Reddit will start charging developers high fees for accessing its API, demanding $12,000 for 50 million requests, a price higher than industry norms. The move aims to diversify revenue sources as API costs concern developers due to large language models searching the web. Reddit’s IPO plans in 2021 prompted this change, and despite criticism, the company remains committed to its pricing strategy. With advertising as its main revenue stream, Reddit seeks to monetize its active user base and boost revenue amidst a slowing digital ad market.
Reddit has announced that it will implement substantial fees for third-party apps that access its data. To diversify its revenue streams, the social media and news aggregation platform will begin charging developers high fees for access to its application programming interface (API). Developers will be required to pay $12,000 for every 50 million API requests, a price that exceeds the industry standard. This move comes as API charges have become a growing concern for developers and companies, particularly as large language models scour the web for content.
Reddit, which has been in operation for 18 years and disclosed plans for an IPO in late 2021, aims to generate additional revenue by requiring developers to pay for direct access to its data and content. The creator of the popular third-party app called Apollo expressed disappointment at the high costs, stating that Apollo alone made 7 billion requests last month, equating to approximately $1.7 million per month or $20 million per year.
While application programming interfaces have traditionally facilitated third-party access to data from major internet companies, the rise of artificial intelligence-powered tools, as well as Elon Musk’s ownership of Twitter, has heightened attention on API costs. These tools, which rely on large language models trained on vast amounts of web-based content, including user-generated posts on platforms like Twitter and Reddit, have led to increased scrutiny and outcry from users and developers.
Twitter previously faced backlash when it announced it would charge $42,000 for 50 million requests, and Reddit’s pricing, although not as extreme, still amounts to $12,000. In comparison, Apollo disclosed that it paid only $166 for the same number of API requests from the online image-sharing service Imgur.
While Reddit has historically relied on advertising for the majority of its revenue, it has struggled to monetize its active user base compared to its peers like Facebook, Snap, and Pinterest. With the digital ad market experiencing a slowdown and Reddit’s IPO filing now 18 months in the past, the company may be under pressure to bolster its revenue.
Despite potential concerns from users and developers, Reddit seems committed to its API pricing strategy. The Apollo developer mentioned that the company had no issues with the announced changes. As of now, Reddit has not responded to requests for comment.
