Reddit’s winding path to a potential initial public offering hit its latest bump after the site’s plans to make more money from access to its data drew condemnation from volunteer moderators.
Moderators representing thousands of Reddit communities with a collective 2.8 billion subscribers organized a widespread blackout on Monday, saying price changes will effectively kill third-party Reddit apps. Popular subreddits such as r/aww, which offers a space to discuss cute photos of animals, went into to private mode on Monday, displaying a message in protest of the change.
Reddit said that starting July 1, it will limit free access to the use of its data API, or application programming interface—which is how two computers or platforms exchange information—based on usage. The move may be an effort by the firm to improve its financials ahead of a potential initial public offering. The company filed to go public in late 2021, but enthusiasm for IPOs went ice cold in the ensuing months. Reddit said at the time that its debut would be “subject to market and other conditions.”
Though the company said 90% of apps fall into the free category, apps that require higher usage will be charged 24 cents per 1,000 API calls. Christian Selig, creator of the popular Apollo Reddit-browsing app, estimates the changes would cost more than $20 million a year to keep his app running. He plans to shut down his app on June 30. The move followed a decision from
Elon Musk
‘s Twitter to charge for access to its own API.
Reddit told Barron’s the company has communicated to its communities that access to the data involves costs. It also said the Apollo app is less efficient than other third-party apps. It will keep API access free for moderator tools and bots.
“We’re committed to fostering a safe and responsible developer ecosystem around Reddit—developers and third-party apps can make Reddit better and do so in a sustainable and mutually-beneficial partnership, while also keeping our users and data safe,” the company said. Reddit was sold in 2006 to magazine publisher Condé Nast, whose parent Advance Publication remains a shareholder after spinning off Reddit in 2011.
CEO Steve Huffman also addressed the planned protest in a post on the platform earlier this month.
“We respect when you and your communities take action to highlight the things you need, including, at times, going private,” Huffman wrote. “We are all responsible for ensuring Reddit provides an open accessible place for people to find community and belonging.”
The drama represents another shadow over the firm’s path to an IPO. Reddit is among the most popular internet sites, but it has long struggled with user backlash in efforts to monetize its reach. Because Reddit relies on volunteer moderators to police content and keep discussion moving, it has multiple levels of constituencies to appease. An IPO would add Wall Street to the list. Asked about the IPO, the firm referred to its December 2021 blog post.
Write to Connor Smith at connor.smith@barrons.com
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