Reddit plans to introduce paywalled content and AI search summaries

For Q2, Reddit’s revenue reached $281.2 million, up 54% year-over-year due to the platform’s growing ad business.

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 | August 8, 2024 , 1:57 pm
“Redditors’ participation in this offering could result in increased volatility in the market price of our Class A common stock,” the filing said. (Representative image by Brett Jordan via Unsplash)
“Redditors’ participation in this offering could result in increased volatility in the market price of our Class A common stock,” the filing said. (Representative image by Brett Jordan via Unsplash)

Reddit’s CEO, Steve Huffman, shared significant updates during the company’s Q2 earnings call. Huffman announced that Reddit will begin testing AI-generated summaries for search results. He also hinted at putting certain exclusive content behind a paywall to enhance revenue. Reddit launched its IPO in March this year.

Reddit is suggesting that it will place some subreddits behind a paywall to increase revenue. Steve Huffman mentioned this idea during a Tuesday earnings call when asked how the platform would help creators earn revenue like they can on Twitch, Instagram, and YouTube.

“I think the existing altruistic-free version of Reddit will continue to exist, grow, and thrive just the way it has,” Huffman said. “But now we will unlock the door for new use cases, new types of subreddits that can be built that may have exclusive content or private areas, things of that nature.”

Since its IPO in March, Reddit has been prioritizing revenue growth. For Q2, Reddit’s revenue reached $281.2 million, up 54% year-over-year due to the platform’s growing ad business. The company has also signed multiple deals with tech companies, including Google and OpenAI, to harness Reddit data to train AI models.

“Other revenue grew over 690% year-over-year to $28.1 million, primarily driven by data licensing agreements signed in the first half of the year,” the company reported in its regulatory filings.

Huffman informed investors that the company plans to test AI-powered search result pages to “summarize and recommend content.” This will help users dive deeper into content and discover new Reddit communities. These summaries, aimed at boosting user interaction with the platform’s diverse content—including games, communities, and product showcases—will be prominently featured at the top of search pages. Reddit will use a combination of first-party and third-party technology to power the feature, Huffman explained. The company will begin the experiment later this year.

Huffman also touted the success of Reddit’s AI-powered language translation feature, reporting that France is one of its “fastest growing countries.” The company is also beginning to expand the translation feature to German, Spanish, and Portuguese.

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