April 12, 2024

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Despite the widespread outcry, Reddit's CEO says the company "doesn't negotiate" fees for third-party apps

Despite the widespread outcry, Reddit’s CEO says the company “doesn’t negotiate” fees for third-party apps

WASHINGTON (AP) — If you took to Reddit to scroll through your favorite forums this week, you may have encountered “private” or “restricted” messages. This is because thousands of subreddits have chosen to go dark in ongoing protest of the company’s plan to start charging third-party developers certain fees for access to location data.

But Steve Hoffman, CEO of Reddit, told The Associated Press that he won’t back down.

“Protest and opposition are important,” said Hoffman. “The problem with this is that it won’t change anything because we’ve made a business decision that we’re not going to negotiate.”

Protest organizers say Reddit’s new policy threatens to end key ways of historical personalization of the platform using an Application Programming Interface, or Application Programming Interface, which allows computer programs to communicate with each other. Third-party developers rely on API data to build their apps, which provide access to features not available in the official Reddit app, particularly in terms of content moderation and accessibility aids.

But Reddit says supporting third-party developers is too expensive and the new policy is necessary to become a self-sustaining business.

Reddit has more than 100,000 active subreddits, and nearly 9,000 of them went into the dark this week. While some returned to their public settings after 48 hours, others say they plan to stay private until Reddit meets their demands, which include lowering third-party developer fees — set to take effect July 1 — so popular apps won’t be shut down.

As of Friday, more than 4,000 subreddits were still participating in the blackout — including communities with tens of millions of subscribers like r/music and r/videos — according to Keep track of And live stream twitch county.

Reddit notes that the vast majority of subreddit communities are still active. And while Hoffman stresses that he respects users’ rights to protest, he also says that subreddits currently involved in the blackout “will not remain offline indefinitely” — even if that means finding new moderators.

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The company’s response to the blackout has sparked more anger among protest organizers, who accuse Reddit of trying to remove moderators — or “mods” — from subreddits protesting this week. Subreddit “moders” are volunteers who often use tools outside of the official app to keep their forums free of spam and hateful content, for example, many of whom are angry about Reddit’s new fee.

“A lot of what’s going on here… (Reddit) is burning goodwill with users. A subreddit moderator involved in this week’s obfuscation said Omar, who asked not to be fully named due to safety concerns that arose while coordinating his subsite.

Reddit denies that it is removing moderators over the outcry, maintaining that it is simply enforcing its code of conduct.

“If mods abandon a community, we find new mods. If mods maintain a large community of their own with people who want to participate, then we find new mods that want to reinvigorate it.” The rules that allow us to do this are not new and have not been developed. to reduce protests.

Experts note that most people who visit Reddit don’t think about APIs, but access to third-party resources is crucial for moderators to do their jobs.

“Reddit is built on volunteer moderation work, including the creation and maintenance of many tools,” Sarah Gilbert, a postdoctoral fellow at Cornell University and research director of the Citizens and Technology Lab, said in a statement. “Without Reddit’s volunteer moderators, the site would likely see less useful content and more spam, misinformation, and hate.”

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Reddit has backed away from some of those concerns, saying that 93% of the moderator’s actions are currently taken through Reddit’s native and desktop apps.

Huffman and Reddit management also noted that the new fee will only apply to eligible third-party apps that require high usage limits. According to Thursday’s metrics published by the company, 98% of apps will continue to have free access to the Data API as long as they are not monetized and remain below Reddit’s data usage limit.

The company also promised that admin tools and bots would continue to have free access to the Data API, and it has agreements with some accessibility-focused non-commercial apps to waive them from the new fee.

However, some brokers say they are banking on popular apps being shut down due to new costs. Apollo And Reddit is fun, for example, has already announced plans to close at the end of June. Apollo developer Christian Selig estimated the fee would be about $20 million a year.

Hoffman backtracked on that estimate and Reddit says the upcoming fee for high-usage third-party apps — 24 cents for 1,000 API calls — is reasonable.

With over 500 million monthly active users globally, Reddit is one of the top sites on the internet. It’s hard to predict the total amount of money Reddit will save – and earn – after the new fees are implemented. But Hoffman says the “pure infrastructure costs” to support these apps cost Reddit about $10 million each year.

“We can’t support other people’s business,” Hoffman said. “We didn’t ban third-party apps — we said, ‘You need to cover your own costs.'” “

Reddit’s changes to its API coincide with the San Francisco-based company’s plans to announce its plans publicly later this year. While Hoffman couldn’t directly address the rumored IPO, he did stress the need for Reddit to become self-sufficient.

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“I believe it is the duty of every business to eventually become profitable — to our employee shareholders, our investor shareholders, and one day as a public company, hopefully our user shareholders too,” said Hoffman, who co-founded the site in 2005. .

Reddit first filed for an IPO in 2021, but has paused its plans amid a decline in tech stocks. With an eye on the possibility of renewing the IPO for the second half of 2023, financial experts speculate that the company may attempt to offer investors increased revenue and profitability.

“I think they feel strong pressure before the IPO to show they can generate revenue from other sources,” Luke Stein, a professor of finance at Babson College, told the AP, noting that API monetization could create other revenue streams, Instead of relying on ads and new users like Reddit did in the past.

Experts also noted the importance of Reddit showing a way to charge AI companies that have historically used Reddit data at no cost to develop AI models at scale and for profit.

However, the IPO is not confirmed and API changes may also have consequences.

“If they can actually make the changes stick,[they can]increase their revenue,” said James Angel, assistant professor at Georgetown University’s McDonough School of Business. “On the other hand, if they alienate their best users, that can cause problems down the road, especially if those users decide to migrate to other platforms.”