So it’s well known now that the developer of Apollo estimated the new API pricing would cost $20 million a year. For a source, see the title of https://www.theverge.com/2023/5/31/23743993/reddit-apollo-client-api-cost
But from https://apnews.com/article/reddit-blackout-steve-huffman-ceo-api-0a4f7b344ecfbf50c924b030c344c55e the price from supporting third party apps is $!0 million a year. And presumably this is all third party apps combined!
Huffman says the “pure infrastructure costs” of supporting these apps costs Reddit about $10 million each year.
Something’s very not balanced here. That one app would have paid for Reddit’s third party infra costs twice over.
I can not remember which ones now (can anyone help me out here actually?), but I think a few apps said they’d try to make it work with the new pricing.
Which means Reddit likely stands to make a huge pot of money once the new API changes take effect, in the short term.
Even if Reddit loses the best subs, the best communities, the best users, and the moderation goes to where the sun don’t shine, I could see that new revenue boosting investors confidence enough to lead to a successful (if slightly smaller) IPO.
If Reddit goes downhill and loses lots of value afterwards, well, spez has already made his quick buck, so I doubt he wouldn’t feel very sentimental about it.
Folks, please explain to me why I’m wrong. Please.
Spez specifically said the pricing was based on the opportunity cost of users being on 3P apps, not the infrastructure costs. The Apollo dev fully understood this, which is why his calculation for determining why it was gouging was based on industry estimates of Reddit’s total revenue vs usership.
They were going to charge 3P devs many times what a user of just the reddit.com site is worth to them. Either it was a “fuck you” price to drive away the devs or it is a sign of deep and dire internal financial woes which they were hoping the more competent 3P devs would somehow bail them out on. Likely a mix of the two, though the former is definitely the dominant note I hear.
That first option isn’t just about lost revenue from ads–it’s likely the opportunity to collect (and sell) user data. Having everyone using only the first-party systems would likely make that a very valuable resource.
I don’t know much about their policies on user data right now, but even if they’re not currently doing much with it, they could always change those policies and make bank.
Reddit still gets most of the user data even for people that use 3rd party apps. They won’t get all of the telemetry and other marketing data pulled from their mobile app or website though, so I suppose that is a consideration, but that’s not as valuable to the LLMs.