
Reddit costs $33k/month to operate? - there
http://www.reddit.com/r/blog/comments/ctz7c/your_gold_dollars_at_work/c0v8ug8?context=1
======
cheald
That's actually not terribly surprising. Reddit's always been extremely
conservative with ad space, and it seems like they could offset a lot of that
if they started running more "traditional" ad slots.

By their own numbers, they do about 14.3m pageviews/day. Let's assume half of
that is AdBlocked. A single 300x250 at an exceptionally low $0.05 CPM would
yield $3,575/day in ad revenue, or $107,250/month. I'll guarantee that reddit
could pull far, far higher CPMs. Like, an order magnitude or two higher.

Edit: I'm off by an order of magnitude, see below. Point stands, though, that
there is a lot of ad money they're leaving on the table.

~~~
jamiequint
I agree with your main point but your math is off by an order of magnitude:

(14,300,000 x $0.05 x 0.5)/1000 = $357.50/day

I still think Reddit could easily pay their costs by running ads, not sure why
they are not doing so.

~~~
danielsoneg
Their user base is outright hostile to the idea.

~~~
cheald
Users are actively hostile to ads in general. Reddit's userbase, in
particular, has been spoiled by the staff's similar attitude towards ads. The
fact remains that computing power, bandwidth, and storage takes money, which
is easy for your average hostile-to-ads user to forget.

If they dropped in AdSense units, there would be an uproar for about a week,
then people would adapt and life would go on with a significantly bolstered
revenue stream. Worst that happens is that more users would still be
adblocking, but given their page view volume compared to their expenses, I
can't imagine that even that would be a net loss.

~~~
masklinn
> The fact remains that computing power, bandwidth, and storage takes money,
> which is easy for your average hostile-to-ads user to forget.

Uh... therefore reddit gold. That's the point.

~~~
axod
Reddit gold will probably bring in 2% of what adsense would bring in (If the
userbase was 'better')

~~~
jacquesm
I think you are completely wrong about that. Even at a very low conversion
rate subscriptions pull in an awful lot of money. Typically my subscription
income outweighs my ad income by about 5 to 1 in a given month. And my site is
_far_ smaller than reddit.

The key to this is user retention, and if reddit users are loyal to reddit
(which they seem to be, especially those willing to pull their credit cards) I
wouldn't be surprised to see retentions on the order of 6 months or more.

What do you base the 2% on ?

~~~
axod
If you look at the internet as a whole, the number of $ revenue from
'subscriptions' vs number of $ from advertising, then the % is probably far
lower. <1%. Also my personal experience has been that it's far far easier to
make money from advertising. Especially for something like Reddit where there
is little incentive for people to pay.

For Reddit, yes you'll get a number of die-hard fans who want to subscribe.
But I don't believe that there is a big enough value proposition for the
userbase to do that en-masse. They may as well just set up their own reddit
since the code is open source (And wouldn't be that hard to recreate if it
wasn't).

It _might_ be different if:

    
    
      A). Reddit wasn't spending crazy money on servers
      B). Reddit wasn't owned by a multinational corporation
      C). Reddit hadn't pandered to, and cultivated a staunchly
          anti advertising userbase.
    

Right now though, it's looking like they're going to try a subscription based
news service. Which fails time and time again. People don't want to pay for
online news.

Also from their latest blog post, it looks like they're just spending the
'reddit gold' money on _more_ hardware! Instead of fixing the underlying
issues.

~~~
commandar
>Also from their latest blog post, it looks like they're just spending the
'reddit gold' money on more hardware!

And hiring a designer! Because, you know, that'll fix their load issues.

~~~
protomyth
joking aside, a good designer can save you bandwidth money if they know what
they are doing. (please note I used the word "good")

~~~
masklinn
Considering reddit's current bare-bones design, a designer would have a hard
time coming up with something eating _less_ bandwidth, lest he removed all
colors.

~~~
protomyth
You can waste a lot of bytes on a bar-bones design if done poorly. A couple of
years ago there was a blog post (can't find it now) about a designer redoing
slashdot.org using css and that redesign had a pretty large % change in size.

~~~
cheald
Slashdot was tables-based back in the day, which can't help but be verbose. :)

(The point stands, though, that "basic" doesn't mean "light").

------
jbail
A comment or two down, jedberg explains they use reserved instances from
Amazon, so their hosting fees are more like $22,390.37 a month.

~~~
bkrausz
Actually they're even lower, since the 3 year instances are so much cheaper
than the 1 year over time.

    
    
      (1820 * 57) + (910 * 23) = $124,670/yr in reservation fees
    

Changes to

    
    
      (2800 * 57) + (1400 * 23) = $191,800/3yr in reservation fees
    

Which, when spread over the 3 years, brings the cost down by $5,061.39/mo,
making the final cost there actually $17,328.98.

Of course this assumes they're doing 3 year reservations, but I don't see any
reason not to on their XL instances (I could be wrong though, not sure how
open Conde Nast is to logic like this).

~~~
jedberg
We use one year reserved instances because our budgets are done annually.

~~~
axod
Why not just get some dedicated servers? :/ I still don't understand why
anyone with any amount of load or traffic would use the most expensive hosting
available.

~~~
jedberg
We had dedicated servers. It saved us 30% a month to move to EC2.

~~~
axod
I can't understand how that would be the case. Did you run virtualization on
the dedi servers so you had multiple 'machines' on them to play with? (If you
need that sort of thing for your architecture)

What was the limiting factor on dedicated? CPU? ram? bandwidth?

Maybe you just had a really bad dedicated server deal? Were they reasonably
priced?

Even VPSs are cheaper than Amazon.

I started out on VPSs and saved a _lot_ moving to dedicated servers once it
made sense to. For the dedi servers I use I don't have to pay for RAM monthly,
and I get bandwidth at a good price.

The kind of money you're paying on servers is just obscene. It wouldn't matter
if Reddit had the revenue of course...

~~~
burningout
There is no point proposing them to use dedicated servers as already many did.
They are 100% sure dedicated servers cost more, so let them keep their ec2's
and let them fail!

I wonder why google, yahoo and facebook don't run their site on ec2... if it's
cheaper.

~~~
rmc
Google et al. do essentially run their servers on EC2. However it's their own
version of EC2, in their datacentres. They have a whole pile of virtualised
servers they can turn on an off by the minutes. They have internal accounting
systems so that each team is 'charged' based on what they use. Google are so
big, so it's cheaper for them to make their own datacentre than use someone
else's (i.e. Amazon's).

EC2 only came about because Amazon run their servers on it, and they had so
much spare capacity, so they sell it.

~~~
ergo98
>Google et al. do essentially run their servers on EC2.

If by EC2 you mean "bunches of servers", sure.

On GoGrid you can buy cloud servers, or you can rent dedicated servers (and
you can intermix the two). The latter are quite a bit less expensive for a
given quanta of resources, while the former obviously offer greater dynamic
flexibility (with a significant premium).

Actually considering the terrible I/O rate of services like EC2, dedicated
often offers a dramatic advantage.

>They have a whole pile of virtualised servers they can turn on an off by the
minutes.

But they don't. So they use none of the upside, and have all of the downside.
Yay!

~~~
jedberg
> But they don't. So they use none of the upside, and have all of the
> downside. Yay!

That's not true at all. We shut down machines when we are over capacity
(rarely) and we often have to bring up a bunch of new machines where there is
a traffic spike.

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rufugee
Wow...this is hard to believe. Numbers like that make me wonder if the cost of
going with ruby or python (in reddit's case) or insert-your-slower-dynamic-
language-here outweigh the benefits in the long run. How can anyone bootstrap
a company and scale to the size of Reddit without quickly running into a "must
fund or sale" situation?

If it's truly a python issue, it should not be taken lightly by entrepreneurs.
I hope it's not...I'm an avid user of both ruby and python, and want to
believe they can both be used to create successful and maintainable (in terms
of effort _and cost_ ) sites.

~~~
joshu
Actually, I bet you it's a "we hit the database on every pageload" problem.

~~~
blhack
The overwhelming majority of reddit's pageviews are users that are not logged
in, which is very very cacheable.

~~~
jedberg
About 20% of the users are logged in, and they represent about 50% of the page
views.

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apower
That's just the server instance cost. What about bandwidth and S3 cost?
Bandwidth would cost a bundle.

~~~
jedberg
The bandwidth is less than 5% of the total cost. It's about $2500 a month.

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d0m
So.. how much cost HN? :)

And what/who pay for that?

~~~
tomjen3
Very little compared to reddit. PG said recently that HN has 60K unique/day.
Reddit has around 8Million.

In addition to that, the software behind HN doesn't do nearly as much as the
reddit software: there is no automatic checking of new messages, there are no
sub reddits you need to work on, there are only so many votes to be processed,
etc.

I have no clue about who pays for what, but I guess PG pays.

~~~
robryan
I would assume though it would be even easier here than on reddit to get
people to donate towards server cost should the need ever arise.

~~~
rick888
The users of reddit are downright hostile toward anyone trying to make money.
There was a thread last week about paid accounts. Out of 2000 comments, I
think I only found one or two people supporting the idea. Most of the comments
were somewhere along the lines of "paid accounts creates two classes of users
and everyone should be equal" and "it's not my job to figure out how reddit
makes money" (advertisements are actively blocked by 30% of users).

When your userbase is filled with college kids and anti-capitalist, you are
going to have a tough time making money,

~~~
Super_Jambo
Being anti-advertising is no the same as being anti-capitalist.

There is a good argument that advertising actively moves you away from the EMH
which is one of the strongest arguments in favor of capitalism.

~~~
rick888
"There is a good argument that advertising actively moves you away from the
EMH which is one of the strongest arguments in favor of capitalism."

I said anti-capitalist because many people were against advertisements and the
gold accounts. While there may be many people lurking on reddit that are not
anti-capitalist, it's a sentiment I see in almost every topic related to
making money on that site.

------
acangiano
Amusingly, I can't read it because I get an error: "the service you request is
temporarily unavailable. please try again later.".

~~~
ronnier
I have a screenshot of it here:
[http://toadjaw.com/screenshot?id=http://www.reddit.com/r/blo...](http://toadjaw.com/screenshot?id=http://www.reddit.com/r/blog/comments/ctz7c/your_gold_dollars_at_work/c0v8ug8?context=1)

~~~
memoryfault
What is toadjaw? The homepage didn't seem to have any info.

~~~
ronnier
It's my after hours/weekend project. It'll eventually be a bookmarking site.
I'm about 75% of the way there before I open it up to the public. Some of the
features are nearly completed, like the screenshots and article text viewer.

Along the way, I realized it would be trivial to make a mobile HN reader, so I
spent some time doing that <http://toadjaw.com/hn>

~~~
ritonlajoie
Hey I use your website everyday on my Iphone. Love it, and thanks for the new
'theming' and new buttons, that's better than last week !

Keep up your website. Maybe you should put an ad on it, I would click it once
a day to help :)

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pbhjpbhj
I wonder what the best money-saving optimisation would be?

Whilst it sounds like a lot of money remember that the whole sites annual EC2
bill could easily be paid for several years by one of the Newhouse brothers
(who own Advance Publications, who own Conde Nast) selling one of their
Reubens or probably just giving up their bank interest for a month (est. about
¼-million USD per day for the poor one : 1day of 2% annual interest on $4.5
billion).

~~~
ryanwaggoner
Of course the Newhouse brothers _could_ do that, but they could do it
precisely for the reason they'd be unlikely to: if it's a bad investment, they
shouldn't keep throwing money at it. Not saying that it is a bad investment,
just that ignoring the problem because it's owned by a rich person who could
easily bail it out ignores the way rich people think.

~~~
pbhjpbhj
>Not saying that it is a bad investment, just that ignoring the problem
because it's owned by a rich person who could easily bail it out ignores the
way rich people think.

I don't want to argue that at all. I'd argue that bailing them out as if
they're a charity is wrong given that supporting it would be pocket change for
the owners - less than they'd pay for a painting that they probably don't even
bother to look at (I know that these paintings are not to look at, humour me).

------
Revisor
There is a great talk by an (ex-) developer from Reddit about the technical
background, scalability problems, caching, storing redundant data, queued
offline computing etc. This might shed light on some questions in the comments
here.

[http://thinkvitamin.com/dev/steve-huffman-on-lessons-
learned...](http://thinkvitamin.com/dev/steve-huffman-on-lessons-learned-at-
reddit/)

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theprodigy
People are usually the highest cost for most companies. Reddit for sure needs
admins, developers, sales, marketing, etc.

------
eleitl
Presumably, they could halve the costs buy racking a bunch of SuperMicro
boxes.

Renting an empty rack is about 200 EUR/month, and you can fill it with back to
back mounted Atoms with SSDs for less than 40 kUSD. 160 cores and 320 GByte
RAM with some 16 TByte/s peak throughput for some ~2 kW is not that bad for
the price.

------
known
Would moving reddit to a cloud will make it cheaper?

~~~
dgudkov
It's already there.

