Reddit’s API Fiasco
I’m aware that this post is almost a month late, but I still wanted to write about Reddit’s API rug pull. On June 12th, I remember trying to check out my most frequented subreddits only to find that they’d gone dark. I couldn’t view any content on them. All I could see was messages that said something along the lines of ‘XYZ subreddit has gone private to protest Reddit’s exorbitant API pricing’.
I figured this protest would be successful because many big subreddits with tens of millions of subscribers had gone private, and I thought this would hurt reddit’s ad revenue. However, almost a month later, things seem to have gone back to normal. This got me digging, and here’s what I found.
For context, Reddit is one of the biggest websites in the world, with over 1.6 monthly active users (MAU). Despite all this, Reddit barely makes any money. Estimates show that they made approximately $510 million, which roughly equals 2.5 cents per month per user. If that wasn’t bad enough, Reddit bleeds money. Why? Because maintaining such a highly used site isn’t cheap. Reddit needs lots of infrastructure and engineers to maintain their platform and has to spend big bucks for the same. This, in all likelihood, made VCs shudder and even start pushing back.
Reddit is also planning on IPO-ing later this year, and before doing that — they wanted to clean up their financials and look pretty for their investors and the public. But, at the same time — they had to cut costs in a way that wouldn’t invite public backlash (like disabling AdBlock, or ramping up subscription prices). So, the execs ended up deciding on something seemingly inconspicuous — jacking up prices of the Reddit API.
What the hell is an API? Think of APIs as waiters in a restaurant, and you’re the customer. When you want food, you tell the waiter what you want. The waiter then heads back to the kitchen, tells the chef to whip up your dish and brings it back to you on a platter. All you had to do was make a request!
APIs work the same way. They are interfaces that communicate requests to a system/server and fetch the requested data. They are used to integrate various portions of an existing website/feature into another website/app. For example, if you were on a restaurant’s website and see an interactive map showing you the restaurant’s location — that website is most likely using Google’s Maps API. Whenever users interact with this map, the website makes a request to Google’s servers and returns data.
This is an API call, and Google will charge this website based on the number of API calls made each month. For dynamic maps, Google charges $7 for 1000 requests. Reddit’s rate — $0.24 for every 1000 requests pales in comparison. Moreover, it provides a generous free tier, allowing users to make upto 100 API calls per minute for free. So what’s the issue?
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The issue is that the Reddit API used to be free REGARDLESS of scale, and several apps/businesses have already been built using the API. One such example is Apollo — an iOS app that uses a bunch of Reddit APIs to recreate the Reddit experience but with a great UI that users prefer.
It has around 1 million daily active users (DAU). The problem here is that third party apps like Apollo — don’t show Reddit ads. This meant that Reddit had to support these apps for free — as it had to bear the cost of maintaining backend infrastructure while these apps don’t have to pay for the API and essentially gets Reddit’s data for free. Moreover, apps like Apollo for instance, can make money by charging users for a premium tier — and Reddit gets none of it.
Even though it seems like these businesses built off of Reddit’s APIs are making a lot of money, they really aren’t. Let’s assume 10% of Apollo’s users pay for the subscription — $1.5 per month. That means Apollo makes around $150,000 per month. Here’s the kicker. Apollo makes 7 billion API calls to Reddit every month, all of which used to be free. But with Reddit’s new pricing model, Apollo will have to pay $1.7 million every month to continue operations. Is this unfair? Corporate greed? Maybe. But it’s also important to recognize that Apollo is making an insane number of requests every month, and using the API in a way it isn’t meant to be used. Why, you ask? APIs are normally used to do things like integrate a post into an article. This would cost almost nothing according to Reddit’s pricing. But apps like Apollo aren’t just looking to import one post. They are importing Reddit’s entire platform which is why the cost per user per month is high.
Given that a lot of Apollo’s user base are dedicated Redditors — either moderators or people who knew moderators, they began organizing a protest now known as ‘Reddark’. This protest has largely fizzled out, because the average user likely doesn’t care and just wants their cat memes. Reddit’s CEO, Steve Huffman stood his ground and basically said that Reddit has to be self-sustaining and therefore cannot keep subsidizing these 3rd party apps.
An interesting angle to this whole issue is what Aaron Swartz, the late co-founder (technically) of Reddit and a fierce advocate of open access to information, would think about this situation. It is likely he would be leading the protest and spinning up proxy servers to bypass Reddit.
