It’s not clear to me that this decision is financially healthy for Reddit. Even aside from the consequences of upsetting a lot of users (which has already made advertisers unhappy, since they prefer to advertise to people who aren’t upset; there’s been a noticeable decrease in ad spending on the site lately), Reddit only makes money from this move if anyone actually pays for the API, and/or they can force more people to use the official app. Whether they get more takers for the app, I don’t know. We’ll find out next week. But I don’t think a lot of people are going to pay for the API. Most third-party apps can’t, and neither can a lot of people who might use the API for research.
Basically, only big companies can afford the new prices, and if big companies pay, Reddit will make a profit. But big companies don’t become big companies by paying for overpriced commodities. API access for sites that have similar content costs a lot less than what Reddit wants. So, of the big companies that could pay, Microsoft is quietly modifying its products to avoid paying (you can’t upload from their hardware directly to Reddit anymore, for example). Google is introducing a service that is meant to take traffic away from Reddit, I doubt they’ll want to buy overpriced API data. AIs have already slurped up a lot of Reddit data, and can just scrape the site if they want more. The API is not the only way for bots to get access to Reddit’s data, just the easiest. Probably someone is going to pay for API access, at least in the short term, but I really don’t see this going well in the long run. People just don’t buy products that cost more than they’re worth. Even if Reddit’s data was worth the inflated price they’re asking, the API is not the only way to get that data. And I am pretty sure it’s not that valuable to anyone except the people who can’t afford it.
Third party apps are the only ones who need API access to survive, and therefore the ideal customers for Reddit’s API, but Reddit would rather fish for the customers that aren’t there than do business with the customers that are. Or, were, until a few weeks ago. Now–not so much. Christian Selig could have put a significant chunk of change in Reddit’s pocket on an ongoing basis if they’d negotiated a decent price, since Apollo was doing well, and Selig wanted to work with them, but no, Reddit had to ask a price Selig literally couldn’t pay, so Reddit gets nothing, users lose Apollo, and no one is happy. Infinity is going to try to make it work, but I doubt that’ll be much money for Reddit, and I doubt it’ll last more than a year, tops.
To be fair, in theory, charging for API access would give Reddit an additional revenue stream, which is probably what Huffman told investors. But no company that actually makes money from selling API access does it at this price point, or without, y’know… trying to keep customers instead of chasing them off. This is how Twitter did it, and Twitter is losing more money on a regular basis than Reddit has ever made. But it’s not my business, so what do I know… [/Kermit drinking tea]
May be just may be whether Huffman is trying to cash out on Reddit. Like once the IPO is done, he gets put with his profit. I don’t think he was able to make reddit a profitable business till now. He might be out for good.
It’s not clear to me that this decision is financially healthy for Reddit. Even aside from the consequences of upsetting a lot of users (which has already made advertisers unhappy, since they prefer to advertise to people who aren’t upset; there’s been a noticeable decrease in ad spending on the site lately), Reddit only makes money from this move if anyone actually pays for the API, and/or they can force more people to use the official app. Whether they get more takers for the app, I don’t know. We’ll find out next week. But I don’t think a lot of people are going to pay for the API. Most third-party apps can’t, and neither can a lot of people who might use the API for research.
Basically, only big companies can afford the new prices, and if big companies pay, Reddit will make a profit. But big companies don’t become big companies by paying for overpriced commodities. API access for sites that have similar content costs a lot less than what Reddit wants. So, of the big companies that could pay, Microsoft is quietly modifying its products to avoid paying (you can’t upload from their hardware directly to Reddit anymore, for example). Google is introducing a service that is meant to take traffic away from Reddit, I doubt they’ll want to buy overpriced API data. AIs have already slurped up a lot of Reddit data, and can just scrape the site if they want more. The API is not the only way for bots to get access to Reddit’s data, just the easiest. Probably someone is going to pay for API access, at least in the short term, but I really don’t see this going well in the long run. People just don’t buy products that cost more than they’re worth. Even if Reddit’s data was worth the inflated price they’re asking, the API is not the only way to get that data. And I am pretty sure it’s not that valuable to anyone except the people who can’t afford it.
Third party apps are the only ones who need API access to survive, and therefore the ideal customers for Reddit’s API, but Reddit would rather fish for the customers that aren’t there than do business with the customers that are. Or, were, until a few weeks ago. Now–not so much. Christian Selig could have put a significant chunk of change in Reddit’s pocket on an ongoing basis if they’d negotiated a decent price, since Apollo was doing well, and Selig wanted to work with them, but no, Reddit had to ask a price Selig literally couldn’t pay, so Reddit gets nothing, users lose Apollo, and no one is happy. Infinity is going to try to make it work, but I doubt that’ll be much money for Reddit, and I doubt it’ll last more than a year, tops.
To be fair, in theory, charging for API access would give Reddit an additional revenue stream, which is probably what Huffman told investors. But no company that actually makes money from selling API access does it at this price point, or without, y’know… trying to keep customers instead of chasing them off. This is how Twitter did it, and Twitter is losing more money on a regular basis than Reddit has ever made. But it’s not my business, so what do I know… [/Kermit drinking tea]
May be just may be whether Huffman is trying to cash out on Reddit. Like once the IPO is done, he gets put with his profit. I don’t think he was able to make reddit a profitable business till now. He might be out for good.