Reddit’s IPO is a nail in the coffin for the centralised internet

Last week, Reddit, the 19 year old social(ish) platform and long-time backbone of the internet, went up for IPO. 

The news is not exactly a surprise; the company has been hinting at it for years now, and initially filed in 2021 before the market turned unfavourable. It is, however, interesting to see the enthusiasm for the stock, which soared more than 75% in its first week, given it has never turned a profit (its net losses last year totalled $90.8 million, despite 20% YoY growth in revenues). Users of the subreddit r/WallStreetBets, best known for being the place where the GameStop short squeeze originated back in 2021, are openly discussing shorting the Reddit stock. To some, it “seems like a gimmick”; others have said “it kind of feels like the final nail in Reddit’s coffin after years of degrading quality”. 

What exactly is Reddit? 

According to its 2023 prospectus, Reddit was one of the top ten most-visited sites in the US. Yet, less than a tenth of US users visit it weekly, according to MIDiA’s consumer survey. In principle, Reddit is a topic-organised forum for everything; a repository of niche community knowledge; a place for discussion, both civil and obscene; and a subculture hub housed in unique and (at times) competing subreddits.

For the vast majority of the people who visit the platform, it is a place to find the answers to obscure questions they cannot find anywhere else. For others, it is a place to explore their obscure passions with like minded web-dwellers. Be it searching “how to fix Mac sound going 1.5 speed when HDMI cable is plugged into TV” or going down the rabbit hole of fan theories (Game of Thrones’ main subreddit, r/ASOIAF, was where readers pieced together the true origins of Jon Snow long before the reveal episode aired), there truly is something for everyone… and the lack of centralised moderation has been critical in allowing this to develop. 

It is also this lack of centralised governance that, when threatened, has sent the platform into protest blackouts. Regular users often express distaste for the CEO, Steve Huffman, who has been responsible for some odd (and often failed) attempts at changing the platform.

What changes are likely to accompany the IPO, and what will this mean for the platform? 

To be worth investing in, Reddit has to start actually making money. It has outlined three main ways in which it will do this in its prospectus: increasing ad revenues, licensing its user-generated content to AI companies, and allowing users to monetise their own subreddits, while taking a cut of the profits. 

Without requiring an account to use it, the platform does not have the same specificity of user data used by other platforms to hyper-target ads – problematic for ad-saturated consumers. The idea of selling its data for AI training has some surface merit, but perhaps not huge long-term potential. The value of its dataset is not in the uploads happening every day, which now have the potential to be AI generated (thus contaminating the training data), but rather in the nearly two-decade backlog of primarily text and image content uploaded to it. The long-term business opportunity also ultimately requires generative-text language learning models (LLMs) to become profitable on their own. Google has already arranged a $60 million per year deal with Reddit to access its data, and OpenAI CEO Sam Altman, who is one of Reddit’s biggest shareholders and was once its CEO for eight whole days, has reportedly already used Reddit data to train ChatGPT. Growth in this area is therefore possible, but perhaps limited long-term. 

The third offering is to turn Reddit into a sort of DIY independent creator space and take a cut of the profits, á la OnlyFans for nerds of things like squirrels, DOTA, and crochet tips. This has not seemed to evoke enthusiasm from a community that is largely united by its distaste for corporate meddling. With the creator economy not really profitable for the long-tail of casual creators (which most avid Reddit users would be), this is also a late step into an oversaturated game – and may push users away altogether. 

The last wild west of the internet 

Reddit must effectively reinvent itself as a platform to be profitable. It will have to incentivise users who are accustomed to anonymous, multi-account browsing to stick to single accounts from which it can derive and sell better data to advertisers, turn open-source communities into monetisable walled gardens, and heavily moderate content – a significant challenge considering the absence of rules against hate speech until as recently as 2020. All of this is technically possible, but that version of Reddit will be almost unrecognisable from the current one, and will likely have a very different userbase. The closest we have seen to this sort of transition is Twitter to X, with the CEOs of Reddit and X bearing remarkable charismatic similarities, and the results of that transition have been far from the resounding success a stockholder might hope for. Regardless of whether the platform changes completely and becomes financially rewarding, or loses unhappy users and eventually collapses as a company (which some r/WallStreetBets users suspect may be the plan), the Reddit we know (and some even love) today will cease to exist. And that will be a very different internet, indeed. 

Reddit is one of the last remaining wild wests of the early internet, and it has been growing tamer. While 4Chan has largely disappeared from the cultural zeitgeist, Reddit, Google, Wikipedia and YouTube still stand as the remaining centralised ‘go to’s’ for anything one might need to find. YouTube has found its footing in the new world and Google remains invaluable (although potentially threatened by TikTok and the likes of ChatGPT, which consolidate answers rather than simply providing links). Outside of these, the internet has decentralised. Social platforms, long the hubs of gathering and discussion, are slowly fragmenting both internally, through an overwhelming number of feature-driven use cases, or via competition from other apps. 

Losing Reddit as a gathering place means one of the last such gathering places is gone. Should lights go out across the platform, we could face the beginning of a digital dark age as the final big digital town squares dissolve into tiny digital neighbourhoods, with no connective infrastructure left to link them.