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Reddit, home to cute cat pictures, investment advice, niche hobby discussions, celebrity interviews, edgy memes, wholesome memes and everything in between, has been facilitating discussions on the internet since 2005. The site has about 57 million daily active users who post and consume news, memes, questions and even stock tips that can roil markets.
The company filed for an initial public offering at the end of 2021. As it prepares to go public, it’s looking to turn a profit for the first time. The company is charging for access to its application programming interface, or API. The price hikes have led some beloved third-party Reddit apps such as Apollo to shut down, instigating an uproar among the website’s community of volunteer moderators, who often rely on third-party apps to run the site’s 100,000+ discussion communities, called subreddits.
Despite extensive protests in which thousands of moderators took their communities private, the API pricing changes took effect July 1 as planned. Under pressure from Reddit admins, nearly all communities have reopened. But tensions remain high, and some say that if Reddit doesn’t rebuild trust, its most passionate users will go elsewhere.
“Reddit is nothing without those communities. They need us far more than we need them,” said David DeWald, a moderator of the r/Arcade1up subreddit and a community manager for the telecommunications company Ciena.
The rise of Reddit
When Reddit co-founders Alexis Ohanian and Steve Huffman were in their senior year at the University of Virginia, startup accelerator Y Combinator was just getting off the ground. The two had met founder Paul Graham at a talk, and he suggested that the recent graduates build what he called “the front page of the Internet.” Ohanian and Huffman jumped at the chance. Y Combinator invested just $12,000 in 2005, and Reddit officially became a part of its first batch of companies.
“For the first probably like month, month and a half, a good number of the folks posting were just me and Steve under usernames that we just invented from like objects in the room, just random stuff just so that it would look like there was some activity,” Ohanian said.
Reddit founders Alexis Ohanian (L) and Steve Huffman (R)
But real user activity picked up, and just 16 months after its founding, Reddit was acquired for $10 million by Condé Nast. By 2010, co-founders Ohanian and Huffman were no longer involved in day-to-day operations, but traffic was booming. In 2011, Reddit was spun out as an independent company, operating as a subsidiary of Condé Nast’s owner, Advance Publications.
“I think it was fashionable back then to want to just grow and Facebook had proven out so well that if you focus on growth and then have a critical mass of users, you could make money,” Ohanian said.
On the one hand, Reddit’s niche communities were ideal places for target advertising, but the company’s permissive attitude toward questionable content also posed a problem.
“Reddit is kind of a perfect environment for advertising because the communities can get so specific and so passionate about whatever it is that they’re discussing,” said Debra Aho Williamson, principal analyst at Insider Intelligence. “But Reddit has had challenges over the years with hate speech and other things that are maybe not brand-friendly.”
Ohanian rejoined Reddit as executive chairman in 2014 and Huffman rejoined as CEO the next year. This time around, Ohanian said, he wanted to reign in some of the site’s more toxic subcultures. In 2015, a new anti-harassment policy led to the banning of some hateful communities, but certainly not all.
Then, in the wake of George Floyd’s murder in 2020, Ohanian resigned from the company’s board, urging Reddit to replace him with a Black candidate, which the company honored.
“I hoped that Reddit would finally get a hate policy so that we could ban those thousands of hate communities that were up, which happened, you know, a few weeks after I resigned,” Ohanian said. Reddit ultimately banned about 2,000 subreddits, including r/The_Donald, r/ChapoTrapHouse and r/gendercritical.
With the world stuck inside during the Covid-19 pandemic, engagement shot up. In the beginning of 2021, Reddit made headlines when users in the subreddit r/wallstreetbets organized a short squeeze on GameStop, the struggling video game retailer. Subsequent so-called “meme stocks” such as AMC kept Reddit in the news for months. Advertising was booming when the company filed for an IPO at the end of the year.
API pricing changes
Now, Reddit wants to turn a profit. With companies such as OpenAI and Google scraping the internet to train large language models, Reddit wants them to pay for its data. Huffman announced in April that Reddit would start charging for access to its API, the gateway through which companies can download all of Reddit’s user-generated content.
But it’s not just tech giants who use Reddit’s API. Many popular third-party mobile apps and moderator tools also rely on API access, which was previously free. These third-party apps are largely just alternatives to Reddit’s official mobile app, which didn’t even exist until 2016. But when developers learned about the new pricing structure at the end of May, many realized they couldn’t afford it.
“Most companies, whenever they have significant API changes, you know, they give anywhere from like three to sometimes like 15 months for developers to acclimate to these big changes,” said Dac Croach, a moderator of the r/Gaming subreddit, now the third-largest community on the site. “And with Reddit kind of coming out of the gate and saying, you know, you have 30 days to figure this out […] I mean, that is an impossible task for many of those third-party developers.”
The developer of Apollo said it would cost him over $20 million per year to operate given the new pricing structure. Apollo shut down, along with other popular third-party apps such as rif is fun, Reddplanet and Sync, a blow to their loyal users who said they have sleeker user interfaces and more features than the official Reddit app.
Jakub Porzycki | Getty Images
The pricing changes caused a particular uproar in a subreddit for blind users, who relied upon many of the third-party apps’ accessibility features. Blind moderators claim it’s very difficult to moderate on mobile using Reddit’s app, something Reddit says it’s currently working to improve.
In total, over 8,000 subreddits participated in a sitewide blackout from June 12 to June 14 to protest the changes. Many communities stayed closed much longer, while others labeled themselves “Not safe for work,” automatically making them ineligible spaces for advertising.
While most communities have returned to business as usual, there are some notable exceptions. For example, the r/pics and r/gifs subreddits are now limited to featuring pics and gifs of comedian John Oliver. The moderators of the popular Ask Me Anything subreddit said they will no longer organize interviews with celebrities and other high-profile figures, which has long been a major driver of engagement.
“They’re not burning things down. They’re saying, hey, you know, you didn’t listen to me then, can you listen to me now?” said Croach.
Reddit is rolling out several new moderator tools for its native app, but the company’s overall response has left many moderators frustrated. In an interview with NBC News, Huffman compared moderators with “landed gentry,” saying that the control they have over the communities they moderate is undemocratic.
Now, as Reddit marches toward an IPO, the tech world is watching to see how these tensions play out.
“Everyone in this situation is passionate for the success of Reddit. Reddit needs to realize that passion is what’s driving all of this anger,” said DeWald of the r/Arcade1up subreddit. “They need to work with us and work with other moderators and work with the app developers to find a solution that’s better for everyone, including Reddit, because Reddit needs us to be there.”
Watch the video to learn more about the rise of Reddit, and how the recent protests could shape the company’s future.
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