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How Reddit set itself up for a fall

@EQUITYMATES|22 June, 2023

The Reddit blackout of the past few days was the latest in a long line of community activism from the self-described ‘front page of the internet’. For those unfamiliar with Reddit, it operates a little different from its social media peers. While Facebook, Instagram, TikTok and the rest centralise content moderation with internal teams, Reddit has devolved power to its users. Groups of community volunteers moderate each of Reddit’s more than 2.8 million subreddits.

This community policing is a superpower of Reddit. It gives it a unique place amongst social media platforms. It also makes it very hard for the Reddit corporate headquarters to make changes. As they found out last week.

Reddit’s thousands of volunteer moderators and millions of most-engaged users feel a strong sense of ownership over the platform. Not only are they contributing the content, they are also moderating and managing it. So when Reddit proposed to greatly increase the price of its API’s – which would have bankrupt many 3rd party Reddit apps – the community revolted.

Reddit claims that its move was to defend its data from AI large language models being trained on its data without paying. Analysts have suggested an alternative reason – that 3rd party Reddit apps don’t carry Reddit’s advertising. And as Reddit prepares for an IPO, it wants its revenue numbers to look as good as possible. (Such a move isn’t new, Twitter made a very similar move with its API’s before it went public).

Reddit’s power has been it’s community. Allowing users to create forums on anything they could think of has led to some wonderfully niche communities. Allowing them to self-govern has allowed Reddit to avoid many of the impossible decisions around free speech and censorship. Instead every community can decide the rules for themselves. But when you empower your community to such an extent, you must be careful when you take it away. And that is an important lesson for Reddit leadership to remember after they IPO and feel the pressures of a public company.


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