Earlier this month, social news site reddit became operationally independent from its owner Condé Nast Publications, forming Reddit Inc. as a subsidiary of Advance Publications, Condé Nast’s parent company. Condé Nast acquired Reddit in October 2006, when reddit was still considered the smaller, tighter knit, cousin of Digg.
Back then reddit was receiving around 700 000 page views per day. Now reddit “routinely gets that much traffic in 15 minutes“. Over the last four years reddit has been steadily growing into one of the less well known, but more influential online social communities. Probably most impressively, it is a site with more than 18.8-million monthly unique visitors and a development team only recently increased to five.
For those who have never heard of reddit, it is a socially powered news aggregation site. Users can submit links to anything interesting they find on the web (or simply post their own text). Other users may then “upvote” or “downvote” these links. Links that are upvoted more rise to the front-page for everyone to see, whereas links that are downvoted linger on the back pages where they are seldom seen. Users can also comment on these links, and can further upvote and downvote these comments.
This means that the reddit community democratically creates or selects and then orders the content it views. With such a massive userbase, front page links can garner tens of thousands of page-views to a specific source. This “Reddit bump” is known for overwhelming smaller websites, but otherwise can provide valuable advertising revenue to various corners of the internet.
Despite its rapid growth of users, over the years the community seems to have been more of a headache for Condé Nast than anything else. It has never been a particularly profitable enterprise. It is a completely open-source project (with the exception of its anti-spam features) and all its code is available freely on Github. Its only income is in the form of limited advertising and Reddit Gold, an optional premium service for US$3.99 per month that offers new features to users. Other than that, the site is powered by the weight of its user participation.
Reddit and Condé Nast have often been at odds over various issues. Possibly the most famous example being a disagreement over Prop 19 adverts, when Condé Nast disallowed adverts for the legalisation of marijuana on reddit. When reddit asked why, the official response from above was “As a corporation, Condé Nast does not want to benefit financially from this particular issue.” In resistance to this stance, reddit decided to make use of the loophole in this response and ran the ads for free.
Reddit is known for a hive-mind that is predominantly liberal, vehemently counter-corporate and counter-commercialisation. It is also more focused on developing its own community than on building a sustainable and profitable business. Reddit staff have also complained in the past that they are treated as second class citizens in the Condé Naste hierarchy. With such a conflictual relationship, reddit has essentially had to finance itself independently under its parent, with reddit revenue going back into the site and very little dripping down from above.
Digg’s spectacular and public implosion in 2010, however, allowed reddit to overtake its long term rival into a place of internet prominence. With the raise in users and stature, came the need for more money for staff and development.
This split from Condé Nast has been a long denied rumour. With reddit’s growth, and conflicting nature to its previous owner, it was only a matter of time before something snapped. This split should benefit both entities in the end. It also means that Reddit Inc. is now in need of a CEO, with no indications so far of who this might be. It will be interesting to see what’s in store for the future of “the front page of the internet”.