Every consumer site wants user generated content for free but is not willing to share a tiny bit of the revs.
This signals desperation than proper business development. Reddit should look at Snapchat: today they have a Nike filter live. This is smart monetization and gives more bucks than this affiliate hack. Besides, Reddit should have done this affiliate thing themselves and not employed Viglink. Any intermediate will not just take their cut, they take more and send lower reports in general (if a CPA deal).
I think Reddit has proven over the last decade that they have more limited options then other tech companies because of their engineering ability. Sports threads (NFL playoffs, NBA, MLB, Hockey, Football) up until maybe three years ago would unilaterally crash Reddit's servers or create large amounts of lag across the platform. It has been "solved" in recent years with an absolutely ABSURD amount of caching that is detrimental to the user experience because it will prevent the user from seeing updated content for a few minutes. They have limited streaming functionality that does not make up for this.
They hired their first CTO in 2015 and he seems to be doing a good job. But theirs no silver bullet for a legacy infrastructure especially if you add all the pressure Reddit is receiving to monetize ASAP.
I actually think companies can get away with "underpaying" engineers if they can offer alternative benefits like great culture, lower cost-of-living, growth opportunities (career and equity value), etc..
But Reddit is a company with a laundry list of PR crises, with an office in one of the most expensive cities in the world, constantly changing leadership, constantly changing leadership goals, extremely dissatisfied investors, an estranged and angry founder, AND a reputation for underpaying engineers.
Ten bucks says they file a complaint somewhere stating "their aren't enough developers in the work force".
They didn't used to be in San Fran, and they used to support remote work, where cost of living was less of an issue, and lower salaries could stretch a lot further if (for example) an employee was working in the mid west. They had a bunch of strong advantages and an already geographically dispersed workforce and threw it away at a time when they really needed to be getting the most bang for their buck.
As far as I remember, they indeed are in severe money troubles. I guess they are, if they need to get pennies off affiliate links. Because, let's be honest here, how much money do they expect to make? My guess is that they will make around a couple thousands a month. What do they expect to do with that, especially at the expense of looking cheap as fuck?
Every penny counts. Even if it's only a couple of thousand every month that's part of a year of dev time paid for, who could be focussed on infrastructure efficiency etc.
I'm assuming the conditions currently occurring at Reddit would make any investor dissatisfied. Stemming from a mix of seemingly negative public opinion, seemingly rushed or short-sighted monetization strategies, and technical challenges.
Articles like this [1] seem to indicate tension between the board and leadership. I assume when any such tensions become public that they are larger in reality then they first appear, because normally such tensions remain private. Though in this case it may just be Wong's and Reddit's board's personality to be more open about such things.
It's pretty liberal for me to make these assumptions, granted. And I've made like a dozen comments on this thread mostly because:
A) my procrastination is terrible today and
B) I'm a rabid Reddit user and usually speak up whenever it comes up on Hacker News, I'm not be trying to gun down the company's throat I promise, just trying to engage in a critical discussion.
I would change extremely dissatisfied to dissatisfied though, but the edit option isn't appearing to me right now (time limit or "tree-weight" I guess).
Who would they file such a complaint against? Do they write it on an index card and drop it in a box in front of the US Department of Labor or something? I'm confused by the premises of this bet. They're a teeny tiny company with < 100 employees and people talk about them like they're Standard Oil circa 1890, twirling their mustaches and engaging in Dynasty-level interpersonal corporate drama. It's literally just a small group of (probably mostly twentysomething) people sitting in a small clump of office space in SF, regardless of how significant the thing that they maintain is to so many people. I don't know how they manage to even keep the lights on given how much traffic they get, much less the crap they have to deal with on a regular basis from many of their users.
I don't doubt that there's a laundry list of corporate dysfunction at Reddit HQ, but even the most seemingly universal complaints I see people post about seem more like collaborative storytelling exercises where a bunch of people are getting each other worked up into a frothy rage over stuff that just really doesn't matter in the grand scheme of things. The pitchforks-and-torches mob mentality I've occasionally seen on Reddit is way more damaging to those communities than anything I've ever heard of regarding the company leadership.
The last legitimate valuation for Reddit was $500M in 2014. They are not a teeny tiny company. And as far as Reddit's competency being heavily editorialized, I'd agree, but if you google a prospective employer and get ten pages of shit it's enough to get the wheels turning against joining the company, which is the question at hand.
"Reddit board member and YC president Sam Altman announced that Yishan Wong was leaving after being unable to garner support for a proposal to move the Reddit office from San Francisco to Daly City.[12] Wong, who thought newer employees would prefer to work in a less expensive area, stated that before the disagreement he had considered leaving due to an abundance of stress."[1]
That quote is a little disingenuous, and you can read more about the situation in these links if you're curious. The Quora link is the ex-CEOs response which puts a good frame on things.
Edit2: It's also telling just how many people were championing Ellen Pao as the replacement. I have to think nobody really knows who'll be a good CEO until after the fact.
Not to mention they have these weird urges to completely control their userbase, to the point where people are creating services like go1dfish or uneddit to see posts that were deleted - and most of the time the posters didn't even break any rules. It's just toxic atmosphere for everyone.
I think Reddit provides those consumers with a forum for their content which otherwise would not be seen by as many people, and therefore defends its value up front.
The contributors on the other hand get to use reddit for free. Sure, many of them could publish OC on their own websites and get hits. A lot of them, no one would care, because their content is only interesting in the context of the reddit culture and hivemind (this is especially true for comments).
Lets not forget how much traffic reddit could drive to your personal site or blog, either.
I am surprised it took reddit so long to do something so simple to generate money.
Can you imagine Reddit's community responding to an equivalent of the Nike filter in a way which helped rather than harmed the brand? For the most part, I can't.
Not only that, but I would think if Reddit participants did get paid, surely the quality (such as it is) would go way down as everyone would be even more incentivized towards producing clickbait comments and stories.
I'm actually amazed that Reddit continues to even exist given how much traffic it gets every day and how little income it must get from what (relatively) few ads it serves. I don't know what this massive cashflow is that people think they're entitled to tap into.
Snapchat's revenue for 2015 was reportedly $59M [0] which does not seem to support their current valuation of $18B. i am not sure if they did native advertising in 2015 like the nike example you suggested.
i suspect that they are going to have to get _significantly_ more aggressive with advertising or come up with a different business model altogether.
they are going to have to get _significantly_ more aggressive with advertising
Only if their monetization plan is being led by someone from a news site. Snapchat being what it is, they would be smarter to sell less for more. That is, if you don't have (much) advertising and a lot of demand, the little real estate you do cede to monetization is more valuable. They don't have to do takeovers.
There are sites that do this. For example, Tsu did this as a social network. Digitalpoint was a forum that used to do stuff like this with ad revenue sharing, and other forums installed the add on for it too.
The problem is twofold:
1. If you're massively successful, then revenue sharing creates huge incentives for spam. Hence you often get people posting links to their content all over the place (especially on rival sites), at which point your brand gets seen as sleazy and your domain often added to a lot of blocklists. You also get a lot of low quality users signing up to post junk in the hope x amount of people click their ads or affiliate links. Digitalpoint got flooded with one liners and gibberish from people in poorer countries and ended up losing most of its more respected users in the process.
2. Revenue sharing often breaks down to a very, very limited amount of money for anyone using the site. Social networks and forums are not the best for ad clickthrough rates or affiliate links, This varies based on how exactly the users are paid (per discussion, per post, per video/image, etc), but it generally isn't enough for anyone to live on unless either got really low expenses or the site itself is ridiculously massive. That's why new sites don't do it.
Just a feeling. It's really very hard to get major brands like Nike as advertisers on board. Why: they want a perfect environment. A positive one and a premium brand which fits to them and a great audience. And not to forget a HUGE reach. Once you have all of these PLUS contacts to the right media agencies then you get good deals based on CPM. The less you as a publisher can offer the more you end with CPC or even crappy CPA deals where you never know if the intermediate evades your commissions.
Just look around, usually advertisers pair themselves with publishers with a similar brand awareness and quality. Eg Nike or BMW won't advertise on Reddit or Facebbok because there would be a too strong asymmetry between advertisers' and publishers' brands. Nike and BMW would rather place and position themselves to eg the next James Bond movie from Sony (=> similar brand perception).
Reddit is the typical publisher that is avoided by a lot of major advertisers. The brand and the audience is maybe too heterogenous and inconsistent. While a sub like Photshopbattles might be positive and funny many other subs like Gonewild (which is huge btw) give Reddit a mixed perception. However, doing a deal with Viglink shows that they must have tried everything before (to get deals with major brands) but finally resigned and go now the affiliate path.
There is one good thing about affiliate marketing though: ad blockers do not harm your business.
> There is one good thing about affiliate marketing though: ad blockers do not harm your business.
They can if you use something like Viglink. That's another reason to roll your own solution. Really don't understand why they decided to go through them just to avoid a bit of regex.
Why roll your own first when you can use an out of box solution to see if the monetization is a good strategy before investing engineer time into it?
If it's a good fit they can always roll their own later. Hell, they may be rolling their own right now but wanted to start capturing the additional revenue at a lower margin immediately.
>just to avoid a bit of regex
I've never heard of Viglink and am too lazy to google, but I'd wager the real value provided by the company isn't adding affiliate codes, but rather strong analytics features allowing you to optimize revenue across different affiliates etc.
It's the regex and the fact you can partner with any retailer automatically without individually applying to all of their affiliate programs. Reddit surely surely are implementing an in house solution (or maybe I'm giving their management too much credit)
Good enough is often good enough. Why shove non-trivial amounts of engineering effort into it when you can take advantage of a service?
If there's enough money in it then maybe it would be justifiable to put engineering effort into it themselves. In the mean time "free money" for minimal effort.
Every consumer site wants user generated content for free but is not willing to share a tiny bit of the revs.
I don't think there will be much revenue to share. It's too easy to get around this. Link to your own page, and redirect to your affiliate offer. Anyone that takes affiliate marketing on Reddit seriously will be doing this, so I doubt this will generate much revenue for Reddit.
You're right. I only read the announcement, which implied that they would be rewriting all links. I didn't see until just now that this was addressed in the comments.
This signals desperation than proper business development. Reddit should look at Snapchat: today they have a Nike filter live. This is smart monetization and gives more bucks than this affiliate hack. Besides, Reddit should have done this affiliate thing themselves and not employed Viglink. Any intermediate will not just take their cut, they take more and send lower reports in general (if a CPA deal).