‘Unlike some of the 3P [third-party] apps, we are not profitable,’ Steve Huffman says in defending the move to charge for high-volume API access.

  • Lojcs@lemm.ee
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    1 year ago

    How tf is reddit not profitable? When I first joined reddit it had a progress bar to the side that showed the percentage of server costs covered by reddit gold and it was always filled. Since then they started showing lots more ads, added reddit coins, awards and premium subscription to increase their revenue. The increase in their cost/user has to be from the native image/video uploads and redisigning the website/app. If YouTube manages to be profitable hosting 4k videos, reddit must be doing something very stupid to become unprofitable with their low quality videos.

    • SterlingVapor@lemmy.world
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      1 year ago

      Because we have an absurd monetary system.

      Companies also need to “grow or die”, the capital holders don’t want to invest in a sustainable company that turns reliable profits - they want line curve up

      Reddit probably took on loans and additional investments to push towards growth plans, like the website redesign or marketing. They might’ve bought fancy office space to look the part, and bought big booths at conventions.

      And maybe it all even worked - but the pressure is always going to be “take more loans and try to grow even faster” - not “pay off the principal so your monthly payments go down”. After all, if you double in size, paying off the loan would be trivial

      Except the way our systems are set up, you have to keep growing until you can’t - at that point, you pop and deflate into a shell of what you were

    • 1rre@discuss.tchncs.de
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      1 year ago

      Server costs are probably a small proportion of their costs, labour costs are probably going to be the biggest part, and I wouldn’t be surprised if Spez’s salary/bonus knocks them from profitable to unprofitable, as being profitable is bad for tax purposes

      • WalterzarBoBalterzar@lemmy.world
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        1 year ago

        With all due respect and empathy to reddit’s employees who do deserve gainful employment:

        Does a link aggregator really need a huge labor pool? In terms of functionality Lemmy is already on par with how I remember Reddit 10 years ago (compared to which the experience of Reddit today is actually worse). And Lemmy achieves it with what, an extreme fraction of the labor cost?

        Props to all the devs, admins, etc who are hosting all these Lemmy instances for us, btw :)

          • JohnEdwa@sopuli.xyz
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            1 year ago

            Majority of them hired last year, back in 2021 they only had 700. The only reasonable explanation would have been adding hundreds of new admins/moderators, but I don’t think that was the case, so I have no clue what all of them have been doing for the last year and a half.

          • Perdendosi@lemmy.world
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            1 year ago

            My guess? 250 devs 200 administrative folks (secretaries, hr, accounting, etc) 50 executive level 1500 marketing and communications and sales folks

            :)

    • radix@lemmy.world
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      1 year ago

      It’s pretty common for big companies to not show a net profit. Remember Amazon wasn’t profitable until relatively recently, because they would reinvest all their cash into growing the business. They could have shown a profit any time they wanted; just stop investing in infrastructure, etc. It’s often a choice to run at break-even or even a loss while capital expenditures are high. I have no idea if that’s what’s happening behind the curtain over there, but it’s one possibility.

    • Sans_outside@lemmy.world
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      1 year ago

      I believe AD revenue is drying up for all tech sectors and the collapse Silicone Valley Bank didn’t help either. You can see a lot of technology companies are cutting back on spending. Layoffs are happening in all sectors of technology. My guess is these companies are preparing for the coming recession.

    • cfx_4188@discuss.tchncs.de
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      1 year ago

      undefined> How tf is reddit not profitable? When I first joined reddit it had a progress bar to the side that showed the percentage of server costs covered by reddit gold and it was always filled. Since then they started showing lots more ads, added reddit coins, awards and premium subscription to increase their revenue. The increase in their cost/user has to be from the native image/video uploads and redisigning the website/app. If YouTube manages to be profitable hosting 4k videos, reddit must be doing something very stupid to become unprofitable with their low quality videos.

      Apparently Reddit’s advertising policy was wrong since their profits dropped. Reddit cannot be compared in popularity to YouTube.