It is June 12 2023 and you’re watching the code report
If you try to go on to the subreddit to look at adorable pictures of puppies and bunnies, you’ll notice that that subreddit has gone private, forcing 34 million people to confront the harsh reality of our existence. As of today, nearly 7,000 different subreddits have gone private, and that means tens of millions of users won’t be able to generate ad revenue for Reddit Inc.
The Business Model of Reddit
Reddit has an incredible business model where people willingly create content for free that it can then monetize with advertisements. However, it recently pissed off a lot of its mods and power users by jacking up the price of its API. Back in April, they announced that API pricing was changing from totally free to 24 cents per 1000 API calls, going into effect on July 1st. That’s a pretty steep increase, considering that serving 8000 get requests should cost them a fraction of a penny.
Reddit has to put food on its family, but they’re not doing this to make money, as they make their money from advertisements. It’s a problem when you have apps like Apollo that provide a much better user experience than the official Reddit app. The best way to get rid of third-party apps is to simply cut off the water supply, or in this case, make the water supply extremely expensive.
The Implications of the Price Increase
The Apollo app makes 7 billion requests per month, which means the API would cost them 20 million dollars per year. They don’t have that kind of money, which means they’re officially going out of business June 30th. Reddit learned this trick from Elon Musk, who recently jacked up the price of the Twitter API, killing off a bunch of third-party apps.
Third-party businesses being killed off by a platform is nothing new. Apple can boot you from the App Store anytime it wants, Google can update its search algorithm so nobody ever finds your website, Instagram can turn you into a famous influencer then erase you the moment you post something that doesn’t align with the regime, and YouTube has complete control over content creators’ fates, and could easily end everything they’ve worked for with the click of a button.
The Power of Software Platforms
The bottom line is that when you build a software product, any third-party APIs or platforms that you rely on have you by the balls. Reddit knows this, and they’re starting to twist hard to get rid of apps like Apollo, Reddit is Fun, Sync, and Red Planet, which seems like a move to eliminate competition on mobile.
The Alleged Blame Game
The Reddit CEO blames large language models like ChatGPT for using Reddit extent offensively as training data, but there is skepticism about this claim. Reddit is tied to most of these AI companies through the same VCS, via people like Sam Altman, Mark Andreessen, and Peter Thiel, who coincidentally all became investors in 2014, after the death of Aaron Schwartz.
The Value of Content
What’s crazy about a website like Reddit is that you have millions of people providing high-quality content and moderating it entirely for free. People do that because the content, in many cases, is more valuable than money. Reddit has the power to knock things up and provide a minimal platform that keeps the gravy train running.
The bottom line is that it is critical that the users of Reddit do not find out that the content they create on the internet has value. If they did, they might want to take that content to their own platforms, where it would be far more difficult for vulture capitalists to feast upon.
Conclusion
Unfortunately, due to the protest, there are no memes available for this article. This has been the code report, thanks for reading and we will see you in the next one!
