The long-awaited Reddit IPO is on the horizon, potentially making it the largest social media IPO since Pinterest. However, in its filed documents, Reddit fails to fully address the complications arising from its developer platform changes and API pricing. These changes, which occurred late last year, sparked protests across the site. The API pricing changes slammed Reddit communities, destabilized the site, and led to a drop in traffic.
Reddit IPO moderators and users alike protested the policy, which was seen as killing popular third-party apps with API cost increases. The protests on Reddit did not discuss the possibility of Reddit being replaced by the decentralized social media movement. This movement has the potential to become a competitor to Reddit in the future. To stay relevant in the ever-evolving social media landscape, Reddit must consider this.
Community Discontent and API Policy Changes
Reddit’s API price changes were part of the company’s plan to lock down user-generated content (UGC) that has been used to train AI models. Reddit’s IPO shows a rapidly growing business potential. Revenue from data licensing to other companies reached $203 million. This shows the high demand for Reddit data across various industries.
However, this profit-oriented move sparked significant anger among the Reddit community. Mass protests erupted on Reddit. Communities and moderators were outraged by the cost changes that would kill their favorite apps. They united to fight Reddit’s new policy.
User Data Business and Its Impact
Reddit’s actions to disrupt the developer business, anger users, and now, sell Reddit user data to train AI systems, have left a mark on the company at a time when the internet itself is undergoing a kind of reboot. Additionally, there are other changes happening across the social web that could eventually impact Reddit and other centralized platforms.
The Decentralization Trend: Threat or Opportunity?
After Twitter (now called X) changed its API fees to lock down third-party developers, similar to Reddit, a number of its users moved to newer decentralized social networking platforms like Mastodon and Bluesky. This decentralization trend is further promising with Mastodon’s user growth and the broader network of apps connecting to the “fediverse” (the name for the decentralized social web) reaching 17.2 million users.
Smaller efforts to offer decentralized alternatives to Reddit are also underway. Projects like Lemmy, Kbin, Raddi.net, Aether, Lime Reader, and others are gaining momentum.
Reddit fails to acknowledge this in their risk factors, other than claiming that “influential Reddit users” or “certain demographics” may conclude that “alternative products or services better meet their needs.” However, if Meta (formerly Facebook) is afraid of the power of decentralized social networks to the point of joining the movement, is Reddit immune?
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