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.
> "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.
"You are claiming that my app is costing you $20M a year in API calls. Just buy it from me for $10M. Then it's yours to shut down if you want, or modify, or whatever you want to do with it."
That's not a threat. At that point it seems like he didn't have any obligation to do anything, and was offering them a mutually beneficial deal. Reddit's cost go down by $20M a year, he gets paid, and everybody (except probably the apollo users) benefits.
> His whole point is that the app isn’t actually worth $20 million a year, which is what they want him to pay. It’s not even worth $10 million. Not to him or Reddit or anyone else.
Right now there seems to be two options on the table.
1. The Apollo dev pays $20 million per year for API access.
2. Apollo shuts down and the users return to the official Reddit website/app for advertising.
If Reddit is refusing to lower their API pricing, doesn't this mean the users are worth $20 million? If the users were worth $1 million, then why wouldn't Reddit charge $2 million for the API and double their income on those users?
That being said, something else must be at play here. The users are not worth $20 million and Reddit refuses to take anything less than $20 million. If I had to guess, they want to boost metrics before going public and are willing to take a hit to their reputation to do so.
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.
That seems like a fair read. Maybe I would restate as:
Reddit: If we had all Apollo's users, and showed them ads, we could make $20M/year more than we are making now.
What Christian meant to say: Ok, if that's really true, how about you buy my app and all my users for $10M? Then you can show them all the ads you want. If what you say is true, that's quite a deal for you. But my real point is that I don't believe your $20M number.
What Reddit heard: If you pay me $10M, you can have my app and all my users and I will stop making a fuss. Otherwise, I will badmouth you to my users and the press, encourage boycotts, and otherwise try to force your hand.
This read mostly makes sense to me. The only part I don't get is the part of the call where Christian says:
> I said "If you want Apollo to go quiet". Like in terms of- I would say it's quite loud in terms of its API usage.
If Christian's intention was to sell the app and all its users to Reddit, then the load on the API wouldn't change, the only thing that would change is that Reddit would own it and the users would also see ads. So Apollo wouldn't "go quiet" under this scenario, and I don't understand the comment.
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.
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.
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.
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.
If he was joking then why would he still be asking for reddit to buy Apollo?
Yesterday he wrote,
> Why doesn't Reddit just buy Apollo and other third-party apps?
> This was a very common comment across the topics: "If Apollo has an apparent opportunity cost of $20 million per year, why not just buy them and other third-party apps, as they did with Alien Blue?"
> I believe it's a fair question. If these apps apparently cost so much, an easy solution that would likely make everyone happy would be to simply buy these apps out. So I brought that up to them during a call on May 31st where I was suggesting a variety of potential solutions
Not only do the receipts contradict the Reddit CEO, but even if they didn't, the Apollo dev is well within his rights to offer an ultimatum that either Reddit acquires his app, or he shuts it down. If he has enough leverage in that situation for Reddit to feel as if that's "blackmail," then it actually means that Reddit is the one blackmailing him with the pricing changes.
On one hand they claim they need to increase pricing to cover their costs, but on the other hand, if he offers (or threatens, according to Reddit) to remove all those costs, they consider it "blackmail" - meaning they're losing something if Apollo shuts down. So why can't they either buy the app or provide discounted API rates or some specialized payment schedule that derisks Apollo's costs instead of forcing a $50,000 bill on them in thirty days?
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.
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.
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 developer of Apollo is clearly asking for money. Even in the thread he made today he wrote "Why doesn't Reddit just buy Apollo and other third-party apps?" and then linked to a comment saying Apollo should ask for 100 million dollars. His ask for 10 million dollars wasn't a joke. He is thinking that while reddit is mad, he can get the money just to go away.
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.
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.
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