Reddit CEO Steve Huffman revealed plans to introduce a paywall later this year that will limit access to certain subreddit content to paid subscribers.
He shared the update during a Thursday “Ask Me Anything” session, where he responded to questions about the company’s fourth-quarter performance. Huffman clarified that the paywall will only apply to specific types of subreddits but assured users that Reddit’s free access will not change.
While Reddit has experimented with paid features before, this move represents a significant change for the platform based in San Francisco.
Huffman acknowledged the challenge of balancing paid content with free offerings, aiming to avoid upsetting the user base. “It’s a work in progress,” he said.
A major issue facing Reddit is how to compensate contributors to paid subreddits. Volunteer moderators, vital to managing discussions across the platform, may be less motivated to work on paid subreddits without proper incentives.
Huffman stated that the company is exploring different ways to reward contributors but didn’t share specific details.
In addition to the paywall, Huffman discussed broader plans to monetize user activity. He confirmed Reddit is preparing to introduce a marketplace within subreddits, enabling users to complete transactions without leaving the platform.
Although this feature is still in development, Huffman emphasized its importance for future growth. “That kind of opens the door” for further monetization opportunities, he said.
Despite reporting a net loss of $484.3 million for 2024, Huffman stressed that Reddit is focused on expanding both its user base and advertising reach. “We have a long way to go,” he stated. “Our goal is significant growth beyond where we are now.”
Reddit Lowers Losses
On Thursday, Reddit announced that its net loss had narrowed to $90.8 million in 2023, with a 21% increase in revenue. This announcement coincided with the publication of its IPO filing, ahead of its much-anticipated U.S. stock market debut in March.
The IPO filing, almost two decades after Reddit’s founding, is seen as a key moment for the platform, which has yet to match the financial success of competitors like Facebook and Twitter (now X).
During the final quarter of 2023, Reddit reported an average of 73.1 million daily active users and 267.5 million weekly active users. The platform hosted over 100,000 active communities and saw a total of 1 billion posts.
The company’s IPO filing showed revenue of $804 million for 2023, up from $666.7 million in 2022, alongside the reduced loss of $90.8 million.
According to a report from Reuters, Reddit has agreed to a $60-million annual deal with Google to allow the tech giant to use Reddit content to train its AI models.
In 2021, Reddit was valued at $10 billion during a funding round, but it is unclear what valuation the company will pursue during its IPO. Sources suggest it could sell roughly 10% of its shares.
The IPO filing also revealed that Huffman holds Class B common stock, which will vest if Reddit reaches a $5-billion market valuation following the IPO. Initial expectations indicate Reddit may achieve this target immediately.
Although Reddit launched alongside social media platforms like Facebook and Twitter, its user base remains smaller. The company has also struggled to monetize effectively compared to its larger peers.
Reddit has faced scrutiny over its content moderation policies, which have been a concern for advertisers. It also faces competition from platforms like TikTok and Facebook for ad revenue.
Despite these challenges, Reddit has cultivated a devoted community. Its forums played a key role in the “meme-stock” surge of 2021, where retail investors fuelled massive increases in stock prices for companies like GameStop.
Founded in 2005 by Steve Huffman and Alexis Ohanian, Reddit has attracted major investors, including Andreessen Horowitz and Tencent Holdings.
