What Happened at Reddit?
So, recently, at Reddit, a rebellion pinned the CEO against many of the subreddit moderators. If you don’t know Reddit, it’s a site where people can create a topic-specific message board online that is moderated by those who are fans of that topic. It could be anything from a movie to a specific technology.
While Reddit was available via a browser or an app from them, it had an API available to others openly, and many of the third-party apps developed superior apps to Reddit’s own. However, recently, the CEO of Reddit, Steve Huffman, decided to start charging a hefty sum for access to the API, specifically increasing the fee for apps with large numbers of users. So, often, these apps are free or at a low price; the cost of the API shuts down all the 3rd party apps. The Reddit community did not receive this policy well, and many staged a shutdown protest for this action as they felt that the 3rd party app was much better than what Reddit had to offer. Reddit responded by threatening to take the moderators off their subreddit if they kept up with the protest.
Who Is At Right?
So, this is one of the situations in which it is difficult to say one side is right and the other is wrong. While the users create the data, the moderators manage their subreddits primarily out of their passion for a subject. So, while the sites’ advertisers pay Reddit’s bills and Reddit owns the infrastructure, the site would be useless without the users’ participation. While the users have some rights, the policy is controlled by Reddit, and they can do whatever they want.
The consequences are similar to what Twitter is going through right now. The new owner, Elon Musk, thought he could control the content; its users revolted, and the advertisement dollars fell. That may happen to Reddit as well. There is no significant competition to Reddit that can absolve the users to migrate to, unlike Threads, which took many Twitter users.
This event is a significant lesson for those wanting to enter the user content-driven business. You have to keep the users happy, sometimes at a higher cost, so more content is created. More content is created, more people will use the site, bringing in more advertisers. However, this is a delicate balance between those factors. While Reddit is large enough that some protests like this will have a negligible impact on the revenue, if you are a new startup, something like this will most likely lead to a website shutdown. You must tread carefully between the company’s interest and the community that creates content for you.
What Is Next?
I believe that if the fees for the API were reasonable, there would not have been such a reaction from the community. However, now that the payment has been implemented, many third-party app developers have killed their products to avoid the high fees.
At this point, one of three things will happen. Either Reddit will pull back on their demand for the fee, which would be too late as many developers have already left. Second, they can do nothing, and the community will soon forget it all happened and return to the way it was. Third, a competitor who caters to the community better may create a mass migration away from Reddit.
I would like to see which of the three outcomes will be final.