Last month, Reddit announced that it had filed with the Securities and Exchange Commission for an initial public offering of shares on the New York Stock Exchange, an event observers had been anticipating for several years. (The company filed an initial statement of intention to go public in December 2021.) It is expected to start trading later this month. In a blog post, Reddit described itself as a “community of communities, built on shared interests, passion, and trust” and said that it is home to the most “open and authentic conversations on the internet.”

Ironically, at least some of those open and authentic conversations have recently concerned how terrible the Reddit stock offering will be for the community, which has developed a reputation for its somewhat anarchic attitude. One member of r/WallStreetBets, a subreddit (which is what Reddit calls its forums), suggested that others should “short the shit out of” Reddit’s stock. (Short sellers profit from a stock by betting correctly that its price will go down.) Some users called the IPO the “beginning of the end.”

In what appeared to be an attempt to win over some of these skeptics, Reddit set aside a certain number of IPO shares for the community’s most active users. Fortune reported that in early March, some of these users logged in to their accounts to find a message asking if they wanted the option to buy stock at the same price as institutional investors taking part in the IPO, with a deadline of March 5 to indicate their interest. The company called the share program a way of saying thank you to “redditors who have contributed to making Reddit what it is today.” It said that 8 percent of the total had been set aside for users, but didn’t say how it had decided which users would receive the offer. According to Fortune, Reddit is not the only company to take this approach: Uber and Airbnb both offered some of their users the option to buy shares at the IPO price when they went public, in 2019 and 2020, respectively.

Whether Reddit’s share offering wins over any of its disgruntled users remains to be seen, but the source of some of that disgruntlement is well known. One of the unique aspects of Reddit’s community is that each forum has a moderator or group of moderators who set the rules. These moderators are powerful, but also unpaid; they are volunteers, chosen by consensus. Last year, as I reported at the time for CJR, the company was hit by a “moderator revolt” that saw thousands of its most popular forums go offline by changing their status to private, a process those forums’ moderators referred to as “going dark.” The revolt was, ultimately, a classic power struggle between these unpaid workers and Steve Huffman, Reddit’s cofounder and CEO, over the future of the community and its users.

The unlikely trigger was a change to the company’s application programming interface, or API, a set of software instructions that allow third-party apps to access Reddit’s data. Reddit announced plans to start charging for access to its API, which used to be free; in response, Christian Selig, the creator of a popular app used for browsing Reddit, announced that he would have to shut down the app, claiming that the API fees would cost him at least twenty million dollars a year. In interviews, Huffman said that the company didn’t want to continue subsidizing third-party apps like Selig’s, which compete with Reddit’s official app. But moderators of Reddit’s most popular forums said that they relied on third-party apps to do their jobs, because these apps were faster and better than the official one. Some users also speculated that the changes were driven by a desire to boost revenue so that Reddit could go ahead with its IPO.

As I noted last year, the moderator revolt was in many ways an existential debate over the future of Reddit itself. Writing in New York magazine, John Herrman argued that the protest looked a lot like a garden-variety labor dispute, except that no one was getting paid for their work. Many Reddit users see the volunteer moderators as valued members of the community—and much of the community’s value and power arguably stems from their work in forums. (Recently, James Ball wrote for CJR about some of these forums’ growing value as a source of news.) In the past, Herrman wrote, Reddit seemed to understand that if it tried to monetize the site too aggressively, its most valuable users would “see their contributions as unpaid labor” and would start to lose interest. But at some point the company’s perspective changed. Now, per Herrman, Reddit seemed to see moderators as “insignificant weirdos who are…holding the site hostage.”

In his newsletter Stratechery, Ben Thompson argued that the furor over Reddit’s API changes was caused by a fundamental tension at the heart of the community. Another reason the company started charging a fee for the use of its API: it was upset that Google and OpenAI were scraping its data to power their artificial-intelligence engines (which train themselves on content swept up from around the internet). And yet, as Thompson pointed out, Huffman and his team didn’t create that data, Reddit’s users did—with the help of its unpaid moderators. The revolt, Thompson argued, was also caused in part by irritation that “everything that was supposed to be special about the web…has turned out to be nothing more than grist to be fought over by millionaires and billionaires.” A number of Reddit users and supporters compared Huffman to Elon Musk, the owner of X (formerly Twitter), who had also angered app developers and researchers when he moved to hike API fees.

In June, at the peak of the blackout, more than eight thousand subreddits were dark. But the effort didn’t last. Reddit replaced some recalcitrant moderators; more generally, the protest just seemed to run out of steam. One of the last holdouts—the forum known as r/aww, which had asked its users to protest by posting photos only of the comedian John Oliver—revoked that rule in August. The moderators of r/aww argued that the rule had helped call attention to the company’s problems. But “did we win?” they asked. “The short answer is no.”

The protest did, at least, get the company’s attention. In the official prospectus for its IPO, it noted that one risk factor for the stock is the potential for disruptions to the site caused by the actions or inactions of its volunteer group of moderators. (It specifically mentioned the subreddit r/WallStreetBets.) Reddit’s share price, the company said, could “experience extreme volatility for reasons unrelated to our underlying business.”

On the same day that it announced its IPO filing last month, Reddit also announced a sixty-million-dollar deal that would allow Google to scrape the site for AI training data. Last summer, Huffman told The Verge that the API changes were all about covering costs and making data licensing into a new revenue-generating business, suggesting that Reddit may seek out deals with rival companies. As recently as October, Reddit had threatened to block Google and Microsoft’s Bing from crawling the site unless they paid licensing fees. And Reddit’s IPO prospectus makes clear that new revenue sources are crucial for the company: it has lost money every year since it was founded, almost two decades ago, including a loss of more than ninety million dollars last year (although revenue increased by about 20 percent over 2022).

Huffman and his college roommate Alexis Ohanian founded Reddit in 2005; in 2006, it was acquired by the magazine publisher Condé Nast, which is owned by the Newhouse family through its holding company Advance Publications. The site was spun off as an independent unit in 2011, but Advance is still the majority shareholder. (Huffman left the company but returned as CEO in 2015; Ohanian, who became a venture capital investor, is no longer involved.) Other large shareholders include Fidelity Asset Management, a private equity group, and Tencent, China’s largest technology company. Sam Altman, the founder and CEO of OpenAI, has the third-largest stake. The company was valued at around ten billion dollars after a private fundraising round in 2021, but the IPO as currently priced would only give Reddit a market value of about six and a half billion dollars.

Digiday noted that Reddit currently has seventy-three million daily active users. This makes it much smaller than some of its competitors: Meta has about three billion daily active users across Facebook, Instagram, and WhatsApp; TikTok is estimated to have about one and a half billion monthly active users, while Snap says it has over four hundred million daily average users. While Reddit had revenue of more than eight hundred million dollars last year, Meta’s revenue was more than a hundred times larger. ByteDance, the Chinese company that owns TikTok, had an estimated eighty-four billion dollars in revenues in 2022. The financial performance of Reddit is thus one question mark as the company prepares to go public. Will it be able to build on its success as a community of communities and create a viable platform the way Facebook has? Or will it gradually fade and become irrelevant, the way MySpace, Friendster, and other predecessors did?

Another major question isn’t so much financial as emotional or psychological: Can a company whose value is based on the free labor of its users find a way to build bridges and mend fences with those who increasingly see it not as a safe place for them to gather, but as a rapacious, profit-oriented landlord? As The Verge put it during the revolt last summer, Reddit’s push for control over its communities was to some extent a risky game. The company’s “attitude toward the users that have made it into the giant that it is,” the site wrote, “could harm the platform more than any apps ever did.”

Other notable stories:

Yesterday, members of the House of Representatives from both parties voted overwhelmingly for a bill that would force ByteDance, the Chinese owner of TikTok, to sell the app to non-Chinese owners or face a ban in the US on national security grounds; President Biden has said that he would sign the bill, though it’s unclear if it has enough support to pass the Senate, and even if it does, it is likely to be challenged in court. Despite its easy passage, the bill has faced sharp criticism, including from free speech advocates; Jameel Jaffer, the director of Columbia’s Knight First Amendment Institute, called it “a betrayal of the First Amendment and a great gift to authoritarians around the world, who will soon be citing this profoundly misguided bill to justify new restrictions on their own citizens’ access to ideas, information, and media from abroad.”
Also yesterday, it emerged that Elon Musk, the owner of X and famed free speech absolutist, canceled plans for a show that Don Lemon, the former CNN host, was set to launch on the platform after sitting for a contentious interview in which Lemon asked him about the spread of hate speech on X and his personal drug use, among other topics. (“I don’t have to answer questions from reporters, Don,” Musk said during the interview; yesterday, he panned Lemon’s planned show as “basically just ‘CNN, but on social media,’ which doesn’t work, as evidenced by the fact that CNN is dying.”) The dispute could now end up in court—according to Semafor, Lemon had not signed a formal contract with X, but a representative said that he still expects the company to pay him.
Recently, we noted the progress of a package of proposed legislation aimed at supporting local news organizations in Illinois, one plank of which would require big tech companies to monitor how often their platforms link out to work from eligible outlets and then pay them a “journalism usage fee” as compensation for their work. (Similar legislation has advanced in recent years in Australia, Canada, and elsewhere, as we’ve chronicled here at CJR.) Now, just as it did in Canada, Meta, the owner of Facebook and Instagram, is threatening to block news content from its platforms in Illinois if the legislation becomes law. Wes Davis has more details for The Verge.
CJR’s Bill Grueskin dug into a letter in which lawyers for the billionaire Bill Ackman and his wife, Neri Oxman, accused Business Insider of defaming Oxman when it reported allegations of plagiarism against her. “Having been on the receiving end of other firms’ letters—none of which were this wordy or which resulted in a successful verdict or settlement—I can attest that it stands alone not just in its length but in its kitchen-sink compilation of grievances,” Grueskin writes. “That said, once you sift through the letter, you’ll find some credible concerns about the way Business Insider reported its stories.”
And the British government said that it plans to ban “newspaper and periodical news magazine mergers involving ownership, influence or control by foreign states”—a move that will likely block RedBird IMI, a firm helmed by the former CNN boss Jeff Zucker and backed by the United Arab Emirates, from buying the Telegraph and The Spectator (a deal we wrote about last year). Along with the US TikTok bill, yesterday was a “big day for Western governments intervening on issues of media ownership,” Ben Smith noted.

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Mathew Ingram is CJR’s chief digital writer. Previously, he was a senior writer with Fortune magazine. He has written about the intersection between media and technology since the earliest days of the commercial internet. His writing has been published in the Washington Post and the Financial Times as well as by Reuters and Bloomberg.

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Reddit moves to monetize its unruly community