, the software is relatively stable, it doesn't advertise. I suspect Reddit could be run very cheaply.
Just charge $1/year. Seems like you could easily run reddit on $150,000,000. You could even do a free/premium model. Free users get ads and limited number of down votes and comments per day. Paid users get no ads and unlimited comments and down votes per day.
Think this all the way through - why did Reddit do these things? To attract more users and to generate revenue. As the OP said, what are you going to do to solve Reddit's income problem? This isn't a technical issue, the technical piece is straightforward and well-known.
They can't really push for advertising until they eliminate 3rd party API access to the content. That or they have to start charging a usage fee.
Which is interesting. One option they do have is to charge the user for using Reddit via an API, not the apps using the API. If you want to access Reddit via a 3rd party app then you'll have to pay for it - say something on the order of $1.99 per month or $19.99 for the year. I imagine they must have explored that option, so it makes me wonder why they abandoned it.
On the other hand, you can’t run a heavily trafficked website without any revenue. It’s very unlikely more than a tiny fraction of their users will pay any amount to use Reddit. They need advertising.
In that situation, Reddit has to be partially accountable to their advertisers. The advertisers will want some measure of control over who sees the ads and some reporting on performance.
I get that no one likes ads but I don’t think it’s that hard to understand Reddit’s situation. You would do exactly the same if you ran an expensive website. In 30+ years of the web no one has found another model which works.
At some level, people don’t want to pay for all the services they use. And while what Reddit is doing with it’s API charges is unreasonable, it shouldn’t come as a surprise that they want to monetize the data they have to make money somewhere. Charging everyone a usage fee is not going to work. I know this from working on a project like that in a social media company. The conversion rates from free to paid tier for social media is so low that it costs more to just build the payment system to support such a feature than the money you’ll bring in from paid subscriptions. And that is unfortunately the reality of things.
this feels like a fair middle ground. Reddit doesn't loose out on ad revenue and the App developer doesn't have to pay anything directly. I assume they calculated their current price at least somewhat on how many Gold members they loose to these Apps that don't show any adds...
A big claim like this requires a source and not handwavy estimates from the person who is impacted by this change (and upset for good reason!).
Otherwise I will ignore this claim because we simply don't know what ad revenue per user is, and we don't know what Reddit's projected future revenue per user is, which I would also expect to be covered by this pricing.
I know you're not saying this, but just to point out how absurd this price point is:
> Reddit generated $350 million in 2021, primarily from its advertising business
> Reddit has 52 million daily active users and approximately 430 million users who use it once a month
Are we really supposed to believe that Reddit is losing $500 * 400 million per year? Their total cost per user is probably something like $1/year. Twitch.tv which streams 1080p video prolly has costs of like $50/user/year. Insane pricing decision by Reddit.
Unless you have some alternative that has Reddit functionality, but can somehow operate without revenue, I'm just going to assume there isn't and Reddit will continue operating as normal.
Just doing the math $2.50 seems reasonable if you're going to redistribute the data to users while bypassing the ads.
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