Elon Musk didn’t just change the way blue checkmarks work on Twitter, the company also cut down free access to its APIs, effectively killing third-party clients and many research projects. On its path to profitability, Reddit is apparently looking to go that same route. Following an announcement earlier this year, a conversation between an iOS client developer and Reddit sheds light on what kind of money the company is planning to charge for its API, and it doesn’t look good forReddit’s bustling third-party client ecosystem.
In a Reddit post, Apollo developer Christian Selig shared insights into his conversations with Reddit representatives. According to him, he would have to pay Reddit $20 million per year to keep his app running as is, with the same user base and the same amount of API calls that the app currently makes. The number is an estimate based on the API pricing Reddit shared with him, with the company charging $12,000 for 50 million requests. Broken down to individual users, who average about 344 requests per day on Apollo, this would mean a switch to a $2.50 per month subscription. That’s double the price of the current optional subscription offered by Apollo, with that number not taking into account that the developer himself needs to make ends meet.
Selig says that from the get-go, Reddit suggested that its pricing would be more reasonable than what Twitter changes. It’s true that $42,000 for 50 million Twitter API calls is much more expensive, but $12,000 is not exactly a bargain, either. Selig compares this to image sharing platform Imgur, which has charged money for API access for a long time. However, 50 million API calls on that platform are only $166 for Selig.
If Reddit sticks with this pricing and if app developers continue to offer their apps under these circumstances, Selig calculates that those using third-party clients could be a gold mine for Reddit. Based on generous estimates that Reddit makes about $600 million in revenue a year and has 430 million monthly active users, this would give the company about $0.12 per user every month, though the actual number is likely a little smaller. Compared to the estimated $2.50 per person on a third-party app, you’re looking at a 20-fold increase in revenue.
While this is a discussion surrounding an iOS app, the same treatment is also bound to come to Android Reddit clients. Reddit made clear to Selig that the pricing is not flexible, so it’s likely that it’s coming to anyone who wants to use the Reddit API. The huge up-front costs of paying for API requests and ensuing efforts to convince users to pay more money may mean that many Reddit clients won’t survive.
Previously, Reddit assured that it didn’t plan to wipe out third-party clients. Instead, the company said it was more interested in charging a fee to cover the costs of the ad-free experience that many third-party clients are known and loved for. Back then, the Apollo developer was still hopeful that the company would charge a more reasonable price, though this seems off the table at this point, especially when compared to the revenue Reddit makes with its own app and website.
