So it's well known now that the developer of Apollo estimated the new API pricing would cost $20 million a year. For a source, see the title of https://www.theverge.com/2023/5/31/23743993/reddit-apollo-client-api-cost
But from https://apnews.com/article/reddit-blackout-steve-huffman-ceo-api-0a4f7b344ecfbf50c924b030c344c55e the price from supporting third party apps is $!0 million a year. And presumably this is all third party apps combined!
Huffman says the “pure infrastructure costs” of supporting these apps costs Reddit about $10 million each year.
Something's very not balanced here. That one app would have paid for Reddit's third party infra costs twice over.
I can not remember which ones now (can anyone help me out here actually?), but I think a few apps said they'd try to make it work with the new pricing.
Which means Reddit likely stands to make a huge pot of money once the new API changes take effect, in the short term.
Even if Reddit loses the best subs, the best communities, the best users, and the moderation goes to where the sun don't shine, I could see that new revenue boosting investors confidence enough to lead to a successful (if slightly smaller) IPO.
If Reddit goes downhill and loses lots of value afterwards, well, spez has already made his quick buck, so I doubt he wouldn't feel very sentimental about it.
Folks, please explain to me why I'm wrong. Please.
so, as a rough back-o-the-envelope estimate, what i'm hearing is that apollo, rif, sync, etc would each be charged about $20M, so a total of $60M - $70M they'd make if the 3rd party apps all decided to run with the new API pricing. I don't know what the AI guys would be charged, but lets say an order of magnitude more - $600M - $700M. All told, these API changes - if everyone paid in, would result in ~$1B in extra revenue.
if 85% of people who use reddit continue to do so, and they convert many of these people into their paid app...maybe they get half of that?
so Spez et al get to add $500M to annual revenues, make the potential investors happy, and all it costs is quality?
they're 40 years old now instead of 23 or whatever....they want money.
if we assume that Musk made some of his moves to really sell his data / meta-data in ways users might not love, I would assume reddit and spez have been doing the same thing and are getting ready to step that up.
reddit is twitter is facebook is cnn is fox is msnbc. engage as you feel comfortable.
I think this whole thread/post is over-thinking it. If all reddit wanted was to break-even or make some profit off of the api, they wouldn't have priced it this way. They would have had changed the api to a key system and then created a two tier pricing system: third party apps like RIF and Apollo, and a large commercial license for LLM training and such.
This is fuck you pricing. As in, if you don't want to take a job, you tell them the price is 8x your normal hourly rate. You either get that bag or more likely, they don't offer the job. Although I say this with less certainty than I would have a month ago seeing exactly how stupid reddit is about all of this, I can't believe that anyone at reddit is so out of touch they actually thought any of the third party app devs could afford this pricing, and if they did and it wasn't just to kill apps, they would changed the pricing structure and not triple/quadrupled down.
This is just Huffman going after the IPO so he can get his golden parachute and peace out. I would absolutely put money on him being out less than a year after IPO, with the small asterisk that as bad as he's fumbling right now the board might kick him before that.
This is exactly what I was thinking. I guess the stuff about API pricing is somewhat orthogonal to that.
The funniest thing is that he is late for LLM pricing. OpenAI, Meta et all already scrapped the whole Reddit dataset many times over.
$500 million is their current revenue so that would be impressive if they could double it just by charging Google and Microsoft.
So doubt they could make that much. Also they already have decades of data they got for free. How much will a bit of new data really change their models?
It all comeback to the fact that Reddit is shamefully unprofitable and everyone needs an exit strategy. A top 10 website that can't even make a billion dollars in revenue? Lol good luck selling that.