
Reddit reaches for profits through a geek-culture bazaar - akhiluk
http://reuters.com/article/2013/12/28/us-reddit-gifts-idUSBRE9BR04F20131228
======
seunosewa
Dear Reddit,

Making money on the Internet is a solved problem. You just need to sell ads.
Please suspend these nerdy business experiments and just focus on improving
and promoting your ad platform. That is literally all you need to do.

And even if you choose not to do that, you can achieve profitability within
the next 2 months by merely moving away from AWS to a more cost-effective
website hosting platform, since hosting costs are your greatest expense.

Since you can easily raise revenue and cut costs at the same time, if you're
not profitable in the next 2 months, it's only because you don't want to be
profitable. And, hey, that's cool if your investors don't care.

~~~
calbear81
Reddit has always been anti-ads especially since they feel strongly that their
userbase hates ads and would actually revolt in a mass uprising if Reddit
started getting more aggressive with the ads they show.

I'm actually with you about them finding more cost effective ways to serve all
that content. I wonder if they should think about using peer-to-peer caching
using HTML5/webworkers and other distributed caching methods. Given that the
community has strong support for reddit (they even give money freely via the
donation bar), maybe they would be okay with allowing spare bandwidth to be
used to keep the site running.

On the ads side, I think the proprietary system they have is not doing them
any favors when it comes to getting a piece of the ad spend pie during RFPs. I
don't even know how an advertiser would begin to figure out which subreddits
they should target w/o having to sit down and dive into all the stats. The
other core issue I think is that reddit specifically touts the fact that you
target by subreddit not by demographics/users/behavior, etc. but I think that
data is extremely important to most advertisers.

~~~
seiji
_revolt in a mass uprising_

What actually happens: the old timers complain for three days then just put up
with it.

People still conflate online complaining with meaning and desires of the
entire user base. Sadly, online comments aren't independent statistical
samples from your entire user base.

What's the rate again? 2% of users actively participate in sites while 98%
happily browse and put up with ads?

~~~
rhizome
You're making a huge, possibly fatal, assumption about quality remaining
constant.

~~~
seiji
Quality of submissions or comments?

I was part of another forum-based company that went from zero advertising to
full display advertising with banners and adsense (the ads brought in another
$200k to $500k per month). Some of the vocal members (read: always bitchy
about everything, even mild color or margin changes) complained at first, then
went back to their normal bitching about everything else in the world.

All changes hurt at first, but we can't not change everything forever.

~~~
rhizome
Quality of the site as a whole, both subs and comments.

Again, you're assuming that the presence of additional advertising will have
no effect on the content. Perhaps your example webboard always sucked, you
know?

One additional way to look at it is to gauge whether your webboard is more
popular and/or more highly trafficked than its related subreddits. This last
point doesn't necessarily speak to content quality, but it does relate to the
relationship and motivations of its community.

A tenet of advertising is to maintain a blindspot for self-reflectivity, to
assume that everything would be the same whether they were present or not.
Leaving aside the economics of production, for a simple example of TV shows, a
lack of advertising would enable longer shows and thus more content, which is
what people presumably watch these shows for. A negligible number of people
watch TV only for the advertising content, and I think we can agree that a
station that is only comprised of advertising would not be very popular. QVC
will never get the ratings that "Duck Dynasty" does, much less one composed
entirely of 30sec spots.

------
bhaumik
How would the HN community react if any of the ideas suggested in this thread
were implemented by PG?

Non-redditors need to understand the overwhelming revolt against any sort of
advertisement in the reddit community. Yishan Wong (CEO) had to respond to one
of the "top" comments when this article was posted in r/technology[1].

While reddit "fans" will support the company through "Reddit Gold"[2],
advertisements in the form of "sponsored links" or "feed ads" doesn't seem to
work under the beloved format [ex: 3]. If you're interested in learning about
Condé Nast and other investors , I found a "myth busters" blog post [4].

[1][http://www.reddit.com/r/technology/comments/1tvfze/reddit_is...](http://www.reddit.com/r/technology/comments/1tvfze/reddit_is_going_for_profitability_next_year/cec2256)

[2][http://blog.reddit.com/2013/10/thanks-for-
gold.html](http://blog.reddit.com/2013/10/thanks-for-gold.html)

[3][http://www.reddit.com/comments/1o6f63/now_you_can_fly_histor...](http://www.reddit.com/comments/1o6f63/now_you_can_fly_historys_greatest_warplanes_in/)

[4][http://blog.reddit.com/2013/08/reddit-myth-
busters_6.html](http://blog.reddit.com/2013/08/reddit-myth-busters_6.html)

------
candeira
Some time ago I read that Andover.net/Geeknet made most of its money via
ThinkGeek. It still didn't made the company any profit [1].

[1] - [http://beta.fool.com/ddelony/2012/09/20/will-selling-
slashdo...](http://beta.fool.com/ddelony/2012/09/20/will-selling-slashdot-and-
sourceforge-save-geeknet/12332/)

But making profit off selling stuff is only half the challenge. As the sale of
Slashdot to Dice Holdings illustrates, the Internet doesn't quite like cross-
subsidies. That's what's undoing traditional media: in newspapers, the cartoon
page attracted viewers and the real estate listings attracted paying
advertisers, and between those the paper rag could pay for the foreign
correspondents, or for the reporter at Town Hall. Now it's everyone for
themselves, and some outlets make writers responsible for their own traffic,
article per article. That's how we end up with listicles all over the place.

But I digress. Reddit has two challenges: one, make the profit off sales that
it can't make off running The Front Page of the Internet. Two, maintain the
cross-subsidy once the managers realise they have a profitable store weighed
down by this money-losing forum, so hey, "couldn't we make more profit if we
didn't have the forum?"

------
onedev
Two words for ya reddit: "Feed Ads" (aka inserting ads in between pieces of
organic content/stories)

It works for Facebook, it works for Twitter, it will work for you. The only
thing is you have to be careful how you present it and design it into the
existing platform.

~~~
minimaxir
Feed Ads would cause a user revolt _overnight_.

Reddit is caught between a rock and a hard place since users like Reddit
_because_ of the nonintrusive ads.

~~~
jds375
It's so true. It would be much to risky to do that. Reddit could risk a Digg-
like exodus if people got too pissed off. I think a more viable strategy would
be to somehow expand the reach of reddit so that it isn't merely a replaceable
social media/news site.

~~~
seiji
_could risk a Digg-like exodus_

That only happens if there is somewhere else to jump to. What else is there?

We don't use the best of all possible systems, we use the best available
system, which is always highly imperfect.

~~~
adventured
I'd suggest that Imgur will be a nearly complete replacement option for Reddit
(no coincidence, it's intentional). At the rate Imgur is increasing in size,
and the rate at which they're moving toward social, this is seemingly just a
matter of time now.

~~~
dreamfactory
I have a sneaking suspicion that there is a big overlap of the early adopter
core user bases from kuro4hin, slashdot, reddit, and HN - i.e. a lot of the
same people moved from one to the other and created the editorial direction
(so to speak). By that measure HN is 'the next Reddit'.

~~~
sltkr
Unless HN starts supporting sub“HN”s (or starts allowing porn, jokes and My
Little Pony-related posts on the frontpage) I don't think it's a viable
replacement for Reddit.

~~~
dreamfactory
It's already got a lot more political stories (though necessarily post-
Snowden); HN feels pretty much like early reddit now. Though I do think Reddit
morphed its community precisely to avoid just being another in this list (Digg
exodus helped that too of course).

------
Havoc
The tech posts by their admins always make for good reading. Initially I
thought "how hard can it be?", but they have to generate so much of their
stuff dynamically that I'd be seriously impressed if they can make the numbers
work. Especially since that dynamic complexity doesn't scale all that well.

------
ChrisNorstrom
They're better off creating a job board for the entire site. I've tried
advertising on Reddit 3 times and each has been a complete and total failure.
It's BOTH the users and the method of displaying which is leading to
poor..er...no results.

===== Reddit Users =====

● Advertising on Reddit is equivalent to a business hustler in a suit
approaching you at a hackathon. Ads are unwelcome because no one on Reddit is
there to buy anything.

● Even if you get lots of traffic, there's no conversion. Out of 1,000 unique
visits I've had ->1<\- person actually bought a calendar. I joked around
saying "I'd probably get more sales advertising on a porn site" and just for
the hell of it actually went through with it. Gay porn sites seem to be the
cheapest on blogads.com with the lowest cost per impressions + high
impressions & big community. So I booked a 1 week spot on "TheBananaBlog". I
actually got 3 sales from it. So advertising a calendar on a gay porn site is
more cost effective than advertising on Reddit. Think about that next time
before you try to buy ads on Reddit.

===== Reddit's Ad Methods Flaws =====

● Reddit doesn't understand what an "ad" is. Plain and simple. It tries to fit
"ads" into a "content" form factor and group them into the "content feed"
where they DO-NOT-BELONG. Users don't like this. They don't like this on
Reddit and they don't like it anywhere else on the web.

● By mixing ads and content Reddit is making their advertisers seem deceitful
and dishonest. Like we're trying to sneak a money making scheme into their
pristine community of readers. When really we're supporting their community.

● Reddit lacks version control and the ability to test out different ad type
content.

● Too many Reddit users tend to be "dough bags". The type that always ask you
for food/pizza/ride/cigarette/drink and never repay you. I'm sorry but it's
true. They'll rip images from people's personal blogs and link to them
directly rather than linking to that person's page with the entirety of the
content. Or they'll just re-upload stolen content to imgur where all their
images are hosted. Their excuse is that they won't want "blog-spam".
Everything to them is blog-spam -_-. They like to take and not give back when
it comes to content. So advertising to this crowd will get you no where.

===== Possible Solution =====

● Use 1 traditional ad on the right side with "Today's Community Supporter:"
above it. Make sure the ad doesn't use "ad like code", rotate, and is a static
image that way it's much less likely to get blocked by ad blockers.

● Nothing. Reddit was like this since the beginning. I remember Reddit back
when it was just 1 reddit (before subreddits) and the community behavior was
similar. Snarky, condescending, anti-entrepreneur.

What makes Hacker News awesome is the community's understanding of self
promotion: Posting a link or plug to your startup/business when relevant is
acceptable: The calendar I mentioned above is here at my custom webstore:
[http://dayonepp.com/](http://dayonepp.com/) you can use coupon code: "hn" to
get $3 off.

------
fuckpig
Reddit's real product has always been its hipness. You introduce something on
Reddit, and 1000 bots-or-people "upvote" it, and suddenly the press picks up
on the story.

How does this translate into dollars and cents? Reddit could use its platform
to popularize new hip counterculture products. When advertisers purchase ad
space, the real ads would be in the links and comments.

All it takes is about a dozen people to upvote something within the first 8-10
minutes after it is posted and it stands a good chance of "going viral."
That's harder to sell than ads, but perhaps more valuable.

~~~
Havoc
>Reddit's real product has always been its hipness.

I disagree. Their strength (in my view) is that its a build your own community
DIY. If you feel strongly about turnips then start a turnip subreddit. vb
forum etc doesn't have that flexibility.

EDIT: FML...someone claimed /r/turnips already.

~~~
onebaddude
>I disagree.

I think it's both. Your turnip site instantly becomes the hippest turnip site
due to it's location on Reddit.

~~~
Havoc
Fair point - building a community is easier if you've got a bunch of
community's that are effectively neighbors.

The other thing I just realized is that the smaller subreddits benefit from
elitism - as ugly as that sounds. i.e. /r/pics is driven by raw masses, while
/r/turnips would likely be driven by a small group of die-hards.

