Reddit Business Model: All of Social Media in One Place

The Reddit Business Model stands out for being unique. As the CEO of Reddit, Steve Huffman, proclaims that Reddit is the front page of the internet. If the internet was a newspaper, Reddit would be the first page. What does he mean? Let’s dive deeper!

Reddit is famous for being an American social news aggregation social media platform. Social news aggregation is collecting content from different platforms and presenting it under one banner. Moreover, it is a web content rating and discussion website as well.

reddit business model

If you had been wondering, Reddit is a portmanteau of ‘read’ and ‘it’. The idea was to create a catchphrase such as ‘I already read it on Reddit’. The name made it easier for word of mouth marketing of the website.  

You can see a variety of subreddits, discussing different topics. Science, music, movies, videogames, sports, lifestyle, food, memes, and news etc. are some of the most discussed topics on the platform. The most up-voted content goes on to the front page of the website and is shown to more users.

Reddit was created in 2005 by two University of Virginia roommates, Steve Huffman and Alexis Ohanian. The website was acquired by Conde Nast Publications the following year. However, Reddit became an independent subsidiary of Advance Publications, parent company of Conde Nast, in 2011.

According to Alexa Internet, it was the fifth (5th) most visited website in the US and thirteenth (13th) most visited in the world, as of July 2019.

What Makes Reddit Different?

Reddit allows its users to upload contents to different ‘subreddits’ where other users up-vote or down-vote the content. Subreddits are sections on the website that organize the posts on the basis of the content.

Also, you can browse through different subreddits of Reddit without making an account. This is something not possible on Snapchat. Facebook and Instagram only allows to see some info before it prompts you to either login or sign up to continue browsing. Hence, Reddit is like that newspaper that anyone can read. As long as you have the newspaper, you can read it.

A Reddit account is needed if you wish to comment, up-vote or down-vote, or follow different subreddits. Reddit gets a lot of attention for being a website that allows you to find all the latest happenings around the world in one place. Moreover, all the popular trends and things related to them can be easily found here.   

How Does Reddit Business Model Work?

reddit business model

Most of the viral trends or memes often originate from different subreddits of Reddit. The subreddits serve as discussion rooms for all of its users. For example, Reddit created a subreddit for Coronavirus that has all the latest news and statistics related to the novel virus. Users can share content related to coronavirus and discuss it in the comments.

Each subreddit has its moderators and subscribers. Users can subscribe a subreddit to have new posts appear on their news feed. They can also turn on notifications to stay updated at all times. The moderator’s job is to make sure that all the users follow the rules of the subreddit and the community guidelines of the Reddit. Reddit has banned subreddits in the past that failed to comply with the community guidelines.

The best part about Reddit is that the communities are created and ran by the users. Moreover, users have the liberty to create any kind of subreddit. They can post all kinds of content, comment or vote on the posts that are added to the subreddit.

Moreover, it is very easy to become a ‘Redditor’. To create an account on Reddit, you only need an email address. All you need to do is to add your personal details and create a username that is not already taken.

Reddit Business Model and the Algorithm

Reddit is a great place to start a discussion about anything. There are more than millions of subreddits online. If the subreddit of your interest does not exist, you can always create your own. Moreover, the diverse user base means that you can always find like-minded people. The community is always growing.

Furthermore, there is a myriad of content that is posted daily on Reddit. There has to be an algorithm in place to make sure that fresh content is shown to the users. Hence, the algorithm ranks the content according to the up-votes that it receives. Nevertheless, the algorithm prioritizes newer content over old content.

Users get ‘Karma’ for posting and commenting on posts. This is Reddit’s way of keeping the users engaged. You get Karma when your post/comment gets up-voted, and you lose it when it is down-voted.

How Does Reddit Business Model Make Money?

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reddit business model
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Like many other social media platforms, Reddit makes most of its revenue through advertisements. Reddit has a diverse group of users and has all kinds of discussions. Companies can choose to put up their ads on the main page of Reddit or on specific subreddits.

reddit business model

They charge companies on the basis of page views. Higher the page view, greater the amount of money charged. Moreover, the presence of Google Adsense advertisements on the website makes money from them.               

Reddit Gold/Premium

Reddit business model
Reddit Gold

Moreover, Reddit has an exclusive membership subscription for its users. This feature has been helping them to make a lot of money. The membership improves the user experience of the platform by providing extra features such as no ads, more comments per page, save comments, make avatars, use custom Reddit themes etc. The subscription is $3.99 per month and $29.99 per annum. It was renamed to Reddit Premium in 2018.

Reddit Premium

Reddit Coins

Awards you can buy with coins

Users with Reddit Premium get 700 coins every month. These coins can be bought by non-premium users too. These coins can be used to buy awards for users who post good content or comment. These award recipients get to experience the premium offerings without paying for it.

Reddit Gifts

Users can sign up to send and receive gifts from/to other users. There is a theme every month and users select a gift accordingly and send it to an anonymous Reddit user. In return, they receive a gift from another user.

Furthermore, it has a freemium option as well. The premium option is about $3 per month and offers the following features to its users:

reddit business model
Reddit Gifts Premium

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