Reddit Is Not Profitable Yet

Posted Jul 19, 2013

Reddit CEO Yishan Wong has acknowledged that the link sharing website is not yet profitable even though they are seeing around 70 million monthly unique visitors and sees billions of views per month.  Wong said that the company is not yet profitable when he was asked why the default subreddit’s on the website’s front page has been changed in a comment.  Wong said that Reddit may break even at the end of the year.

“We are thinking of posting a public graph with no numbers but updated regularly with the relative amounts of revenue vs expenses on a quarterly/monthly basis (depending on how precisely we can get our accounting) so that people can see how far/close we are from being profitable. There is a common misconception that we are ‘part of a billion-dollar conglomerate’ and/or ‘already very profitable, so why keep giving them money’ that is kind of frustrating for us: reddit was given its freedom when we were spun out, so the price of freedom is paying our own way and no one else is paying the bills – a graph like that might help make things more clear.”

Wong is not worried about Reddit not making money.  They could become profitable overnight if they put traditional display ads on the website.  However, they are holding off from doing that because Reddit believes advertising can be too intrusive or spammy.  The problem with not monetizing enough is that server costs are shooting up for the company.

“We’re not grossly unprofitable (i.e. we’re not hemorrhaging money), but revenues are still a bit short of expenses,” added Wong.  “One reason we’re not quite profitable is that as reddit becomes more popular, it means more traffic, which means more servers needed to support the traffic. Our traffic serving bill has risen steadily over the past year, though we have at least been able to stave off super-linear cost growth there by implementing efficiency improvements. We’ve also hired people, though we have been quite careful with that – it’s true that if we fired half the reddit staff, we would technically be profitable, but then things would probably fall into disrepair almost immediately.”

Reddit makes money in three forms:

1.) Ads – Reddit is strict about ad quality though

2.) Reddit Gold – This plan gives users features and benefits so that over time your subscription will become more valuable.  If you intend on buying something from one of the Reddit partners, a month’s subscription to Reddit Gold will pay for itself immediately through the discount.

3.) Redditgifts Marketplace – The Redditgifts Marketplace is a popular gift exchange service where merchants are curated and allowed into the marketplace.