What a tangled web we weave, when at first we slap our value creators in the face. Oh Reddit .....
While it’s understandable that Reddit wants to monetize its content, the service’s new API charges and its heavy-handed response to moderator protests are ill-conceived. Especially since almost all of the content comes from either these same moderators, or other end users whose content is effectively curated by these moderators.
These changes have potential negative financial implications for Reddit. Of even greater concern is the company may actually undermine the content and community value of which the moderators are the backbone. The company can still turn this around and avoid lasting damage, but it needs to rethink the entire situation.
What is Reddit? Why does this matter?
Reddit?is a massive series of forums providing a unique mass of user content that corporations can leverage in various ways. New of late, generative AI models such as ChatGPT can be trained on and source much material from Reddit.
Naturally, Reddit wants to be paid for that value. With this in mind, Reddit recently announced it would charge anyone to access its API. The API is the means by which companies get at the Reddit content. But it’s also the means by which the moderators access and manage the content.?
Reddit was following in Twitter’s recent ill-conceived steps to charge companies to access its API. Twitter’s exorbitant API charges alienated everyone and sparked a rush of 3rd party providers and customers to depart the platform. Twitter ultimately had to introduce more modest API pricing to stem the departures and calm the objections.??
The critical dynamic here is that while these two companies have a treasure trove of content, that content is coming from the users and 3rd party providers, moderators in Reddit’s case.
Arbitrarily charging these people high prices for something they’ve had all along for free is essentially slapping in the face the source of your value.
One moderator reports the charges will amount to $20 Million.
Clearly, the charges are so burdensome that moderators have begun waves of protests, including shutting down or otherwise restricting their forums. Reddit’s response has been to suspend or otherwise punish the moderators. The company may hemorrhage under the weight of moderator protests and desertions, or it may be able to bully its way through this crisis. Either way, it will have created lasting ill-will.
But it’s not too late. The solution is simple. Reddit can right the ship and flip the crisis to its advantage:
1) Acknowledge the API pricing was rushed out and failed to account for its impact on Reddit’s most important partners, the moderators.
2)?Create a special moderators pricing advisory group.
3)?Rollout new API pricing model that is tiered with low or perhaps no fees for the existing moderators. But higher pricing for corporations, in particular generative AI suppliers.
4)?Going forward, don’t follow Twitter’s flailing examples. Do look to other ecosystems, such as eBay and Apple, that have thrived by prioritizing the interests of their 3rd party content value creators.