2 Comments

Summary:

As costs continue to rise along with pageviews, Reddit is looking to its community of users for help by promoting a membership model called Reddit Gold — an approach that other media entities might want to consider instead of just putting up a paywall.

You run a large and popular website that distributes news and other content on a variety of topics, but the cost of producing and hosting all of that information is climbing, so you need to find a way to pay the bills. If that describes your problem, you might be a newspaper or a magazine or some other traditional media outlet that is looking at a paywall plan — or you might be Reddit, the online community that has become a kind of news outlet in its own right, although not one without controversy. In an attempt to cope with rising costs, the site is pushing a membership model called Reddit Gold. But will it work? And can other media companies learn anything from this kind of approach?

Reddit’s relatively new CEO, former Facebook engineer Yishan Wong, posted about the site’s needs on the Reddit blog on Thursday, saying the growth of the community — thanks in part to the success of its Ask Me Anything discussions with celebrities and newsmakers like President Barack Obama — has led to higher costs for servers and other infrastructure needs, and that Reddit doesn’t want to have to resort to boosting the number of ads it carries on the site. As he described it in his post:

“In October 2012 alone we were up to over 3.8B pageviews and more than 46 million unique visitors. Our server costs also continue to grow, so we have a choice to make: we can start running a bunch more ads, or we can give you, the community, more reasons to support the site with your own money through reddit gold.”

Advertising ruins the experience

Reddit Gold has actually been around since 2010: the site launched it as an attempt to keep up with costs when it was still a subsidiary of Conde Nast (it has since been spun off as a separate entity, although Conde still controls it), and at that time it had less than 300 million pageviews. Now it has over 10 times that amount. In a thread on Reddit, the CEO said that a lot of users seem to assume the site’s success and growth mean that it is profitable, but it is not — and Wong said he didn’t want to boost the amount of advertising because it would ruin the user experience:

“The problem is that if your site is funded primarily with advertising, then you are beholden to your advertisers. If your users choose to post something politically or culturally controversial, you come under editorial pressure from advertisers to remove or modify it, because advertisers like bland, well-lit spaces. This eventually results in a watering down of the true, authentic content on the site [and] personally, I feel that’s not the best way to serve the community.”

In the Reddit discussion, Wong also says that this attempt to woo advertisers was one of the reasons that Digg failed. Although that was arguably just one part of the site’s downfall, the Reddit CEO is right about one thing: those kinds of decisions, along with other design-related moves that Digg made, arguably poisoned the site’s relationship with its community to the point where many core users left — in many cases for Reddit — and the site’s long slide into irrelevance began (the name and other assets were bought earlier this year by Betaworks and later relaunched).

Strengthening the relationship with your community

The necessity of a strong relationship with a community is most obvious with sites like Reddit and other services that rely on user-generated content, including Fark — which has a membership model called TotalFark — and Metafilter. Some hybrid news and commentary sites such as Techdirt and Talking Points Memo have also launched similar attempts at community fundraising that are based on membership benefits rather than a paywall: both Techdirt and TPM, for example, offer members access to discussion groups and forums that non-paying readers don’t have access to.

For Reddit, the membership layer includes a discussion forum, a way to turn off advertising (a feature I think more newspapers and other media companies should experiment with), and something called “gilding,” which allows members to give Reddit Gold or credits to other users who have posted comments that they like. Whether this results in the kind of gaming that other reward-based systems have encountered — including one that Gawker Media experimented with before revamping its comment system — remains to be seen.

There’s no question that being a community already gives Reddit a better chance of success with this kind of thing, but it is a model that I think more media companies could implement as well, instead of just putting up a blanket paywall around all of their content. This is the idea behind what Wall Street Journal managing editor Raju Narisetti and author Jeff Jarvis have both called a “reverse paywall” — which provides benefits to loyal users and readers instead of charging them — and it seems like a much better fit if what you want to do is build a relationship with your community.

It’s also worth pointing out that the way Wong responded to the ongoing discussion about Reddit’s plan in the thread on the site also shows a kind of openness that more CEOs would do well to imitate.

Post and thumbnail images courtesy of Flickr user Christian Scholz

You’re subscribed! If you like, you can update your settings

  1. This is a great example of the dirty little secret no one wants to talk about. 46 million visitors and they’re not profitable?? The reality is that Reddit can’t sell enough advertising to make a profit. Blaming it on “being beholden to advertisers” is ridiculous. I doubt it has lost many (any?) advertisers because of controversial content …

  2. You guys need to add more hotlinks to your articles.

Comments have been disabled for this post