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Reddit's not profitable though..



I wrote this just above but I'll repeat it here:

Funny story about that. When we were owned by Conde, the accounting was a little different (they took on some of the charges, like Akamai), and so we were actually told we were slightly profitable.

When that blog post went up I was as surprised as you to see it wasn't profitable when I was there.

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Profitable is not that big a deal with something on the size and important of Reddit though.

Firstly, as with Wikipedia, if Reddit were forced to close because of money issues, Reddit could simply post a 'donate now or reddit shuts down' post and they would likely be rolling in millions of dollars.

Second, simply because reddit itself is not profitable does not mean people are not making a lot of money off reddit. The moderator system lends itself very well to a kind of 'corporate capture' of communities where moderators can be (and are) bought off for very tidy sums.

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> Firstly, as with Wikipedia, if Reddit were forced to close because of money issues, Reddit could simply post a 'donate now or reddit shuts down' post and they would likely be rolling in millions of dollars.

From what I remember, this is kind of why they started Reddit Gold.

http://blog.reddit.com/2010/07/reddit-needs-help.html

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It's ironic that the alternative to advertising, is to splash big "DONATE NOW" adverts over a website.

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Its not the alternative to advertising (it is advertising), its the alternative to soliciting and displaying third-party advertisements.

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For me personally, it ends up being far more annoying. I really wish wikipedia would just put small unobtrusive text adverts on each page rather than the massive intrusive banners begging for money.

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There is an issue of who calls the shots -- if you solicit donations from your users, that's who you are beholden to and need to serve to get money. If you are soliciting third party advertisements, that's who you are beholden to (and if you are using a third-party ad placement service, you are beholden to them as well as, perhaps more than, the actual advertisers.)

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That is one issue, indeed. But the downside is that you're hassling your users to give you money, rather than hassling advertisers to give you money.

I'd rather not be hassled as a user.

I would also click on adverts, and buy things if they're useful to me, but I don't think I'd ever donate to a website.

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I really wish wikipedia would just put small unobtrusive text adverts on each page rather than the massive intrusive banners begging for money.

Hi, welcome to your first day on the Internet. Since you're new, let me tell you how things work around here.

There are probably dozens of web sites similar to Wikipedia. But Wikipedia is on the first page of search engine results for just about anything you search for. Why is that? Because people have learned that they can trust them over the last 12.5 years.

When you go to Wikipedia, you know that when you're looking for information on the Battle of Hastings that you aren't going to see ads for anatomy enlargement pills. You won't see any advertising at all in fact. You know that the community at large does a decent job at removing biased information. You know that a company can't buy their way into hiding negative information or promoting positive information.

This level of trust is what causes people to link to Wikipedia thousands of times per day.

So let's say Wikipedia takes your advice. They put a small unobtrusive text advert on each page. Suddenly you're searching for information on acne and an ad for "Acbegone" pops up that promises to cure your problem for 3 easy payments of $19.95. Acbegone ends up becoming a huge advertiser with Wikipedia - spending $1 million per month on advertising. Suddenly Wikipedia gets The Phone Call. "Hi, this is Acbegone. We'd love to continue advertising on your site but your article on acne mentions 10 other products. Get rid of those and we'll double our ad spend with you. Don't get rid of them and we'll be forced to stop advertising." Wikipedia can't make do without the income they've become accustomed to so they make editorial decisions to not mention any product - but still there's that ad from Acbegone. Suddenly Wikipedia seems like one huge cheesey ad. People stop trusting it. People stop linking to it. It stops coming up in search engine results.

For a real world excample, see http://en.wikipedia.org/wiki/Digg#Digg_v4

Look at that - a link to Wikipedia.

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Welcome to the internet. You seem new.

Everyone goes to Google.com to search for things. You know that when you do a search, you're going to see helpful related adverts.

That level of conflict of interests and possible abuse, privacy concerns etc, means that the entire world uses google as their search engine. Oh and they make billions in profit.

Your hypothesis about an advertiser asking wikipedia to alter content surely applies to google search results.

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Your hypothesis about an advertiser asking wikipedia to alter content surely applies to google search results.

Google indexes other people's content. All Google has to say is, "Sorry, we're not in control of the content others make, our automated systems follow an algorithm we're unable to make one-off tweaks to." It could conceivably cost Google $1MM to make a one-off tweak to their algorithm in terms of programming and testing time.

Wikipedia on the other hand is all content. They have no plausible response other than, "Yeah, it would take 5 minutes to update that but we won't do that for you." Hell, all they'd really have to do is let the advertiser update it as they want and then instruct editors to do nothing.

It really is just different for this and a number of other reasons.

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The problem is, if wikipedia did alter articles based on advertisers demands (Which seems pretty far fetched to me), the public would just alter them back. Or see the edits wikipedia is making and put 2 and 2 together.

>and then instruct editors to do nothing.

Yeah good luck with getting wikipedia editors to comply with that request!

A site like wikipedia would likely have thousands upon thousands of advertisers. They wouldn't be dependent on a few big advertisers. If an advertiser came to wikipedia and asked them to change a page, wikipedia would just say "no", publish the details to make the advertiser look like a douche (cue internet witch hunt, boycot naming shaming etc), and not care about the 0.000% temporary drop in revenue.

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If there is one lesson that HN needs to learn, it's that profitable is not the same thing as important.

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Without cash flow, how far can the site go? Someone needs to pay the bandwidth/server bill. Not to mention it costs time to run a site. If you are working full-time at another job (because you aren't bringing any money in), you won't have any time to work on it.

Reddit succeeded largely because the company that bought them is making money elsewhere.

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>> Reddit succeeded largely because the company that bought them is making money elsewhere.

Such a nonsense makes me angry. Surely you've heard about companies called Google, Facebook, Linkedin, that succeeded without being bought and for a long time not making a profit.

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The difference is Reddit isn't particularly looking for profit. Unless they completely change their business and way of doing things (unlikely to happen), they probably will never make a profit.

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Agreed. If they are re-investing money to grow the product, that might be why they aren't currently profitable. That doesn't indicate a lack of success in my book.

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I think that the endless stream of stories about websites shutting down and deleting all user content has made it clear to HN users that clearing a profit is pretty important.

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So they are important, but need to live off ramen every day (figuratively). What good does that do to them?

I don't think grandparent should be downvoted, he raises a good point. Tons and tons of people use Reddit, but Reddit has a hard time making a living.

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> So they are important, but need to live off ramen every day (figuratively). What good does that do to them?

Maybe they enjoy it? Maybe it makes them happy?

Not everything is about money.

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Power and fame are strong motivators too.

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Look back in time. Read up on other things that had a massive userbase, but were unsustainable.

Checkup alladvantage - they paid people to surf. Had millions of users, but ultimately failed because their "business model" was idiotic.

Getting millions of users is pretty easy if you pay them to be a user. Someday though, it's only worthwhile if you can build a sustainable business which at least doesn't lose money hand over fist.

If Reddit hadn't got bought and supported by other profitable businesses, I doubt it would have survived.

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AllAdvantage was great for free money as a teenager. It only took a few minutes to slap together a VB application to move the mouse a few pixels every minute. I made a few hundred dollars from them while I slept.

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I guess I didn't have my act together enough as a teenager to commit fraud over the Internet while I slept.

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It wasn't really fraud. The terms of use etc weren't really clear enough or lets face it enforceable.

Was it fraud if you got a dog to play with the mouse, and never looked at the screen? The dog might have still been looking at the adverts!

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That was more of a general statement than a comment specifically on reddit's position.

I can make millions of dollars selling condom wrappers, but just because I have made millions of dollars does not mean that I have done something important. I may catch quite a bit of hate for this, but a large portion of HN's content is on things that make money, but are not truly important.

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I think the mantra from the startup community is often:

1. Make money doing whatever it takes. eg come up with some crappy website, sell it to google, then shut it down. 2. The money problem is solved! 3. Spend money solving world hunger, diseases, philanthropy.

Which IMHO is pretentious BS.

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> Reddit's not profitable though..

Source?

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"I confirm that reddit is not profitable." Yishan Wong, CEO

[1] http://www.reddit.com/r/CrazyIdeas/comments/1i7crj/antigold_...

[2] http://blog.reddit.com/2013/08/reddit-myth-busters_6.html

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I would find it incredibly strange if reddit is never able to make money. I don't think they are really trying at the moment.

Reddit is an incredibly valuable service. Maybe a lot of people on Hacker News don't see this, but reddit has basically become the Geocities of online discussion communities. The subreddit system has eliminated the "eternal september" problem, since all non-casual users will trickle into the communities that match their interests. Even if reddit loses 90% of its users, it will still be a highly relevant online community. I am certain that they can turn a (modest) profit if they really try.

Reddit will probably never become a massive money machine. But regardless, it is a very influential community. Even community is arguably an understatement at this point, it is really closer to infrastructure. As I have said here before, I would be willing to bet that it is still around in 10 years, with a significant (millions) amount of users.

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> * I don't think they are really trying at the moment.*

I can - sort of - confirm they are not trying hard. Last time I tried to advertise on Reddit, I failed because they could not accept CC payments from mainland Europe ... Just think of all the ad revenue they are losing.

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Advertising on Reddit is not the same as advertising in general.

If you advertise on Reddit, you're advertising to a violently anti-corporate anti-advertising audience, who may love you, but very well may hate you. You could be subject to a witch hunt at the drop of a hat.

I very much doubt advertisers would be lining up to advertise to that crowd. They're hardly big spenders either.

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This is an unsubstantiated claim. Some of reddit's communities are like this, but most are not. If you're just viewing the front page, you are viewing the lowest common denominator, which could give you this impression. But reddit is a very heterogenuous community.

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That doesn't mean you can't learn from it though.

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Reddit has an exceptionally low cost to scale ratio. Where are you getting the information that they're not profitable at this point (I know they weren't in the past)?

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From the horse's mouth (18th of July, 2013):

Yep, the site is still in the red. We are trying to finish the year at break-even (or slightly above, to have a margin of error) though. [1]

1: http://www.reddit.com/r/TheoryOfReddit/comments/1ihwy8/rathe...

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Last time they shared, they were spending ridiculous amounts of money on Amazon ec2 a month. Like ridiculous amounts.

Someday, the money will run out, and they'll have to try and turn a profit.

Their business model is fundamentally bad.

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If those outdated figures of ~$50k/month are true, I wonder if they could move to their own infrastructure or dedicated and turn some of those savings into getting from red to black.

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Yes.

We operate a dozen of our own colos, with a virtual colo on AWS for insta-scalable multi-region redundancy, and an Amazon "colo" costs the same as about eight of our own when spun up and serving at least a gigabit of traffic.

However, the difference is less if you're going from zero sys admins to 24/7 says admins. I'd SWAG the crossover is once your AWS budget exceeds 4 full time sys admins willing to do shift work.

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That wouldn't address the lack of a sustainable business model.

Being a forum where low wage/students/anti-corporate/anti-advertising types go and share memes is the elephant in the room problem.

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Just because reddit has a lot of anticorporate types doesn't mean they don't also have a lot of pro-corporate types, too.

For example, I wouldn't be surprised if the Internet's largest right-wing community turned out to be one of the subreddits.

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/r/all is the internet’s largest right-wing community, on any manner of subjects from race relations in America, to multiculturalism in Europe, to feminism and women’s rights anywhere. Last time I visited was around the Zimmerman verdict, and I couldn’t decide whether the conversation on reddit more closely resembled Free Republic or Stormfront—the major difference being that neither of those other right-wing communities can match redditors in their hatred and fear of women.

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