The question for reddit isn't whether or not people enjoy it and want to spend time on it, but whether or not the owners can make money selling those people's attention. The traffic to reddit - while admirably large - is relatively unattractive to most advertisers.
"Reach" (impressions/eyeballs) are only important insofar as you're talking to someone who might buy what you're selling (see "relevancy"). The sub-reddit system could theoretically segment the audience in interesting ways, but other than r/gaming, there aren't many natural industry fits amongst popular sub-reddits.
Anecdotally, the audience would also seem to be advertisement-averse. An advertiser should be willing to pay network prices for the audience (i.e. pennies CPM), which makes it a nice living for a small group of folks living off their passion, but pretty useless to a Condé Nast trying to run a media empire.
I think the business model in a reddit-like site could be selling curated content in other media, e.g. a meme-series of coffee table books. Think Harry Potter, not Oprah.
If you're in the content game, your business's value is in having the attention of a group of people. Your first attempt to monetize that asset needn't be to sell your audience's attention to someone else, in this case undermining your ability to keep their attention. Instead, you should focus on bringing things your audience wants - and would pay for - to them. Sometimes that means you need to make the things they want to buy instead of shilling them for someone else, because no one sells what your people want.
Nailed it, joshklein. In fact, publishing xkcd and SMBC (along with the other breadpig products) has taught me a few things about that world. I'm hoping reddit makes good use of them.
Buyer of Reddit self-serve ads here, and I think that their approach is interesting, even exciting, and in the long-term potentially very profitable. Some of the issues come down to the ad averse culture (as you pointed out), not just of the community at large but even of the staff on the back-end.
There are great little ideas that are not being managed effectively in my opinion. For instance, it costs more to target a particular subreddit than the whole website, which is not particularly good for the kinds of small businesses that could really benefit from the service (there's also a daily minimum -- $20/day for site-wide, and $30/day for subreddit buys -- compared to Google, and Facebook's $1/day minimum).
Secondly, the true genius of the Reddit ad system is that your ad looks a lot like a regular submission. Think about the power of Adwords -- your ad looks just like the content your potential buyers came to consume anyway.
Thirdly, and here is the double-edged sword -- in the comments, a conversation (actually, a long-term, multiparty conversation) can build around your company. The power of this is truly great; however the implementation has been spotty. Every post on Reddit is submitted via a community with rules, and moderators. The one exception to this is self serve ads. What you end up with is a lot of spam and trolling in your self-serve ad, which defeats the whole purpose of having the comments in the first place.
Unfortunately, in my experience, the admins aren't sure what to say and fallback on free speech adherence, etc. although many posts and comments are taken down in various subreddits due to a lack of observance on the part of the commentor or OP to that sub's rules.
TL;DR: Reddit's self-serve ad system is a billion dollar idea in the making, but only if the culture of the community and more importantly the admins allow it to be so.
Even something like coffee table books would be a nightmare to get all the rights lined up. Having users post content on an open website allows you to shrug off a lot of these problems compared to actually publishing it yourself. A lot of the content on Reddit consists in writing from people using throwaway accounts they'll never check again (i.e. /r/IAmA, /r/AskReddit, etc.) or in "borrowing" images from pop culture or random strangers where it may be impossible to ever track down or secure the rights for (i.e. /r/vertical and /r/adviceanimals).
And there's nothing stopping someone other than Reddit from monetizing all that content the same way. If I wanted to, I could send private messages to hundreds of Redditors and get permission to include their comments in a self-help book gleaned from AskReddit comments, and Reddit would have absolutely no advantage over me in doing this, nor any way to stop me. As far as any content on Reddit goes, the story is the same way. Just as Hacker Weekly operates independent of YC and the people who run HN.
I think if you want to monetize Reddit, monetizing the audience isn't the only way. There's no reason Reddit can't, aside from having subreddits, sell paid hosting for completely separate, possibly private reddits that don't connect to Reddit itself.
"The sub-reddit system could theoretically segment the audience in interesting ways, but other than r/gaming, there aren't many natural industry fits amongst popular sub-reddits." In my opinion this is only true for a few (admittedly most popular) subreddits like r/funny and r/wtf and everything nsfw . Nearly every subreddit that I read has an industry that fits, r/photography -> photo gear, r/parenting -> baby stuff, r/science -> journals and books, r/somethingimade -> etsy, etc. I'm also sure that reddit knows a lot more about my interests than google and facebook together. But maybe that's just me...
Some time ago, the Reddit community expressed their interest to have an @reddit email account (they were willing to pay for POP access, etc.). I tried to contact the Reddit admins by Reddit messages, email, Facebook, etc, because we can provide them with @reddit mail accounts in no time and scalability is not an issue (we have installations in some of the biggest ISPs in the world) and it would cost them nothing as we were wanting to do a rev-share deal. Sadly I never heard back.
There's an opportunity to monetize Reddit users, even if they seem somewhat far from the core product.
Cheezburger Network seems to be scooping up the business model you're mentioning, bringing the 4chan and reddit memes that are likely to have a broad audience into the mainstream and monetizing them.
I wonder if then that speaks to interesting business opportunities? There appears then to be a misalignment between traditional industries and what people are actually interested in.
Sad to see them hiring an outside CEO instead of promoting from within. I don't think hired CEOs work so well for products that are still at the stage Reddit is at.
They need someone with deep, intimate knowledge of the community and the product. The best source for that in my opinion would be internal.
Reddit is currently a small team of developers, so there's really no "within" to promote from. I don't know them personally, but I somehow doubt any of the developers wants to be CEO.
Can someone with more business know-how tell me how a company like Condé Nast benefits from making Reddit an incorporated subsidiary? It doesn't sound like all that much is changing, honestly.
Condé Nast seems to have every intention of 'funding' this new company itself (that is, without raising outside investment), so it's really just removing the "Condé Nast" from the process but maintaining ownership.
Granted, they were rather autonomous (one reason why I know I stayed until the end of my contract) but with money in the bank, the new CEO can simply do things as easily as any of the other startups in the top 50. Before, that money would be going through some other big company approval process -- e.g., if reddit wants to hire away a fabulous programmer, it simply gets done.
If things go well, reddit continues to grow and increase its value, at which point, it could potentially be acquired, IPO [RDIT?], or just become a cash cow for Condé Nast.
Instead of Reddit being a division on the Org. chart of C.N., Reddit Inc. shares are held by C.N. This means that Reddit can take on equity investors to finance operations and operate externally of any organizational influence Conde Nast had (which may not have been much anyways).
I suspect Condé Nast's advertising operations didn't mesh well with Reddit's audience. Within Condé Nast, they were likely just an irritating drain on resources.
If Reddit's going to monetize effectively (and that's a big 'if'), it needs to be operationally independent so it can get creative.
One issue not mentioned here is that Condé Nast has particular rules about staffing that are good for magazines but bad for web sites. These kinds of issues need to be worked through politically every single time they come up.
As a stand-alone entity, they won't be subject to those rules, and Condé Nast doesn't have to worry about the rest of its companies saying, "but reddit did it".
If they keep Reddit as part of the mothership they can't sell it whole or in part. This is the first step in a process of divestment. The valuation that they are tossing around should be seen as the asking price if and when they do. It would highly surprise me if that asking price was met or even approached by an outside party.
Note that a deal at that valuation did not go through, and that likely that valuation was an important reason why it didn't.
Reddit could become an email replacement. My college campus has all-campus email that anyone can send to. Discussions in email simply don't turn out well, there's no good way to respond to just one person while letting everyone view it, there's no good way to voice agreement or disagreement, and it's mixed in with much more important information.
Reddit would be perfect for it, and for campuses with less generous email policies. It doesn't interfere with work communication and its better suited for the sort of discussions and arguments that email often plays host to.
As a student, I can't speak much for companies. And I'm aware of Reddit's recent College promotion and how easy it is to make, moderate, etc a new Reddit. But a dedicated Reddit integrated with college websites or email could be a profit stream.
My thoughts exactly... Reddit is a misfit in the overall organization and with the current exponential growth it's experiencing, it's the best and most leveraged time to sell it off. Would be a strategically good decision IMO.. I'm surprised this comment isn't voted higher..
I would like to see reddit release a product where I, can implement a forum system much like reddit but completely autonomous and hosted on their own service - basically a replacement to the dreaded phpBB. Hell, I'd pay for it.
You underestimate the ability of a large media company to squash innovation and morale. They might get outside investment so they can iterate harder/better/faster but Advance wants to hold onto this goldmine.
Greater independence will mean reddit can go to a new board, which includes reddit OG Alexix Ohanian, who had been serving as an “advisor,” as well as representatives from Conde and Advance, with proposals instead of jockeying within Conde’s budget. Reddit doesn’t plan to seek outside funding at this time, Mr. Martin said, but it’s not out of the question. “It’s a lot more more of a startup,” he said. “It’s able to happen faster with less overhead.”
I have to say, although Reddit is a large and possibly even influential service. I can't agree that they will be able to influence the news industry greatly (I use greatly loosely as the industry is so large).
I think an online service could revolutionise the way we all read and digest news, Reddit is the first stepping stone in this revolution but I expect it to be overtaken soon by a superior service (The same way Facebook has MySpace).
They have also, in my opinion, implemented mainstream and niche news so well (via subreddits) that they're not in immediate danger of being replaced by another aggregate news and/or niche site.
In terms of traffic and user base, they're killing it. In terms of revenue (and most importantly, profit), I'm sure they've been a massive let down for Conde Nast.
Now they spun them out so other people can finance it without it being their sole burden.
I can't tell if you're serious or not. In case you are...what makes you think reddit is dying? All indications point to continued explosive growth. I've been on reddit for about 5 or 6 years and it's pretty clear the site goes through growing pains but consistently gets over them. Overall it is better and better every day, with more lively intelligent discussion than even in the beginning days.
[+] [-] joshklein|14 years ago|reply
"Reach" (impressions/eyeballs) are only important insofar as you're talking to someone who might buy what you're selling (see "relevancy"). The sub-reddit system could theoretically segment the audience in interesting ways, but other than r/gaming, there aren't many natural industry fits amongst popular sub-reddits.
Anecdotally, the audience would also seem to be advertisement-averse. An advertiser should be willing to pay network prices for the audience (i.e. pennies CPM), which makes it a nice living for a small group of folks living off their passion, but pretty useless to a Condé Nast trying to run a media empire.
I think the business model in a reddit-like site could be selling curated content in other media, e.g. a meme-series of coffee table books. Think Harry Potter, not Oprah.
If you're in the content game, your business's value is in having the attention of a group of people. Your first attempt to monetize that asset needn't be to sell your audience's attention to someone else, in this case undermining your ability to keep their attention. Instead, you should focus on bringing things your audience wants - and would pay for - to them. Sometimes that means you need to make the things they want to buy instead of shilling them for someone else, because no one sells what your people want.
Condé Nast isn't built to do this.
[+] [-] kn0thing|14 years ago|reply
[+] [-] shoham|14 years ago|reply
There are great little ideas that are not being managed effectively in my opinion. For instance, it costs more to target a particular subreddit than the whole website, which is not particularly good for the kinds of small businesses that could really benefit from the service (there's also a daily minimum -- $20/day for site-wide, and $30/day for subreddit buys -- compared to Google, and Facebook's $1/day minimum).
Secondly, the true genius of the Reddit ad system is that your ad looks a lot like a regular submission. Think about the power of Adwords -- your ad looks just like the content your potential buyers came to consume anyway.
Thirdly, and here is the double-edged sword -- in the comments, a conversation (actually, a long-term, multiparty conversation) can build around your company. The power of this is truly great; however the implementation has been spotty. Every post on Reddit is submitted via a community with rules, and moderators. The one exception to this is self serve ads. What you end up with is a lot of spam and trolling in your self-serve ad, which defeats the whole purpose of having the comments in the first place.
Unfortunately, in my experience, the admins aren't sure what to say and fallback on free speech adherence, etc. although many posts and comments are taken down in various subreddits due to a lack of observance on the part of the commentor or OP to that sub's rules.
TL;DR: Reddit's self-serve ad system is a billion dollar idea in the making, but only if the culture of the community and more importantly the admins allow it to be so.
[+] [-] philwelch|14 years ago|reply
And there's nothing stopping someone other than Reddit from monetizing all that content the same way. If I wanted to, I could send private messages to hundreds of Redditors and get permission to include their comments in a self-help book gleaned from AskReddit comments, and Reddit would have absolutely no advantage over me in doing this, nor any way to stop me. As far as any content on Reddit goes, the story is the same way. Just as Hacker Weekly operates independent of YC and the people who run HN.
I think if you want to monetize Reddit, monetizing the audience isn't the only way. There's no reason Reddit can't, aside from having subreddits, sell paid hosting for completely separate, possibly private reddits that don't connect to Reddit itself.
[+] [-] weinzierl|14 years ago|reply
[+] [-] fabiandesimone|14 years ago|reply
There's an opportunity to monetize Reddit users, even if they seem somewhat far from the core product.
[+] [-] PostOnce|14 years ago|reply
they could do a /r/forRent, etc. also. Reddit has a lot of opportunities. Let's hope the CEO can figure out how to captialize on some of them.
[+] [-] smokinn|14 years ago|reply
[+] [-] bane|14 years ago|reply
I wonder if then that speaks to interesting business opportunities? There appears then to be a misalignment between traditional industries and what people are actually interested in.
[+] [-] emmett|14 years ago|reply
They need someone with deep, intimate knowledge of the community and the product. The best source for that in my opinion would be internal.
[+] [-] lobster_johnson|14 years ago|reply
[+] [-] jedberg|14 years ago|reply
[+] [-] jillsy|14 years ago|reply
[+] [-] thurn|14 years ago|reply
[+] [-] kn0thing|14 years ago|reply
Granted, they were rather autonomous (one reason why I know I stayed until the end of my contract) but with money in the bank, the new CEO can simply do things as easily as any of the other startups in the top 50. Before, that money would be going through some other big company approval process -- e.g., if reddit wants to hire away a fabulous programmer, it simply gets done.
If things go well, reddit continues to grow and increase its value, at which point, it could potentially be acquired, IPO [RDIT?], or just become a cash cow for Condé Nast.
[+] [-] dkokelley|14 years ago|reply
[+] [-] gyardley|14 years ago|reply
If Reddit's going to monetize effectively (and that's a big 'if'), it needs to be operationally independent so it can get creative.
[+] [-] SoftwareMaven|14 years ago|reply
As a stand-alone entity, they won't be subject to those rules, and Condé Nast doesn't have to worry about the rest of its companies saying, "but reddit did it".
[+] [-] mibbit|14 years ago|reply
"The move comes after Conde talked to several investors about selling off a chunk of the company as part of the spinout;"
[+] [-] 0x12|14 years ago|reply
Note that a deal at that valuation did not go through, and that likely that valuation was an important reason why it didn't.
[+] [-] fecklessyouth|14 years ago|reply
Reddit would be perfect for it, and for campuses with less generous email policies. It doesn't interfere with work communication and its better suited for the sort of discussions and arguments that email often plays host to.
As a student, I can't speak much for companies. And I'm aware of Reddit's recent College promotion and how easy it is to make, moderate, etc a new Reddit. But a dedicated Reddit integrated with college websites or email could be a profit stream.
[+] [-] dotBen|14 years ago|reply
FTFY: This change is all about setting up reddit so that it can be be sold.
[+] [-] argus|14 years ago|reply
[+] [-] twidlit|14 years ago|reply
1. paid mobile apps 2. paid API access 3. build an internal Flattr like service 4. offline events 5. go compete with Disqus
[+] [-] epicviking|14 years ago|reply
[+] [-] krashidov|14 years ago|reply
I would like to see reddit release a product where I, can implement a forum system much like reddit but completely autonomous and hosted on their own service - basically a replacement to the dreaded phpBB. Hell, I'd pay for it.
[+] [-] jedberg|14 years ago|reply
[+] [-] mason55|14 years ago|reply
[+] [-] nohat|14 years ago|reply
[+] [-] citadrianne|14 years ago|reply
From http://www.betabeat.com/2011/09/06/a-startup-is-reborn-reddi...:
Greater independence will mean reddit can go to a new board, which includes reddit OG Alexix Ohanian, who had been serving as an “advisor,” as well as representatives from Conde and Advance, with proposals instead of jockeying within Conde’s budget. Reddit doesn’t plan to seek outside funding at this time, Mr. Martin said, but it’s not out of the question. “It’s a lot more more of a startup,” he said. “It’s able to happen faster with less overhead.”
[+] [-] barredo|14 years ago|reply
How much? I'd say 50M$ would be adequate.
[+] [-] jkaljundi|14 years ago|reply
[+] [-] garydevenay|14 years ago|reply
I think an online service could revolutionise the way we all read and digest news, Reddit is the first stepping stone in this revolution but I expect it to be overtaken soon by a superior service (The same way Facebook has MySpace).
[+] [-] cowkingdeluxe|14 years ago|reply
[+] [-] kn0thing|14 years ago|reply
[+] [-] ck2|14 years ago|reply
[+] [-] pointyhat|14 years ago|reply
[+] [-] gigantor|14 years ago|reply
They have also, in my opinion, implemented mainstream and niche news so well (via subreddits) that they're not in immediate danger of being replaced by another aggregate news and/or niche site.
[+] [-] dchuk|14 years ago|reply
Now they spun them out so other people can finance it without it being their sole burden.
[+] [-] cryptoz|14 years ago|reply
[+] [-] IAnsari|14 years ago|reply