Inherent conflict in Reddit’s business model
@riantogo | 8 months ago | #panet

You might be aware of the moderator protests over at Reddit and how it was crushed. It started when, in the light of its forthcoming IPO, Reddit decided to price their API to kill off popular apps like Apollo and RIF.

I have been a redditor since the beginning (launched 2005) when it started small and rapidly grew from digg exodus. It went from being a single tight community to a platform for hundreds of thriving communities. The software just worked and it started pulling in independent old-web forums, all centrally consolidated on the platform. Today you can find a community for virtually any topic. Reddit is not alone; there are other platforms like facebook groups, tumblr etc. where communities came together. But generally it went from distributed forum websites to a handful of central platforms.

With a classic forum that you would self host using bbPress, phpBB or Vanilla Forums, it is a bit harder to get going but you have ownership over your forum. You would find ways to monetize it, typically using ads, which helps support your investment of time in facilitating the community. When you use a platform like Reddit you trade convenience for monetization.

This is where it gets interesting. On these platforms, as a moderator, you feel you are the steward of your community and play a critical role, albeit without the economic incentive. But from the platform's POV you are only an unpaid worker, contributing to their business making money, by administering a community that they own.

You can hear it in the Steve Huffman interview with Jason Calacanis where he is explicit about their ownership of the users and data, and it being a business decision. At one point Jason describes Reddit content ownership being similar to Disney and NYTimes. Except there is one big difference. Disney creates their content while Reddit creates nothing. It is the community that creates the content.

The platform is aware of this mismatched expectation, but walks a fine line through the growth phase. It comes to a head during some key business events (IPO, acquisition, partnership etc.) and the community eventually seeks out a new platform.

To break this new cycle we need alternate business models to take hold where instead of the platform raking in all the money using free community content, the majority of the value is channeled back to the community and its organizers with the platform retaining a reasonable software fee. We need to popularize such platforms as FairPlay Platforms.

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