reddit - a major player

7/29/2019 Reddit - A Major Player

1/17

I

SAE INSTITUTE - LONDON

Reddit: A Major Player?

Practical ResearchSubmission Code: PR

By,

Aditya Tirumala BukkapatnamID: 16370

Batch: AD0212

Word Count: 2,166.

Submission Date: 10April 2012


2/17

i

Abstract

This project is aimed at understanding the factors pertaining to the inception and growth of the

social news aggregation website - Reddit.com, whilst attempting to comprehend its stand as a

Major industry player. The method adopted searches for linkable information between the user

population and factors that might have contributed to its growth, and later observe how this

user group has contributed to the weight of Reddit as a brand. In conclusion, a workable

connection between the growth of Reddits user population with their financial model was

established, and results of the growing population in terms of social welfare were identified as a

large contributor in projecting them as a large player in the industry of social news.


3/17

ii

Table of Contents

1. Introduction .......................................................................................................................... 12. Reddit: How it works ............................................................................................................ 1

2.1. Reddit goes Open-Source ............................................................................................. 12.2. Content sorting ............................................................................................................. 32.3. Revenue ......................................................................................................................... 4

2.3.1. Advertising ............................................................................................................ 52.3.2. Freemium Services ................................................................................................ 6

3. Influence and Reach .............................................................................................................. 84. Conclusion .......................................................................................................................... 105. Bibliography ........................................................................................................................ 11


4/17

1

1. IntroductionReddit began as a News Aggregator website, founded byAlexis Ohanian and Steve Huffman;

both graduates from the University of Virginia in June, 2005. Michael Arrington (2006) reveals

that Ohanian and Huffman received their funding from Y Combinator another social news

website for $100,000. Within 16 months of its inception, the website was generating an

approximate 500,000 unique views per day, and was acquired by Cond Nast Publications at

reportedly $20 million (Adams, 2005; Macale, 2011). The website uses an interesting

algorithm to sort the content arriving on the website which seemingly builds a sense of pride to

redditors (reddit users). Through the course of this study, reddit has been found to have

remained one of those internet trends with a very loyal family of users. Together they call

themselves the front page of the internet.

2. Reddit: How it worksReddit has been widely regarded for the way it has prioritized the content it publishes. A closer

look at its nuts and bolts could perhaps shine some light on what makes it what it is.

2.1. Reddit goes Open-SourceOn 18th June, 2008, the reddit code went Open-source. The code became available on a website

called GitHub (see https://github.com/reddit/reddit/wiki). All the code was now downloadable

and could be developed by those possessing the necessary skills of open-source programming.


5/17

2

Huffman (2008) comments:

Until now, the only portion of reddit that wasn't freely available is reddit itself.

The entire code 1 being made available online was aimed at inviting a large community of open-

source programmers, to contribute to developing the code and thus allowing the user

community to steer the course of the websites functionality. Huffman (co-founder: Reddit) says

about Reddit being unique in the social news scene with a huge community of developers, and

that Reddit's growth has more to do with the communities contributions to the code (Huffman,

2008). Below is an excerpt from Reddit's page on GitHub (https://github.com/reddit/reddit, no

date):

When we say 'open-source' we mean specifically that the code behind reddit is available

to the public for download, and we're inviting the public to submit code to help

improve the site.

In an interview (Chartier, 2008), Reddit co-founder Steve Huffman tells Ars-Technica (also

owned by Cond Nast Publications), how they witnessed a major growth spike in the month of

December 2007; that showed up as 1,033% increase, owing to 4.1 million unique visitors in a

month. This is attributed to be shortly after the company introduced its user-generated category

area, called reddits.

1 Some parts of the code related to anti-cheating/spam are still restricted (Ohanian, 2008).


6/17

3

The reddit community can be said to have grown stronger and more tightly-knit with this

almost democratic development.

Below (Fig. 1) are the latest statistics in terms of unique visitors.

Fig. 1: Unique Visitors (in Millions) in the period 2011 to 2012.

(Source: siteanalytics.compete.com/reddit.com/).

2.2. Content sortingReddit's interface essentially allows users to post responses on a particular story of their interest.

Once a response is made, other users subscribing or viewing the story are allowed to view the

responses. Each viewer is also given the power to up vote (express favour for) or down vote

(express favour against) a comment that is posted, that reflects the viewers opinion on the

content. The question remained, as to how to sort the content on the basis of this voting

system.


7/17

4

Reddit answered this with their new Best ranking algorithm. Randall Munroe (2009) explains

that the algorithm treats the vote count as a statistical sampling of a hypothetical full vote by

everyone, much as in an opinion poll.To elaborate, Reddit calculates the net number of up votes

(up votes minus down votes), and compares it against a hypothetical situation where the post

received all, only up votes. It quantifies this, and uses this information to sort the information.

Munroe (2009) shares an insight into how the voting system functions:

if it has 10 up votes and only 1 down vote, the system might have enough confidence

to place it above something with 40 up votes and 20 down votes - figuring that by the

time it's also gotten 40 up votes, it's almost certain it will have fewer than 20 down

votes The bottom line is that this system means good comments will jump quickly to

the top and stay there, and bad comments will hover near the bottom.

2.3. RevenueReddit is known to have generated revenue from the following means:

Advertising Freemium Services

Schiraldi (2010) comments:

Whenever this topic comes up on the site, someone always posts a comment about how

reddit is owned by Cond Nast, a billion-dollar corporation and how if they wanted to

they could hire a thousand engineers... But here's the thing: corporations aren't run like


8/17

5

charities. They keep separate budgets for each business line, and usually allocateresourcesproportionate to revenue. And Reddits revenue isn't great.

2.3.1. AdvertisingReddit originally generated revenue through internet advertising. Given their association with

Cond Nast Publications and their large user access, their ability to generate ad revenue was

quite understandable. Nevertheless, catering to a growing market is also understandably a

difficult ordeal, and it can be concluded from Shiraldis quote above, that Reddit's revenue from

advertising wasnt enough to run operations. Below is the testimonial of a reddit advertiser

(Weinberg, 2010), to allow a better insight into what advertising on reddit meant.

My reddit ad has yielded he highest ROI (Return-on-Investment) compared to the

other ad platforms I've tried, which includes Adwords, Yahoo, Bing, Facebook,

Myspace, and StumbleUpon My ad ran for 13 days, from 3/7 to 3/20. It cost $650,

and I spent $50 per day. In total it had 1,288,378 impressions (282,732 uniques) and

yielded 20,700 clicks (18,420 uniques). That's a CTR (Click through Rate) of 1.61%, or

6.49% per unique redditor. This CTR works out to a CPC (Cost per Click) of 3.14

cents, or 3.53 cents per unique visitor, and a CPM of $1.98, or $2.30 for uniques.

In an interview on TechCrunch, Alexis Ohanian (co-founder: Reddit) tells Chris Dixon how

advertising is effective on Reddit. He shines a light on how advertising is still new when put in

relation to social media websites; and about the kind of reservations that potential advertisers

might have when it came to posting ads on a website like reddit. He talks of advertising on


9/17

6

Reddit as often overlooked, and as a trend that still hasnt caught on very well and might have a

very lucrative future (Ohanian, 2011).

2.3.2. Freemium ServicesThough being a subsidiary of a major publication (Cond Nast), Reddit's revenues have ended

up quite controversial over the years. The website adopted a freemium model2 in 2010, in an

attempt to save Reddit. The birth of Reddit Gold is something that speaks proportions about

the self-sufficiency of the Reddit community or should one say family.

Wauters (2010) explains that Reddit Gold began on the basis of donations, openly requesting

their users to subscribe to them. Their plea was reportedly answered by up to 6,000 members

donating and subscribing to the new service. What is truly astonishing here is that the freemium

services offered to gold subscribers would be considered intangible, and merely without-value,

when compared to other freemium websites. To illustrate this better, below is a list of freemium

services provided to gold subscribers as read on Reddit Help (2012):

What do I get for joining?

We plan to continually add features over time. Right now we're offering:

A trophy on your userpage,

The ability to turn off sidebar ads, sponsored links, both, or neither,

2

A business model that provides a service that is essentially free, and optionally provides a paid premiumoption with added benefits to the user.


10/17

7

The option of seeing twice as many comments at once without having to click"load more comments",

The ability to see up to 100 subscribed subreddits in your front-page listing,

New comment highlighting: see what's been posted since the last time youvisited a thread,

Friends with Benefits -- you can add notes to your friends to help you keeptrack of them all,

See your karma broken down by subreddit,

Access to a super-secret members-only community that may or may not exist,

A thank-you note

The freemium model worked exceptionally well for the company. Their blog updated with

mentions of howreddit gold has emerged as what can only be termed a huge success (Slowe, 2010).

ODell (2011) goes on to provide that the site is also reported to have subsequently grown to

more than a billion page views a month as a result of reddit golds success.


11/17

8

3. Influence and ReachReddits users have already been discussed up to now, in terms of sheer numbers, and their

tendency to behave like one amalgam. This, when combined with Reddits playground of

opportunity yields strong and powerful results.

Tynski (2012) tells us how Reddit provides its users with Karma points. In essence, this is a

reflection of how the content posted by a user was received by its audience. Up votes, lead to

good karma, and down votes to bad karma. This system, described commonly among redditors

as the Karma Quest, has become a simple solution to keep the content on the website relevant

and useful to other redditors (Tynski, 2012).

Thus, reddit has grown into a cult-like environment, made of helpful, sociable, and sometimes

very generous users. It has helped raise funds, sustain businesses, provide relief, and most

recently, their impressive stop SOPA campaign, forcing webhost GoDaddy.com to reconsider

its stance that originally supported SOPA. This was achieved through a ferocious GoDaddy

boycott campaign(Chen, 2012).

Some other notable contributions by the reddit community are the instances where $185,356.70

was raised by the reddit community for Haiti (2010, we hardly knew ye, 2011). In a blog post,

Ohanian (2010), notes that the initial goal of raising $31, 415, was reached within the first five

hours, and then updated that the second target of $62, 830 was hit in the first 12 hours of fund-

raising.


12/17

9

One of the most active sections is one dedicated to depression, and suicidal counselling. The

subreddits titled HeretoHelp and SuicideWatch have been active, offering support to those

seeking it. In an opinion posted by a reddit admin Aenea (2010), the user describes that

SuicideWatch offers a safe place for people to talk about what is going wrong in their lives.

Subreddits like SuicideWatch are reported to be highly moderated, allowing a check on some of

the limitations of internet counselling (discussed below).

Though the SuicideWatch system has its advantages to the conventional hotlines and

counselling agencies, it has its demerits. Singal (2012), discusses how many of these are mainly

attributed to some redditors described as being insensitive to the matter at hand, and in some

cases actually post comments that might persuade the victim to go ahead with the act of taking

ones own life. This has always been under-check by fellow redditors that down vote such

content till it disappears; this mechanism nevertheless, isnt very effective. As an added measure

to address the loophole, Reddit has enlisted moderators to such sensitive subreddits. The

moderator is given power to discard material that he/she finds insensitive or unhelpful to the

discussion at hand.

Many similar stories of redditors reaching out and helping in numerous ways can be found

online (noteworthy events in reddit history, no date). These stories can be incredibly inspiring and

could be one of the few examples that restore confidence in humanity.


13/17

10

4. ConclusionOne could conclude that the Open source and Freemium model were both dearly inter-twined

with Reddits appearance in the market. It was observed that the communitys growth was

reflecting proportionately with their financial growth, and also mutually benefiting the former

in some cases. I would not ignore the idea that a large contributor to their resource was also

linked with Reddits acquisition by Cond Nast who was already a well-established resource of

users. Delving further, we have reflected on the power that this raw and vast resource of users

can command, when put onto a task.

It could be argued that the strength of Reddit is a direct function of these users, if it werent also

for the unique platform that Reddit provides them with. When viewed from this stand point of

Social Influence, their success is unlike any other player. Social Influence is key, to news-paper

and news-aggregator alike.


14/17

11

5. BibliographyArrington, M. (2006) 'TechCrunch | Breaking News: Cond Nast/Wired Acquires Reddit',

TechCrunch, October [Online]. Available at: http://techcrunch.com/2006/10/31/breaking-

news-conde-nastwired-acquires-reddit/ (Accessed: 06 April 2012).

Adams, R. (2005) 'Reddit.com', The Guardian, 08 December [Online]. Available at:

http://www.guardian.co.uk/technology/2005/dec/08/innovations.guardianweeklytechnologysect

ion1 (Accessed: 06 April 2012).

Macale, S. (2011) 'A rundown of Reddits history and community [Infographic]', The Next Web,

October [Online]. Available at: http://thenextweb.com/socialmedia/2011/10/14/a-rundown-of-

reddits-history-and-community-infographic/ (Accessed: 06 April 2012).

Huffman, S. (2008) 'Reddit Goes Open Source', blog.reddit -- Whats New on Reddit, 17 June.

Available at: http://blog.reddit.com/2008/06/reddit-goes-open-source.html (Accessed: 07 April

2012).

https://github.com/reddit/reddit (no date) (Accessed: 07 April 2012).


15/17

12

Chartier, D. (2008) 'Reddit social news site goes transparent, open source', Ars Technica,June

[Online]. Available at: http://arstechnica.com/open-source/news/2008/06/reddit-social-news-

site-goes-transparent-open-source.ars (Accessed: 07 April 2012).

Munroe, R. (2009) 'reddits new comment sorting system', blog.reddit -- What's New on Reddit,

15 October. Available at: http://blog.reddit.com/2009/10/reddits-new-comment-sorting-

system.html (Accessed: 04 April 2012).

Schiraldi, M. (2010) 'reddit needs help' blog.reddit -- Whats New on Reddit, 09 July. Available

at: http://blog.reddit.com/2010/07/reddit-needs-help.html (Accessed: 06 April 2012).

Weinberg, G. (2010) 'My Duck Duck Go reddit ad by the numbers', Gabriel Weinbergs Blog, 29

March. Available at: http://www.gabrielweinberg.com/blog/2010/03/my-duck-duck-go-reddit-

ad-by-the-numbers.html (Accessed: 03 April 2012).

Ohanian, A. (2011) '(Founder Stories) Ohanian Discusses Reddits Revenue Strateg'. Interview

with Alexis Ohanian. Interview by Chris Dixon for TechCrunch, 31 May [Online]. Available

at: http://www.youtube.com/watch?v=HP2X1bCFCGs&feature=youtube_gdata_player

(Accessed: 07 April 2012).


16/17

13

Wauters, R. (2010) 'TechCrunch | Reddit Asks Users For Money To Hire People Because

Revenue Isnt Great ', TechCrunch, July [Online]. Available at:

http://techcrunch.com/2010/07/10/reddit-gold/ (Accessed: 08 April 2012).

Reddit Help (2012) What is reddit gold?Available at: http://www.reddit.com/help/gold/

(Accessed: 05 April 2012).

Slowe, C. (2010) 'this was a triumph', blog.reddit -- Whats New on Reddit, 12 July. Available at:

http://blog.reddit.com/2010/07/it-was-triumph.html (Accessed: 07 April 2012).

ODell, J. (2011) 'Is Reddit on the Rise?', Mashable, 09 February [Online]. Available at:

http://mashable.com/2011/02/08/reddit-hires/ (Accessed: 05 April 2012).

Tynski, C. (2012) 'Could Reddit Be the Worlds Most Influential Website?', BlueGlass, 02

February [Online]. Available at: http://www.blueglass.com/blog/could-reddit-be-the-worlds-

most-influential-website/ (Accessed: 08 April 2012).

Chen, A. (2012) 'Reddit Has Gone Mad with Power', Gawker, 03 January [Online]. Available

at: http://gawker.com/5872769/reddit-has-gone-mad-with-power (Accessed: 09 April 2012).


17/17

14

Ohanian, A. (2010) ' Helping Haiti (because we ought to do more than just change our logo)',

blog.reddit -- Whats New on Reddit, 14 January. Available at:

http://blog.reddit.com/2010/01/helping-haiti-because-we-ought-to-do.html (Accessed: 09

April 2012).

Aenea, (2010) 'Guys, I dont know whats with the influx of suicide posts today, but please

know that r/suicidewatch is an awesome place', Reddit, 11 October. Available at:

http://www.reddit.com/r/AskReddit/comments/dq1ob/guys_i_dont_know_whats_with_the_inf

lux_of_suicide/c12398q (Accessed: 08 April 2012).

Singal, J. (2012) 'Reddit Enlists 10,000 Volunteers to Prevent Suicides They Hope', The

Daily Beast, 08 March [Online]. Available at:

http://www.thedailybeast.com/articles/2012/03/07/reddit-enlists-10-000-volunteers-to-

prevent-suicides-they-hope.html (Accessed: 09 April 2012).

noteworthy events in reddit history(no date) Available at:

http://www.reddit.com/help/noteworthy (Accessed: 09 April 2012).

2010, we hardly knew ye(2011) Available at:

http://www.reddit.com/r/blog/comments/evmek/2010_we_hardly_knew_ye/ (Accessed: 0 April

2012).

reddit - a major player

Documents