Reddit Sales Growth Slowdown Preceded Fight Over New API Fees (theinformation.com) 36
A stark business reality faced Reddit before a user uprising engulfed its site this month: slowing sales growth. From a report: Reddit's revenue rose 38% in 2022 to about $670 million last year, two people familiar with the matter said, faster than many other internet ad firms but a steep slowdown from the more than doubling of revenue the company experienced in 2021 over 2020. The slowdown adds to uncertainty about Reddit's hopes of going public. It comes in the wake of a highly public battle between Reddit and third-party apps that connect to Reddit and are popular with users and moderators. The battle has highlighted the challenges for many internet firms that rely on content from users but are trying to build profit-making businesses.
And the 2022 sales figure, which hasn't been previously reported, suggests Reddit would face a significant valuation haircut from its last private round if public investors valued it similarly to peer companies. The 2022 revenue multiple at which Snap and Meta Platforms are trading suggests Reddit is worth just over $3.3 billion. That's about one-third the value private investors put on the company less than two years ago, when Reddit last raised money.
And the 2022 sales figure, which hasn't been previously reported, suggests Reddit would face a significant valuation haircut from its last private round if public investors valued it similarly to peer companies. The 2022 revenue multiple at which Snap and Meta Platforms are trading suggests Reddit is worth just over $3.3 billion. That's about one-third the value private investors put on the company less than two years ago, when Reddit last raised money.
They picked a bad time to cash out (Score:2)
Apparently they are convinced things will just get worse in the future and want to do it _now_. This is not looking so good at this point. The data points are going in the direction of failed IPO to me.
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The difference is the current extrapolation isn't anywhere close to linear. The rate of growth is falling. Extrapolating that leads to 0.
It's about selling access to AI vendors (Score:3)
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Data that's essentially free to scrape...why would the vendors pay for that?
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Especially unlikely to be exciting given that m
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Scraping can be defeated, and defeating scraping is legal - see the final ruling in the LinkedIn case.
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If you offer me the challenge of scraping Reddit without them knowing i'm scraping Reddit, with the condition of doing it legally, I have some ideas on how to accomplish this. Basically; a whole bunch of accounts, various VPNs and a user agent that doesn't look like anything but a commonplace browser. Defeating that would probably involve taking the whole mess offline, or some steps that would amount to the same.
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Calculus (Score:4, Informative)
So they continued to make lots of money, and in fact lots more money than the year before.
These business wizards are killing the goose that lays the golden eggs, because of a negative second derivative.
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You are confused. "Make lots of money" would mean turning a profit, which reddit has never done. Reddit is not profitable [forbes.com]. $670M is a big number compared to somebody's personal income, but if it costs more than that to run the business - which so far it does - then you're losing money which is not sustainable.
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Reddit says Reddit has never turned a profit. Hollywood says the same thing about a lot of their projects, too.
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To use their "golden goose" analogy, the problem is that the goose has a diet consisting primarily of large quantities of platinum.
(with that said: the idea that reddit loses money on $670M in revenue is almost obscene).
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It is surprising, but look at twitter (before it went private): profits hovered around $0 [statista.com] even as revenue soared to over $4B [statista.com].
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It has never been run with a goal towards making a profit for investors. Almost unique among companies, it has run itself, successfully, with the goal of taking all profits and spreading it out among employees. It does not take 6000 employees to run Twitter, as Musk showed. For a long time Twitter had no more than about 150 employees out of consideration for Dunbar's Number. Sure it needs more now but 6000 is crazy.
Musk has shown that if you slash the employees, you get a site that's barely function and often completely broken, with a rapidly shrinking userbase. You also get a site filled with so much hate that most of the advertisers left. Many of those that were willing to stay had to leave because there aren't enough people on staff to handle ad sales.
They're only surviving as well as they have because they're not paying their rent and a lot of their hosting costs. They've also got lawsuits pending over not paying
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It is surprising, but look at twitter (before it went private): profits hovered around $0 [statista.com] even as revenue soared to over $4B [statista.com].
The problem is, "profitable" is essentially meaningless because the calculation of "profits" is subject to all sorts of accounting shenanigans.
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All the suits get paid. They don’t care how much money the company loses.
Reddit has fundamentally changed (Score:2)
Reddit used to have principles that aligned with the open source model. Now they are removing mods that protested their API pricing. They have changed and that is how they are killing the goose that lays golden eggs. Everyone was cheering for them to succeed. Not anymore. The good will people had towards reddit is gone. They killed it.
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A two-digit checks in! You lived through the rise and fall of /.! I saw it, too.
Tell me, what was different about /.’s downfall?
Re: Reddit has fundamentally changed (Score:2)
(new-account oldbie who remembers the Cowboy Neal days checking in)
Reddit is more of an "open forum" than /., which never really did much to integrate User Journals in any meaningful way. /. was always dependent on being a news feed, and Digg came along and did the "news feed that zillions of people look at" thing bigger than /. - then Reddit did the same to Digg, to the point where it ended up evolving into more of a "Proboards-but-better" than a mere news aggregator.
So even though you can draw a straight
Re: Reddit has fundamentally changed (Score:1)
I never felt the need to stop using Slashdot, it just faded a bit from my daily news refresh cycle. Reddit/Twitter by contrast has actively repulsed me enough to seek decentralized alternatives (Mastodon/Kbin/Lemmy/etc).
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I think it's the first time I've seen a single digit post :)
Twitter all over again... (Score:1)
By "Twitter all over again", I mean the business is doing what it can to actually be profitable instead of not.
The online mob is claiming this means Reddit is dying, while most people simply continue to use it as they did before. Meanwhile Reddit turns to doing what they must to actually reach profitability since the days of running a company forever at loss are coming to and end.
Need more flexible 3rd party apps (Score:2)
The way to fix this is for the 3rd party app developers to design apps that are source site independent. For example Reddit is Fun (RIF) could become All is Fun (AIF). It could pull in content from Telegram, Twitter, Facebook, or whatever as well as it does Reddit now. The type of content pulled in should be fully user defined. That way if one site become too onerous the users could adjust the app settings to make that site less favorable in content selection.
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Nearly all the original content on reddit comes from external sites to reddit. If the super App is getting its content from these other sites then reddit will have to adapt or become irrelevant like Myspace did. With pretty good AI in the picture now this could be easily done by a well written super app.
capitalism and the stock market dont seem friendly (Score:1)
Danger of Double Dipping. (Score:3)
/r/byebyejob (Score:1)
The question is, how long until Advance Publications pulls the plug on Huffman for the two most unpopular miss-steps in Reddit history: The site redesign and the API fee schedule? I'm going to guess that they're going to wait until the deadline passes and watch the effect of the loss of goodwill on advertising revenue and then replace him. I wouldn't give him more than six months. The replacement CEO will get probably nine months to a year to turn things around and then they'll look at an IPO again.
It's
Duh (Score:2)
This should come as no surprise to anyone except the people who say that there's no inflation. The price of everything is going up and not by small amounts. Real-world inflation is ridiculous. Over the past 20 years, the price of some things has quadrupled or at the very least doubled. That's never happened before. As a result, everyone running a business is discovering that they have to raise their prices to compensate. More and more people are starting to look at what aspects of their life that thei
Oh Yes. (Score:1)