The Next Thing – Issue 174
Timbot is live (but not alive).
First up, a quick plug. I've been working with Tim Burrowes and Cat McGinn over at?Unmade?on a little project called?Timbot. The idea behind Timbot was relatively simple - how could we make the knowledge about Australia's media and marketing industry that resides in Tim's book and the years of Unmade newsletters more accessible? The result is Timbot, a chatty little robot that has both the knowledge and (slightly caricatured) writing style of Tim Burrowes.
As with every AI project, there were a bunch of learnings along the way. I'm in the process of writing up a proper summary but things like not letting Timbot confabulate, getting timelines of events correct, and having Timbot fact check itself were all interesting hurdles to overcome.
So do go check out?timbot.ai?and let me know any weird, wonderful or surprising conversations you have.
Why the Reddit train wreck matters
If you're not a die-hard Reddit user, you might be unaware of the current commotion enveloping the social platform. (early side note: While I'd normally interject about now with the number of Australians using Reddit monthly, there's actually no reliable source for that. Reddit states that?Australia is its fourth largest market, but not how many people that is. Consider this some solid foreshadowing of the quality of its advertising revenue)
The kerfuffle TLDR is that Reddit has made the decision to start charging for access to its API. This change will have an immediate effect on two things – the availability of third-party apps for users of the site, and the availability of third-party moderation tools for moderators of subreddits (who are volunteers).
Both users (who quite like the third-party apps but won't pay for them) and moderators (who quite like having third-party tools to help them do their volunteer jobs) are quite upset at this, to the point of temporarily shutting down thousands of subreddits for a few days. I'm not going to go too deep into the arguments here, and instead focus on what this means for media and brands. (for a good read on the ins and outs of this palaver, do check out?this excellent piece?over at Slate)
The stark reality for Reddit is one that's dawning on quite a lot of digital media companies - the days of bleeding cash are over. Since being founded in 2005 Reddit has raised over $1.3B, including being acquired by Condé Nast before being spun out again (Condé Nast are still a majority shareholder). Reddit has recently filed in the US for an IPO, and there is a long line of people who would?quite like their money back please?(and several bags more).
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Steve Huffman is CEO (and founder) of a company that has existed in near-zero interest rates for all but four years of its life. Like many other ZIRP-era founders he's now finding that the job isn't so easy once the money dries up. Huffman has said "we'll continue to be profit driven until profits arrive", which falls a little short of the deep strategic insight one might hope for from the CEO of a (potentially) $15B public company.
Profit drivers for digital media companies like Reddit make for a pretty short list. Subscriptions of any form won't ever be meaningful enough. Reddit's advertising offering is third-rate (at best), and many of the apps that power-users love cut out the ads altogether. So charging for API access (along with charging AI scrapers like OpenAI and Google for access to the archive) is pretty much the only option left on the list.
All this is happening while the rest of the digital darlings who have had 15 years of breakneck growth are finding themselves heading towards (or already off) cliffs. Vice (the media company that cracked content for the millennials) is?searching for a path out of bankruptcy. Buzzfeed News (the media company that cracked social distribution)?has been shut down. Twitter (the social media company that launched more than one revolution) is devolving into a wasteland of high-frequency scam ads. Spotify has acknowledged that?podcasts aren't a panacea of new media growth?(or revenue). Even Facebook is becoming less and less relevant with every quarterly earnings, as it slowly fades away and joins broadcast TV and radio as things that continue to surprise you with their audience numbers (seriously,?Australians spend 1 hour and 40 minutes a day watching broadcast TV!).
If Reddit does stumble and fall, it's the decline of another corner of the digital media world that is important to many brands, whether they know it or not. Reddit has always been a quiet achiever. Despite a facile advertising offering, brands in many categories are influenced more by Reddit when it comes to mental availability than any other digital channel (or any channel at all). While I hate to invoke the Gen-Z's, ask four Zoomers how they search the web and three of them will tell you they start most Google searches with "site:reddit.com". Along with YouTube, Reddit has slowly become a trusted source for buying everything from?car insurance?to?coffee grinders.
The number of places we go on the internet is shrinking. It's not hard to envision a future where most of your search queries are handled by AI. Social networks are already contracting into messaging (one interesting aspect of Reddit is a shift to Discord by some communities).
For brands, the spaces where audiences can be reached (and targeted) effectively are becoming fewer and fewer, and media companies who are still battling the social traffic fight now have AI content to contend with as well.
I've banged on about this in many previous issues, but the days of a digital strategy being a simple question of "how much Google and how much Facebook?" are well and truly over. Reddit might feel like an afterthought for brands or media companies, but the recent stumble is another signal that this change isn't going to slow down soon.
Happenings…