Time to hire some business folks? Really, now it is not the time to talk about server expansion or more page views. The highest priority now is monetization. They need to come up with ways to get paid sufficiently to expand.
Here are the things they can do:
1. Place more ads. I don't buy the notion that many reddit users run ad-blockers. Even half of them do, you still get 140M/month page views.
2. Get Google AdSense, to place content-related ads.
3. Sponsorship. Have companies to sponsor some subreddits and add companies promotion and events.
4. Paid submission, clearly marked so. Company ad and product/service announcement can go there. E.g. all the webhosting promotion deals going on now.
5. Create some deal/coupon/onsales subreddits. Have companies feed them and pay for them. Rather than just having user-generated content, have companies generated content as well, and get paid for them.
6. CPA revenue sharing. Give redditers some percentage of discount when they go to a merchant's site to purchase something from a reddit link. Reddit takes a cut. It's a win-win-win setup, merchant sells a product minus the marketing cost which becomes the redditers' discount and reddit's share.
There are so many ways to skin this cat. They are sitting on a good problem to have. Why are they fumbling on this?
Thanks for the suggestions. Some we have tried, others we would like to, and some are totally new.
The big problem is that we spend most of our time just keeping the site up and don't have time to focus on these ideas, and Conde is unwilling to invest.
We're hoping the reddit gold money gives us the flexibility to bring in the talent we need to make some of those ideas happen.
Yes I think they have a Maserati problem. Or rather, they could have a Maserati problem if they simply flipped the right switch, given the high traffic and community/fanbase they now have. Most startups would love to have their problem.
I have to say, this looks bad for the whole "users first, revenue later" mantra. Now, admittedly, the founders got paid on the flip. But there are users, and now it's later, so... where is the revenue?
I heard this moment described as the "where is the land" moment. The crew has been sailing the ocean for a long time and they're running on slim hope. They grumble, then complain, and finally they confront the captain and say, "You promised us land. Where is the land?!"
This doesn't look like a good resolution to the "where is the land" moment. Why decide to plead for cash? It's the business model of last resort.
So yeah, this is definitely a cry for help. Unfortunately, it's one that reminds me a lot of the drowning article. I think this is Reddit grabbing its users and trying to climb on top of them.
Where is the revenue? I think that blog post, 1700 upvotes, and 1400 comments is pretty good indication of the possible revenue. Hint: it'll probably be more than the 3 readers of my blog will be ponying up this year.
This looks like a straight up request for charity. As they say in their blog post, they will not be able to offer any new features, at the current time, in exchange for you subscribing. I would feel uncomfortable with that business model, if I was them. Admittedly, National Public Radio survives that way, but then, NPR is registered as a non-profit, and donations are tax deductible.
I think that this is an attempt to keep the users first. If the users love the service enough to pay for it, there will be no need for potentially-user-experience-degrading changes like sponsored subreddits.
I think if any site could pull this off, Reddit could. Somehow, somewhere, someway, Reddit became a social news site that has a strong sense of community to it. Redditors feel good being "Redditors", and feel an affinity towards the site. My prediction is this actually works.
No doubt, I gladly donated. I'd rather see a site asking for donations if their user-friendly business model isn't quite making enough then it turning into some kind of profit-driven popup-banner mess. Sometimes the community just needs to support the free services it enjoys, be it Wikipedia, Apache or Reddit.
I would love it if totalfarke...(err, I mean, "reddit gold members") also got labeled (perhaps after a review by a mod or something) as "definitely not spammers".
Just today I was being told to wait 10 minutes between postings...even though I'm definitely not a spammer, and have very positive karma (2000 after about 3 months).
I bought a t-shirt from kn0thing at startup school a few years ago, but I can't really see paying for reddit now. I wish them luck in finding a business model that works for them.
most sites can pull that off, almost every forum has the subscription model where all you get is some icon and different color username.
actually I think for reddit it'd be a little harder for comparison...because with those forums, the people know they are supporting small time folks...with reddit, they'd be asking people to donate money to a for profit billion dollar corporation.
This has the same feeling as another Conde Nast owned site: ArsTechnica. They've had a subscription option for a while, and it seems to work well for them.
Regardless of what the Reddit admins or Conde Nast are doing right or wrong to monetize their site, I think it's simply a matter of assessing the value of the information Reddit has exposed me to -- not just via the links but also the user comments. That aggregate value I've derived from their service over the past four years is still far more than what I just donated. (arguably it was more valuable a few years ago when there were fewer animated gifs linked on the homepage)
But that begs the question: if I'm paying reddit, why am I not giving back to the content authors that reddit linked to?
They don't actually have merchandise that generates a profit. All of their merchandise is done through breadpig, where 100% of the profits go to a charity.
Every company/product with a strong community and few employees that I've seen try this has worked massively well.
http://unknownworlds.com/ is a great example. When it was still just a halflife mod, and the creator wanted to work on it full time while bootstrapping the company, he asked for donations to get a special icon in game and playtesting access. There was an incredible outpouring of support and it kept them in the green.
Now, to fund the stand-alone sequel, they are taking preorders far in advance to help the development, with an option to pay $20 extra for the game to get special black armor in-game and their eternal gratitude. Almost all of the preorders opted to pay extra, mostly out of thanks for the years they spent playing the first game for free.
I don't know, I think paying money for nothing in return to a big corporation is a little bit insane, actually. $5, in the right hands, would go a long ways in Africa or various other places in the world where people have real, urgent needs. Or if that's not your thing, there are all kinds of real charities out there. Hell, if you want, you can send the money my way and I'll put it in my daughter's college education/future fund. She's even cuter than the reddit alien and doesn't have such extremist political views ("pacifiers for all!" is probably the most controversial).
Joking aside, I think there are a lot of people in Africa, Haiti and, sadly, many other places in the world, who would get a lot more out of a few dollars than my daughter, who will hopefully never experience anything like the sort of privation many people see every day there.
They have a userbase which is ridiculously hard to monetize (IMHO). I'd bet the % of adblock users on Reddit is way higher than the average. The Reddit crowd aren't your average mainstream user. It's a particular crowd (liberal anti-capitalism pro-cannabis etc etc) [Again, just my opinion]
Also they really have very few adverts at all on the site, and those that are there, are tucked away not very noticable.
Say you get an eCPM of $0.05 or something (A guess for that sort of site so I may be way off)... That'd work out to $14k/month in ad revenue for 280m pageviews.
It sounds like they are profiting. They just aren't having high enough profits that Conde Nast is willing to cut into said profits to either spend more on servers to speed it up or hire another engineer.
I can't remember who I'm quoting here, but it comes from someone in the Voluntary Simplicity movement and it really struck a chord with me:
>With your money you get to chose what exists in the world.
It's one of the the last truly democratic forms of voting. In some ways, consumerism is an unriggable election, with the market deciding (for better or worse - sometimes worse) what is allowed to thrive and what dies.
A few people have expressed the opinion that because Reddit is owned by a large corporation, that asking for donations is unjustified. The way I see it, they're creating value, and have a right to ask for payment for that. In exchange for your dollars, you get to see a great community continue existing in the world.
with only four engineers, this is what I'd focus on, personally. hardware is not as hard or expensive to deal with as people seem to think, especially as they already have a SysAdmin.
To be blunt (we are talking Reddit..) Conde Nast were chumps when they allowed Chris Anderson, high on his own supply, convince them to buy Reddit for its supposed "Long Tail News" value.
Now they're chumps for not putting a grown up in charge of converting 280 million page views/month and a dedicated community to enough money to support 4 engineers and a bunch of servers.
The comparison to Gruber etc is misleading, since Gruber never got bought by a major company. This is more like 30 Rock asking you to donate to NBC.
Unless you have some inside information, what on earth makes you think that Conde Nast is to entirely to blame?
The people over at reddit have made two thing clear: that Conde Nast won't increase their budget unless they increase their revenue. And that their current budget is not enough for them to run reddit the way they would like.
I'm certainly not defending Conde Nast, nor will I blindly defend reddit. And I certainly don't expect any company to run a site the size of reddit out of charity.
I will donate, as I've been a long time reddit user who enjoys the site (though somewhat less as time goes on).
I'm not sure what the problems are, and I agree with others' sentiment that they need to focus on business and advertising. Still, as someone who in the last few years has bought into the Rails explanation of scaling (sure, ruby is slow, but you can scale horizontally with more servers after you're sold and have bajillions to spend), I wonder if this is a bad sign for startups using dynamic languages.
I've played around with www.playframework.org, and in my tests it was a LOT faster than ruby, while offering many of the same benefits as Rails. I know Reddit is written in Python with Pylons, but I wonder if all those CPU cycles they sacrificed by using Python instead of Java wouldn't come in handy now?
FYI, we tried to buy a self serve Reddit ad a month ago but it wouldn't accept any of our cards. Tried to contact you guys but never heard anything back. No hard feelings, we just went with other advertising.
But if this happens more then incidentally then you guys could easily be missing out on multiple 1k/month advertising deals by not offering a way to contact someone on the team.
Do what incredibly successful SomethingAwful does: it's pretty much free to browse and read (but saturated with ads) or you can pay $10 for life, and rid yourself of most ads and post content.
It removes 99% of the shitheads and creates a great community. You can also buy upgrades like an avatar, no-ads, a custom title, personal messages, etc.
What I would do...
Tier 1: $36 a year to get rid of ads and get a silver badge
Tier 2: $72 a year to get rid of ads and get a gold badge and be mentioned on a "featured supporters" page
Tier 3: $144 a year to get all of the above (except make it a platinum badge) and become a "platinum-supporter," which would entitle you to discounts to Conde Naste events, pulications, etc. Conde Naste owns Wired, the New Yorker, etc, so the discounts could be pretty cool with a bit of creativity.
I don't want to kick someone when they are down, but this just stood out to me:
And reddit's revenue isn't great. The good news is, our traffic continues to grow by leaps and bounds.
Talk about doing it wrong.
When you have growth but no revenue, it's probably because you aren't asking your users to pay. That should be every website's first option - ask people to pay for the service they receive.
Paying users are great, un-paying users are a liability.
Is there any actual synergy at all with the rest of Conde Nast? Would it make sense for Reddit to work with some P.E. people to buy themselves out, and make a venture investment in improving the site?
It will have to be many pieces not just a subscription...having to be careful though for the community, so create more...
- reddit game site with reddit comments and upvoting integrated into the site like kongregate, game sites can pull in some better revenue (indie game competitions, stats, leaderboards etc).
- reddit book or movie club where you take the revenue of the amazon lead or other store leads.
- make money off the porn communities, tier the submission process (lots of great companies get some funding from porn and noone will complain here).
- prominent donation link or pay it forward like flattr.
- deals for sponsorship such as takeovers on subreddits for movies, games, etc.
- deals for reddit flash mobs for buying a product or service at once or with code (queue people ready to buy a product, then find a retailer ready to give 10% off for redditors - could work with book/movie clubs above and digital goods like steam games).
- ...
If you can relate everything back to your core feature (awesome community) then it may just work.
Can any savings be had by committing to a data center instead of paying the amazon hosting rates? I fear if they're at yet another crunch point, the next one will be too much. Granted the pressure to "do more with less" is always there, but something has to give.
With the number of page views you all are getting, why don't you bring on a developer on a commission basis to really focus on driving revenue. I'm sure you can find an ambition, business minded developer that you could give a percentage of the increase in revenue to, who would be willing to work for free to get things going. There is definitely money being left on the table, and structuring it in this way could allow you to avoid getting shot down by the people in charge, while bringing in more people, and increasing the revenue, which will ultimately allow you all to increase the operating budget.
I'd definitely be interested in something like this, and I'm sure many other people would be too.
[+] [-] ww520|15 years ago|reply
Here are the things they can do: 1. Place more ads. I don't buy the notion that many reddit users run ad-blockers. Even half of them do, you still get 140M/month page views. 2. Get Google AdSense, to place content-related ads. 3. Sponsorship. Have companies to sponsor some subreddits and add companies promotion and events. 4. Paid submission, clearly marked so. Company ad and product/service announcement can go there. E.g. all the webhosting promotion deals going on now. 5. Create some deal/coupon/onsales subreddits. Have companies feed them and pay for them. Rather than just having user-generated content, have companies generated content as well, and get paid for them. 6. CPA revenue sharing. Give redditers some percentage of discount when they go to a merchant's site to purchase something from a reddit link. Reddit takes a cut. It's a win-win-win setup, merchant sells a product minus the marketing cost which becomes the redditers' discount and reddit's share.
There are so many ways to skin this cat. They are sitting on a good problem to have. Why are they fumbling on this?
[+] [-] jedberg|15 years ago|reply
The big problem is that we spend most of our time just keeping the site up and don't have time to focus on these ideas, and Conde is unwilling to invest.
We're hoping the reddit gold money gives us the flexibility to bring in the talent we need to make some of those ideas happen.
[+] [-] mkramlich|15 years ago|reply
[+] [-] aohtsab|15 years ago|reply
[+] [-] msmith|15 years ago|reply
[+] [-] zach|15 years ago|reply
I heard this moment described as the "where is the land" moment. The crew has been sailing the ocean for a long time and they're running on slim hope. They grumble, then complain, and finally they confront the captain and say, "You promised us land. Where is the land?!"
This doesn't look like a good resolution to the "where is the land" moment. Why decide to plead for cash? It's the business model of last resort.
So yeah, this is definitely a cry for help. Unfortunately, it's one that reminds me a lot of the drowning article. I think this is Reddit grabbing its users and trying to climb on top of them.
[+] [-] brianpan|15 years ago|reply
http://www.reddit.com/r/announcements/comments/cnth8/making_...
[+] [-] zyb09|15 years ago|reply
[+] [-] nostrademons|15 years ago|reply
[+] [-] lkrubner|15 years ago|reply
[+] [-] Sidnicious|15 years ago|reply
I don't know if it's the right move.
[+] [-] maukdaddy|15 years ago|reply
[+] [-] ergo98|15 years ago|reply
I think you misunderstood the mantra. It really is "users first, flip it later". Let the next sap deal with it.
We've seen that play out time, and time, and time again. They got their payout, hang around for a while, and then split off.
[+] [-] city41|15 years ago|reply
[+] [-] muppetman|15 years ago|reply
I see lots of people bashing reddit and from a glance at the Frontpage I can see why. But the real good stuff is in the subreddits.
I'd also donate to HN too, if asked.
[+] [-] zyb09|15 years ago|reply
[+] [-] blhack|15 years ago|reply
Just today I was being told to wait 10 minutes between postings...even though I'm definitely not a spammer, and have very positive karma (2000 after about 3 months).
Personally, I would pay $5/mo for premium reddit.
[+] [-] Zak|15 years ago|reply
[+] [-] vaksel|15 years ago|reply
actually I think for reddit it'd be a little harder for comparison...because with those forums, the people know they are supporting small time folks...with reddit, they'd be asking people to donate money to a for profit billion dollar corporation.
[+] [-] mbreese|15 years ago|reply
[+] [-] ch00|15 years ago|reply
But that begs the question: if I'm paying reddit, why am I not giving back to the content authors that reddit linked to?
[+] [-] scorpion032|15 years ago|reply
[+] [-] swilliams|15 years ago|reply
"...we can right now only offer you our undying gratitude and an optional trophy on your userpage."
Yikes. What else could reddit offer for subscribers other than a png?
Can reddit or similar platforms find a good way to generate revenue? Obviously ads and merchandise (t-shirts, etc) aren't doing it alone here.
[+] [-] EvilTrout|15 years ago|reply
I'd know: my web based MMO, Forumwarz is one. People can pay to buy some kinds of "E-Peen" which is our version of badges.
[+] [-] mdwrigh2|15 years ago|reply
[+] [-] moultano|15 years ago|reply
http://unknownworlds.com/ is a great example. When it was still just a halflife mod, and the creator wanted to work on it full time while bootstrapping the company, he asked for donations to get a special icon in game and playtesting access. There was an incredible outpouring of support and it kept them in the green.
Now, to fund the stand-alone sequel, they are taking preorders far in advance to help the development, with an option to pay $20 extra for the game to get special black armor in-game and their eternal gratitude. Almost all of the preorders opted to pay extra, mostly out of thanks for the years they spent playing the first game for free.
[+] [-] davidw|15 years ago|reply
Joking aside, I think there are a lot of people in Africa, Haiti and, sadly, many other places in the world, who would get a lot more out of a few dollars than my daughter, who will hopefully never experience anything like the sort of privation many people see every day there.
[+] [-] vaksel|15 years ago|reply
[+] [-] axod|15 years ago|reply
Also they really have very few adverts at all on the site, and those that are there, are tucked away not very noticable.
Say you get an eCPM of $0.05 or something (A guess for that sort of site so I may be way off)... That'd work out to $14k/month in ad revenue for 280m pageviews.
[+] [-] jackowayed|15 years ago|reply
[+] [-] vinhboy|15 years ago|reply
[+] [-] brianwillis|15 years ago|reply
I can't remember who I'm quoting here, but it comes from someone in the Voluntary Simplicity movement and it really struck a chord with me:
>With your money you get to chose what exists in the world.
It's one of the the last truly democratic forms of voting. In some ways, consumerism is an unriggable election, with the market deciding (for better or worse - sometimes worse) what is allowed to thrive and what dies.
A few people have expressed the opinion that because Reddit is owned by a large corporation, that asking for donations is unjustified. The way I see it, they're creating value, and have a right to ask for payment for that. In exchange for your dollars, you get to see a great community continue existing in the world.
[+] [-] avar|15 years ago|reply
See the question at around ~27m into the video.
[+] [-] axod|15 years ago|reply
[+] [-] lsc|15 years ago|reply
[+] [-] jamesshamenski|15 years ago|reply
[+] [-] nir|15 years ago|reply
Now they're chumps for not putting a grown up in charge of converting 280 million page views/month and a dedicated community to enough money to support 4 engineers and a bunch of servers.
The comparison to Gruber etc is misleading, since Gruber never got bought by a major company. This is more like 30 Rock asking you to donate to NBC.
[+] [-] cag_ii|15 years ago|reply
The people over at reddit have made two thing clear: that Conde Nast won't increase their budget unless they increase their revenue. And that their current budget is not enough for them to run reddit the way they would like.
I'm certainly not defending Conde Nast, nor will I blindly defend reddit. And I certainly don't expect any company to run a site the size of reddit out of charity.
I will donate, as I've been a long time reddit user who enjoys the site (though somewhat less as time goes on).
[+] [-] keysersosa|15 years ago|reply
[+] [-] petercooper|15 years ago|reply
[+] [-] rufugee|15 years ago|reply
I've played around with www.playframework.org, and in my tests it was a LOT faster than ruby, while offering many of the same benefits as Rails. I know Reddit is written in Python with Pylons, but I wonder if all those CPU cycles they sacrificed by using Python instead of Java wouldn't come in handy now?
[+] [-] koenbok|15 years ago|reply
But if this happens more then incidentally then you guys could easily be missing out on multiple 1k/month advertising deals by not offering a way to contact someone on the team.
[+] [-] leftnode|15 years ago|reply
It removes 99% of the shitheads and creates a great community. You can also buy upgrades like an avatar, no-ads, a custom title, personal messages, etc.
[+] [-] adammichaelc|15 years ago|reply
[+] [-] run4yourlives|15 years ago|reply
And reddit's revenue isn't great. The good news is, our traffic continues to grow by leaps and bounds.
Talk about doing it wrong.
When you have growth but no revenue, it's probably because you aren't asking your users to pay. That should be every website's first option - ask people to pay for the service they receive.
Paying users are great, un-paying users are a liability.
[+] [-] rdl|15 years ago|reply
[+] [-] JabavuAdams|15 years ago|reply
Reddit was (perhaps not intentionally) built to flip. Mission accomplished.
[+] [-] drawkbox|15 years ago|reply
- reddit game site with reddit comments and upvoting integrated into the site like kongregate, game sites can pull in some better revenue (indie game competitions, stats, leaderboards etc).
- reddit book or movie club where you take the revenue of the amazon lead or other store leads.
- make money off the porn communities, tier the submission process (lots of great companies get some funding from porn and noone will complain here).
- prominent donation link or pay it forward like flattr.
- deals for sponsorship such as takeovers on subreddits for movies, games, etc.
- deals for reddit flash mobs for buying a product or service at once or with code (queue people ready to buy a product, then find a retailer ready to give 10% off for redditors - could work with book/movie clubs above and digital goods like steam games).
- ...
If you can relate everything back to your core feature (awesome community) then it may just work.
[+] [-] lvecsey|15 years ago|reply
[+] [-] jcnnghm|15 years ago|reply
I'd definitely be interested in something like this, and I'm sure many other people would be too.