"Paywalls" and more advertising: Reddit wants to become profitable

On Tuesday, Reddit announced its financial figures for the second quarter of 2024. The platform has never been in the black since it was founded in 2005 and is not doing so this time either: the quarterly report shows a loss of 10.1 million US dollars, which is 9.2 million euros or 8.6 million francs. This loss is around 30 million US dollars lower than in the same quarter of the previous year. Nevertheless, it is understandable that further ways of getting the platform into the black are being discussed.

Reddit has been working for a long time to achieve this goal and also used means that caused furious discussions and ultimately the shutdown of third-party apps last year. My colleague Florian wrote an article on the API price increase that got Reddit into the shitstorm.

More advertising content is now being discussed. But the introduction of VIP areas for paying users has not been ruled out either. There is certainly no shortage of "Redditors", as the quarterly figures show. 91 million users are active on Reddit every day. That's an increase of 51 per cent compared to the same period last year. So there is great potential here.

"Paywalls" for certain subreddits

To announce the quarterly report, there was a conference call with Reddit's executive board. The magazine Ars Technica reports on it here. According to CEO Steve Huffman, there is an idea to make certain subreddits only accessible to paying users. "Reddit Premium" has been around for several years: This means that paying users do not see any adverts and get access to the subreddit r/lounge.

This concept seems to be working well and Huffman therefore sees the opportunity to further expand paid areas. He says: "I think the existing altruistic, free version of Reddit will continue to exist, grow and thrive as it has done so far. But now we're going to open the door to new use cases, new types of subreddits that can have exclusive content or private areas [...]."

So you probably don't have to worry about your current favourite subreddits no longer being accessible for free for now. Huffman's statement rather suggests that certain new subreddits could be made accessible to premium subscribers. In this case, it's less about classic paywalls and more about VIP areas for paying subscribers. However, Huffman also emphasises that there are no clear concepts yet.

More advertising, more profit

On the other hand, more advertising should generate more money. Jen Wong, Managing Director of Operations, emphasises that Reddit runs comparatively few adverts. According to Wong, the aim is not to overload the site with advertising, but to identify the areas where the advertising is actually seen.

Technically, it is possible to understand where users spend a lot of time on the site. According to the study, users spend 50 per cent of their time in the discussion area, where there is hardly any advertising. Conversations can go on for pages without users seeing an advert. This could change in the future: According to Wong, Reddit is already experimenting with adverts in the comments section.

According to Huffman, there could also be more adverts in the search results. Reddit is currently improving its search algorithms and would also like to rely more on AI to show users relevant content when searching. According to Huffman, this area could also be easily monetised. Reddit has been working on such contextual adverts for some time. This means that the adverts are displayed in line with the content and the search. For example, camping accessories in camping topics or for camping-related search queries.

At the same time, Reddit has exclusive agreements with Google and OpenAI, among others. These companies are authorised to use Reddit content themselves and display it in Google search results, for example. In return, Reddit receives money from Google. Search engines without this agreement are excluded.