The basic idea of most websites is to create content, attract an audience, and then sell advertising that targets your audience. If your website attracts a large enough audience, you can make a good business out of selling advertising.
Of course, if you build a website where your audience volunteers to create the content for free, and you still get to show them ads, that sounds like a really good business. That's basically all social media websites, though some of them (Facebook) are much better than others (Twitter).
Reddit is an interesting case because not only do the people who use the website create all of the content, but they also do almost all of the heavy lifting of managing and moderating the site. That sounds like a really good gig, except Reddit hasn't ever really managed to make money. Yes, it gets all the content for free and sells ads, but not nearly to an extent that makes a profit.
There's another problem, which is that if you give people a lot of control over your website, you'll build a thriving community--which seems like a good thing--but if you want to make changes that affect your community, they might get upset. They might even decide to protest. Considering the amount of control you gave them over your website, it doesn't seem ideal to have them angry or protesting.
That's Reddit.
On Monday, more than 7,000 Subreddits, the name for individual communities within the site, went private, effectively taking those parts of the website down. At some point, Reddit--in its entirety--went down.
The protest comes in response to Reddit's decision to start charging for its API access. That API is used for things like scooping up Reddit's content to train large language models (LLMs) used by A.I. chatbots like ChatGPT. It's also used for creating third-party apps like Apollo, whose developer, Christian Selig, said last week that it should be shutting down because of the fact Reddit's API fees would cost him more than $20 million a year. For context, Selig says Apollo makes about $500,000 a year.
Ostensibly, that's exactly what Reddit's CEO, Steve Huffman, wants. During an AMA last week, Huffman didn't hide his disdain for third-party apps that make a profit, even while Reddit does not. The thing is, if that's the case, he should have just said, "Hey, we're cutting off third-party access to our API for creating client apps since we don't make any money off of them."
Instead, Huffman said he's happy to work with third-party apps, but it's obvious that's just a thing you say when you know none of them have the money to keep going. Reddit is under pressure to become profitable as it reportedly prepares for an IPO, and as investors have stopped putting in new money.
This brings me to Elon Musk and Twitter. Earlier this year, Twitter pulled the plug on third-party developers. The difference is that the company was pretty clear that it just no longer wanted them to exist. If you're going to use Twitter, the company wants you to use its website or its own app. Again, the reason isn't hard to understand--Twitter doesn't make any money from anyone using a third-party app because they don't see Twitter's ads.
If you're going to kill off your partners--who do bring value to your platform, even if you can't see it on the bottom line--you should just be honest about it. You should just say, "Hey, it's been a nice ride, but we're doing this differently from now on." That isn't to say that it isn't going to ruin some small businesses, but if that's your goal, you should own it.
Sure, Musk took heat for killing off popular apps like Twitterific and Tweetbot. I'm sure plenty of people would disagree with this decision. It's not like Musk's Twitter hasn't been one chaotic move after another. At least, in this case, no one was pretending it was about anything other than getting everyone on the official platforms.
On the other hand, Huffman wants to pretend this is all about LLMs or something else. This is purely about trying to find any way to increase revenue per user (which, again, is zero if you're using a third-party app) ahead of going public.
Huffman even doubled down in a note to employees that was first reported by The Verge:
There's a lot of noise with this one. Among the noisiest we've seen. Please know that our teams are on it, and like all blowups on Reddit, this one will pass as well. The most important things we can do right now are stay focused, adapt to challenges, and keep moving forward.
Calling your users "noise" is maybe not the best way to win over your most important stakeholders. Instead, you just end up alienating the people you're going to need to make your business successful.
That's the worst thing you can do in any business, but especially when if you built it on the goodwill of your users and partners. Alienating them is bad enough--not being honest about it is even worse.
Here ya go...
Edit: formatting