Despite widespread opposition, Reddit CEO says company ‘doesn’t negotiate’ with third-party app fees

WASHINGTON (AP) — If you’ve been using Reddit to scroll through your favorite forums this week, you’ve likely come across “private” or “blocked” messages. This is because thousands of subreddits have chosen to go dark The ongoing backlash is against the company’s plan to start charging some third-party developers to access the site’s data.

But Reddit CEO Steve Huffman told The Associated Press that he’s not backing down.

“Resistance and dissent are key,” Huffman said. “The problem with this is that it’s not going to change anything because we made a non-negotiable business decision.”

Reddit’s new policy threatens to end key ways of historically customizing the platform using APIs, or application programming interfaces, which allow 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, notably content review and accessibility assistance.

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

Reddit has more than 100,000 active subreddits, nearly 9,000 of which went dark this week. While some will return to their public settings after 48 hours, others say they plan to remain private until Reddit meets their demands, which include reducing third-party developer fees — effective July 1 — so popular apps don’t shut down. .

As of Friday, more than 4,000 subreddits were still participating in the blackout — including communities with tens of thousands of subscribers like r/music and r/videos — a step Tracker And a live Twitch stream of the boycott.

Reddit notes that most subreddit communities are still active. While Huffman maintains that he respects users’ rights to protest, the subreddits currently participating in the blackout are “not going to stay offline indefinitely” — even if that means finding new moderators.

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

“There’s a lot going on here … (Reddit) is burning goodwill with users. It’s a lot more expensive than trying to cooperate,” said Omar, a moderator on the subreddit participating in this week’s blackout.

Reddit denies removing moderators for dissent, insisting it is simply enforcing its code of conduct.

“When mods abandon a community, we see new mods. When mods have a large community with people who want to engage privately, we see new mods looking to revive it,” the company said in an email. Not created.”

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

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

Reddit has put some of these concerns behind us, with 93% of moderator activity now being taken through the desktop and native Reddit apps.

Huffman and Reddit management also note that the new fees will only apply to eligible third-party apps that require higher usage limits. According to metrics released Thursday 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 cap.

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The company has also promised that moderator tools and bots will continue to have free access to the data API and has struck deals with some commercial, accessibility-focused apps to exempt them from the new fees.

However, some appraisers say they rely on popular apps being shut down by new spending. Apollo And Reddit is funnyFor example, they have already announced plans to close at the end of June. Apollo developer Christian Selig estimated the fees to be around $20 million a year.

Huffman pushed back on that estimate, and argues that Reddit’s upcoming fee for high-use third-party apps — at a rate of 24 cents per 1,000 API calls — is reasonable.

With over 500 million active monthly users worldwide, Reddit is one of the best platforms on the web. It’s hard to predict the total amount of money Reddit will save — and make — after implementing the new fees. But Huffman says the “pure infrastructure costs” of supporting these apps cost Reddit about $10 million each year.

“We can’t subsidize other people’s businesses,” Huffman said. “We didn’t ban third-party apps — we said, ‘You have to cover your costs.'”

The San Francisco-based company reports that changes to Reddit’s API plan to go public later this year. While Huffman couldn’t directly address the rumored initial public offering, he did underscore the need for Reddit to become spontaneous.

“I think every business ultimately has an obligation to make a profit — our employees’ shareholders, our investors’ shareholders and one day as a public company, our user shareholders as well,” said Huffman, who co-founded the site in 2005. .

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Reddit first filed for an IPO in 2021, but put its plans on hold amid a slump in tech stocks. Given the possibility of a renewed IPO in the second half of 2023, financial experts speculate that the company will try to show investors increased revenue and profitability.

“My guess is that they feel strong pressure to show that they can generate revenue from other sources before the IPO,” Luke Stein, a professor of finance at Babson College, told The Associated Press, noting that monetizing the API could create another avenue. revenue streams rather than relying on advertising and new users as Reddit has done in the past.

Experts also pointed to Reddit’s importance as a way to pay AI companies that have historically used Reddit data to build large-scale and profitable AI models.

However, the IPO is uncertain and API changes may also have consequences.

“If they can really make changes, (they) can increase their revenue,” says James Angel, an associate 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 move to other platforms.” ”

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