Reddit announces "power-ups", their plan to have individual subreddits unlock features through members paying for a monthly subscription
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- Testing a new concept with select subreddit partners
- Word count
- 576 words
What a terrible idea that sends the message that Reddit values some communities over others. I really don't understand all the new and "experimental" features Reddit has rolled out over the last few years. RPAN, new awards, this stuff, chats, user profiles. It's like they can't decide if they want to be Facebook, Discord, Patreon, Twitch or something else entirely, and the end result is they look like a weird mashup of all of those.
I am eagerly waiting the day that there is a large alternative where I can find communities around most of my interests. Tildes is already close, but I can't wait to fully ditch Reddit.
I think it's pretty simple: they have no idea what to do to make enough money to recoup all the money invested in them. So they're throwing every idea they can think of at the wall in a hope that one will stick.
Typical startup mindset of "build a userbase first, figure out how to make money later", except Reddit's been stuck there for way longer than is normal. They've been going for 15 years - at this point, most startups are either dead, profitable, or sold out and had their technology pillaged by a larger company then killed.
Okay, to be fair, investing is not like a debt. Early stage investors aren't hounding Reddit for their money. They get their payday when Reddit has some kind of liquidation event (typically an IPO, direct listing, acquisition, merger, or SPAC), and their profit is the difference between what their stake cost in the beginning and the new public price.
In fact, many investors will be quite happy if your company is losing the GDP of small companies every year so long as you have the revenue growth to back it up. Snowflake is going to have a hot IPO despite losing 350 million last year, and their VC investors are going to be very happy with their returns.
Early stage investors like Y Combinator probably already got their money. Now it's the later investors like Tencent that are looking for money. And no matter how much you image the stock market as a ponzi scheme, there comes a point where nobody wants to invest in a company that has been operating for 15 years without profit. The pressure to at least look like you have the potential to make money in the foreseeable future must be immense, even if you don't have Paul Graham knocking at your door with a couple of ex-Spetnaz commandos in tow.
Yes, the early stage investors would have been paid back almost immediately, when Reddit was acquired. It's only relatively recently that they've taken any investments again. Quick investment/ownership timeline:
The significant fundraising has really only happened over the last few years. For most of Reddit's life, it existed as a mostly-ignored acquisition of a publishing company without any direct investors.
Why take on the recent rounds of funding?
Because they expanded and need the cash to fund the company? According to Wikipedia, they had 400 employees in September 2018. That shit costs a lot of money. I don't know why they have 400 employees for a fairly simple website, but you know.
I think that reverses the cause and effect somewhat, but it's hard to separate them. Raising a lot of money is how they were able to start hiring way more employees, but then having a larger staff means you burn through that money much faster, and probably end up needing to raise more. It's kind of a self-perpetuating cycle.
When I started working at Reddit in 2013 (before any of that fundraising), there were still only about 10 employees that worked on Reddit itself, even though the site had been running for almost 8 years. When I left in late 2016 (about 2 years after the $50M), they had hired over 100 more. I think there are over 600 now—in a February blog post, they said "nearly 600", and they haven't stopped hiring as far as I know.
What's interesting about that to me is that I know that they've had over 500 for a little bit as far back as September. I can't find the exact thing that mentioned this, but that seems about right.
It's always seemed to have been a point among the Reddit community that "the site is down in the depths of the red" and while there was a point where that was just a rumor (that was actually seemingly to have been dispelled), that doesn't seem to be any longer the case.
Lol - For a company the size of Reddit they should be employing way more people. The only reason they have so few employees is because they rely on thousands and thousands of free volunteer labor from moderators.
Right now Reddit is the 6th most trafficked website in the United States after Google, YouTube, Amazon, Yahoo, and Facebook. For comparison, Twitch is 15th, Instagram is 17th, and Twitter is 34th.
From some quick google searches, it looks like Facebook has about 44 thousand employees and Twitter has 4,600. So despite its huge influence online, the fact that Reddit only has a few hundred paid employees is worrying and is part of the reason why it is known as such a hive of toxicity and hate online.
I'd hazard a guess that a significant number of those employees are "content moderation/anti evil operations/community management/legal compliance" type people.
Reddit has always skimped on the engineering and community team sides of the business and I doubt that has changed, so IMO it's more likely that marketing employees make up the majority now... hence how slow the site redesign process has been, how long it takes for the admins to respond to moderators pleas for help, and how strong of a monetization push is currently underway.
What content moderation? Reddit has very effectively outsourced moderation to its community.
Anti-Evil Operations is pretty active on Reddit, and they've only gotten more aggressive. It used to still be pretty rare to see an admin removal in the log, but if you're a mod of a medium-size subreddit, you can expect one pretty commonly.
Interesting. It's been years since I modded seriously, but even for a default sub I was on it was still a "handful of times a year" event for an admin to appear in your modlog. How often are we talking now? Multiple times a month?
Back then you would usually get a modmail for anything that wasn't dangerous/illegal.
Yeah. The default I mod, a relatively forgotten one at that (/r/Documentaries), has 4 admin actions in the last 2 months.
I counted another, more active subreddit, that I moderate (that still has rules about posting and is actively moderated, it isn't a "anything goes" playground) has over 30 admin actions in the last 90 days.
it tends to scale with activity it seems (also on how often people have a tendency to report each other). i can't imagine the amount of actions on any decently sized political subreddit.
yeah, that's really uncommon nowadays. it's usually only if it becomes a systematic problem that they have to deal with (usually if you have dozens of admin actions but there are only like 20000 subscribers, that's when the community managers come to visit).
I mean that's not specific to VC backed companies, every company wants to make profit eventually. The difference is that a lot of people treat investors with equity, like debt owners who loaned Reddit money.
The difference between the two, is that if you loaned Reddit money, you want cash from them, now. While investors will also push you to generate funds, that's so your company looks like it's a healthy functional being that will IPO nicely.
There's always pressure to make money, even moreso for non-VC backed companies because without actual profit they'll just run out of money.
There are a few very real reasons that a big VC investment can be an anchor round the neck of a company, but I think broadly they boil down to this: the investment puts an artificial lower limit on what constitutes "profitable".
A company can easily be healthy and functional with no prospect for IPO. I can envisage many a sizable tech platform generating enough revenue to pay for servers plus a comfortable salary for the 15 employees they need to keep things running, and that's that.
The thing is, a VC investor would likely see that as an enormous waste of notional value. They want exponential growth, huge returns for everyone involved, and they'll happily spend money and take on risk to make that happen. Before you know it your sustainable 15 person company with a target turnover of $8M has become a 250 person war room with a $200M target to hit and a burn rate that'll put you out of business in six months unless you spike that revenue - and more than likely use the spike to justify another, higher raise that moves the goalposts once more.
You don't have to pay back the VC's money, but you do have to turn the business into something with a higher valuation than it had when they came in. Given the power dynamics and the misaligned incentives (investors don't mind a 99% failure rate if the one success makes a 200x return, and that informs their attitude to business risk, but those are really shitty odds for the founders), the VC investment is likely far more constraining than the bank loan.
I don't understand the relevance of your comment, then. I never said Reddit's situation was unique to VC-backed companies. But, conversely, venture capitalists do not have infinite patience and infinite capital to shore up a failing company either.
I guess I just find it weird that it's being framed that "(VC) Investors are probably pushing Reddit to be profitable". Why the investors? Why not the CEO or CFO that needs meet payroll every other week?
Investors or not, Reddit needs to be profitable eventually. If anything, VCs would care less about immediate profits and prefer either better long-term monetization or to just cover up profitability with large growth.
They have a site with a bunch of users, now they need to make money from it. Tbh, some of these have been pretty poor implementation wise, but they're better monetization efforts than, say, increased ad presence or selling user data.
When an alternative appears, I have no doubt it will also fumble for ways to pay the bills when it grows to scale.
They're also doing the other types of monetization as well, though. For example, last week they started adding a new ad banner at the top of every comments thread.
That's really the main issue with running sites like Reddit as a for-profit service with a lot of investment: your goal isn't "make enough money for the site to be sustainable", it's "make as much money as possible, so the site (or stock) can eventually be sold for the highest value".
If you come up with 5 potential monetization methods, you're not going to look at them and only pick the one or two that are most friendly towards the users, you'll do all of them. There's no concept of making "enough" money, no threshold to reach where you'll stop trying to make even more.
If this isn’t from a film script, it should be.
But seriously, on a larger scale this is the modern dilemma in my view. What are reasonable limits on the wolves of our civilization.. like capital/business. IMO, the USA has certainly jumped the shark in this regard. More than once, during multiple seasons. Putting profit centers in health, education, and prisons is just insane to anyone who holds values other than mo’ money.
But back to VCs. At the moment, the best “take the VC money” argument is that it If you don’t take it, then someone will compete with you. They will take the VC money and use it to scale their business better/faster than you. You will go out of business.
Is that a valid argument to everyone? Is there a good counter-argument?
Edits: grammar, clarity
There was an episode of Star Trek: TNG where there was some futuristic chess or go-like game that people played. There was one character who was supposed to be the equivalent of a grand master. Eventually they have Mr. Data play against him. Spoiler: Data ends up keeping from losing by playing not to win, but only to block the Grand Master. I forget the rest of the episode, but I think Picard ends up using the same strategy to defeat an enemy or something.
Data was truly the Anish Giri of his generation. Seriously though, that particular idea in star trek has aged extremely poorly. Modern machine learning pretty much stomps human wetwork when it comes to hyper focused tasks like board games.
When I first read “TNG” I was expecting the Texan financier character from the lost 20th century stasis pod.
Edit: TNG - The Neutral Zone s01e25
They are just trying desperately to find new revenue streams to support Reddit and make it profitable. They have been getting a lot of outside investment in recent years and those companies will ultimately want to make their money back and then some.
While I agree with a few of your points, I love RPAN. I spend a few hours every few weeks just... Watching people do their thing. I've seen talented musicians writing and performing music, art being made, machinery being machined, walks and tours though far off lands, travels through underground abandoned train stations, and a tonne more (including someone livestreaming removing bedbugs from their house, it was weird and strangely interesting).
RPAN is imo the best feature they have, sadly it is mostly squandered and ignored because the posts they show in the feed are quite boring.
I agree. I would say that I do a lot of stuff that most normal reddit users don't do such as moderating or whatnot. But like, the one time I turned RPAN on to kinda see what it was about, I was like "I see how this can be a time suck" and I ended up watching for like an hour.
So... I don't know. I think they could be on to something with RPAN.
Reddit Public Access Network.
Think of it as a television set with hundreds of channels all from users livestreaming the content with a limited time of being featured, if enough people like it they will get additional time being at the front of the channel. That's it, thats the best way I can describe it. You kind of have to experience it and use the arrow buttons on the side to flip through the channels.
I see. Well, I personally never got into live streaming. I guess I’m not the target audience. As a Reddit user this seems a bit bizarre for the site. They’re spreading themselves too thin, it seems. I mean, isn’t becoming a successful streaming platform super hard in 2020?
Reddit Public Access Network.
Basically they want people to livestream something on their platform with a weird 2000s theming. Kinda like Twitch but more... spontaneous?
Pretty much. It seems to me that they're desperate to bring more money in and are throwing ideas at the wall and seeing what sticks.
When Reddit just had gold and ads, I was ok with it (despite my dislike of ads). Like, yeah they have to make $ somehow to pay for all that electricity, server time and human employees, but do we really need the social media equivalent of loot boxes and cosmetics?
TBH, I don't think Reddit's management has a plan or a vision beyond finding novel ways to make more $.
I'm OK with gold. I'm OK with (non-malware, less intrusive) ads. I'd even imagine that they could target the ads somewhat without being too intrusive, i.e. if you're browsing threads and comparing CPU's then... maybe ads for CPU's?
There must be other ways to legitimately monetise the site without pissing off a bunch of people. RPAN seems like a neat thing recently. I was browsing and actually came across a live cast of a band which I quite enjoyed, soooo... what if they did that on a percentage basis wherein you could donate via Reddit and they get part of the "take"? Again they could tailor it to the subreddits so bands might want to choose music SR's, or maybe you're music appeals to gamers so you publish under both some music and gaming SR's, etc.
Other broadcasts could include howto's, lessons, or whatever people thing might net them some cash and Reddit a percentage.
Power-ups sounds a lot like a fremium model. I'm not against this particular addition, but against the philosophy in general. Adding micro-transactions to unlock features has been done in lots of places already, especially video-games. It creates inequality amongst users in the long run, and frustration. Reddit already has ads.
I understand that monetisation is an issue. I would gladly pay a small subscription each month to access reddit without ads or other AMP if I was offered the possibility.
Isn’t reddit gold essentially that? It takes away ads and adds some additional features?
Just FYI, Reddit Gold no longer exists; They call it Reddit Premium now. But yes, it is basically what @m15o was asking for.
It's kinda funny. I noticed that even the CMs call it Reddit Gold and "gilding"
Deleting my Reddit account was the best thing I've done for my mental health. It has the most predatory system with the whole karma system with infinite scrolling. Now they are hurting the very userbase that switched from old forums in the first place.
Well, that seems like an invitation to massive amounts of piracy.
They don't care about stolen content now, they sure as hell aren't going to in the future.
Pretty sure they ban subreddits that share stolen content, see /r/piracy
Not really... they only ban subreddits that openly admit to having that as their focus. /r/videos and many other subreddits are completely chocked full of user re-uploaded, linkjacked/stolen videos that reddit does absolutely nothing about. As long as reddit gets the traffic/income from the video and they don't get a DMCA takedown or any bad press from it, they don't care.
They really are hell bent on making all of EzBoard's mistakes. New idea my ass, this idea has been done to death. I've never seen it end well - and with that list of useless features it's not off to a good start.
It looks very similar to Discord Server Boosts too, which also suck...
That's weird, I just heard a pronounced ringing. I can only describe it as some kind of a "knell".