Conde Nast's Reddit Asks Users for Donations to Fix Site

http://www.pcmag.com/article2/0,2817,2366299,00.asp

by jackfoxy • 16 years ago

16 26 16 years ago

rianjs2• 16 years ago

Makes sense to me. Don't really see why users expect Conde Nast to send money down the chain. CN/Wired Digital is in business to make money, and it's clear that reddit's model isn't working. If the site provides utility to its users, it makes sense that some might be willing to pay extra.

What's going to happen is that the donations will create a little bolus of cash -- not nearly enough -- and then run out of steam. Then the reddit guys are going to have to go back to the drawing board to figure out a long-term solution. This will probably be a subscription model that offers benefits that non-paying users don't get. This works better when you have content that people are willing to buy, but communities by users for users don't generally monetize that well, I don't think. What they might consider doing is figuring out what their "niche" is. Technology? Off-topic stuff? Something else? Then monetize the resource-drainers that don't fit with this mission. They could probably talk to Ars Technica about that, seeing as how they're also a CN property, and have nearly a decade's worth of experience in monetizing a dedicated community of users.

If they don't figure it out, reddit will go out of business. Conde Nast isn't in the business of subsidizing money-losing propositions, nor is any other company. And there's no reason they should be.

duck• 16 years ago

Why did Conde Nast buy reddit in the first place?

9oliYQjP• 16 years ago

For the same reason they bought Ars Technica. It was an Internet play to say "look we're still relevant." Except, they used the wealth they accumulated in their print empire to try to prove relevance in the online age. Truth be told, they didn't choose badly with Ars Technica and Reddit. Those calls are far better than Murdoch's Myspace play. But c'mon, they haven't done anything with Ars Technica or Reddit because the print guys don't understand the Internet and never will. They need to be doing the exact inverse of what they're doing. They tried to bring Reddit to Wired. Instead, they should have been asking how to bring GQ, Wired, et al to Reddit and Ars Technica.

pavs2• 16 years ago

There are so many things wrong with your comment I don't know where to start.

>CN/Wired Digital is in business to make money, and it's clear that reddit's model isn't working.

Except that there was no investment to make Reddit more profitable. Arstechnica, Wired and Reddit are all owned by CN, not only does Ars and Wired have more employees (its understandable since they are in publishing business) but they also have _dedicated_ people, specifically hired to bring in advertising and do market research. Reddit traffic blows both Wired and Ars traffic out of the door, in every sense of the word. How much traffic per month specifically does Reddit get? Here is a snapshot from one of Reddit employees: http://i.imgur.com/mirir.jpg

But this is a problem not specific to Reddit. Ars also have money problems, they recently had to tighten their revenue generation by blocking ad blockers, presumably because they don't have enough revenue to keep current employees or even expand. To read more specific comments to my claim go through 2000+ comments with heavy involvement from Ars employees: http://arstechnica.com/business/news/2010/03/why-ad-blocking.... They always had Subscription, but only recently they started to heavily promote their subscription model, presumably because they can't get enough money.

> What's going to happen is that the donations will create a little bolus of cash -- not nearly enough -- and then run out of steam. Then the reddit guys are going to have to go back to the drawing board to figure out a long-term solution. This will probably be a subscription model that offers benefits that non-paying users don't get.

If you actually took the time to read the reddit blog post and the subsequent discussion on that subject you would have known that the whole purpose of that blog post was to generate conversation within the reddit community to see what they would more convenient with, which include discussions about having recurring paying model for customized option (including custom reddit email and other features). The whole idea was to generate conversation and see how many people are willing to pay if they try to go for a subscription model.

> This works better when you have content that people are willing to buy, but communities by users for users don't generally monetize that well, I don't think.

See also: Facebook, digg, fark,

> They could probably talk to Ars Technica about that, seeing as how they're also a CN property, and have nearly a decade's worth of experience in monetizing a dedicated community of users.

Ars is trying to save their own ass, as we speak.

> If they don't figure it out, reddit will go out of business. Conde Nast isn't in the business of subsidizing money-losing propositions, nor is any other company. And there's no reason they should be.

I think CN is run the same way as any big corporations are run. You can't monetize something you don't understand. CN is famous for print publication, and I think they are trying to apply the same logic on online publication.

There is something horribly wrong when Reddit has 4 employees and not self-sustaining; when digg has 60-80 employees and they are very much self sustaining and hiring more people at this very moment. Digg is not 20-times bigger than reddit.

Edit: http://www.reddit.com/r/AskReddit/comments/co8n8/why_should_...

rianjs2• 16 years ago

> Except that there was no investment to make Reddit more profitable. Arstechnica, Wired and Reddit are all owned by CN, not only does Ars and Wired have more employees

Ars has 9 employees, and a number of contract/freelance workers, including myself. That's not exactly a huge company. There were layoffs last year where the number of full-time staff was cut by ~half.

Anything done by Ars to be more profitable has come from within Ars itself, and the staffing to make it happen has come out of Ars's budget, not from the parent company's.

>specifically hired to bring in advertising and do market research

I don't know where your information is from, but it's wrong. Ars uses CN staff, as part of its business department. Presumably the same people that do reddit and the other Wired Digital properties. Each segment has its own budget that it must stay within. During rough times (last year, for example), the budgets may be cut, but often what revenue does come in doesn't cover costs. These cyclical fluctuations are painful, but expected in markets where advertising is the primary source of revenue. In this respect, the parent company floats the properties for a short time.

It's when the phenomenon is consistent -- as in reddit's case -- that this becomes a problem.

>Reddit traffic blows both Wired and Ars traffic out of the door, in every sense of the word. How much traffic per month specifically does Reddit get? Here is a snapshot from one of Reddit employees: http://i.imgur.com/mirir.jpg

That's less significant than you think. reddit's audience is diverse because it covers so many things. Not all pageviews are created equal. MySpace is the obvious posterchild for this phenomenon. There were rumors before the financial crisis that you could buy 1000 pageviews on MySpace for a penny. I don't know if that's true or not, but certainly Ars commands far more value per 1000 pageviews than that. Pre-acquisition, they did their advertising through Federated Media, and here's a screenshot of what ads cost at that time:

http://rianjs.net/media/2008/ars-federated-media.png

Because reddit doesn't really have a niche -- unlike Wired or Ars -- their audience is less desirable. Look at the stats about readership in that screenshot. That's the most desirable niche for advertising, and commands the highest CPM rates. I would be very surprised if reddit's audience was anything like that, given the fairly emo nature of many of their subsections. reddit is more like Facebook in its approach to advertising. I suspect it's harder for them, though, because the drill-down tools for targeting are more crude because Facebook is far more structured that the "Wild West" nature of reddit.

> They always had Subscription, but only recently they started to heavily promote their subscription model, presumably because they can't get enough money.

That's not correct, either. Ars was started in 1998, and the subscription model started in ~2002 and was a voluntary donation model that got users the "et Benefactor" title, and not much else. This wasn't enough after the initial bolus of donation money was spent down, and several of the forums went subscription-only. (The off-topic forums.) Later on, other things were added to make it more appealing to front-page readers that never make it to the discussion forums. An ad-free version of the site didn't exist until the most recent major revision to subscriber benefits.

> If you actually took the time to read the reddit blog post and the subsequent discussion on that subject you would have known that the whole purpose of that blog post was to generate conversation within the reddit community to see what they would more convenient with, which include discussions about having recurring paying model for customized option (including custom reddit email and other features). The whole idea was to generate conversation and see how many people are willing to pay if they try to go for a subscription model.

I skimmed it, but after I wrote my first reply. In a case like reddit, it's probably going to take a few iterations to come up with a sustainable business model. reddit is fundamentally different from a site like Ars or wired. It doesn't publish its own content, and its audience is diverse. It also eats up far more physical resources, thanks to its larger scale and dynamic nature.

achille• 16 years ago

This is turning into bad PR for Conde Nast. The news cycle is turning this into "Conde Nast begging for money", which in turn is likely to lose millions in the market.

It's embarracing too. Conde Nast executives will wake up this week to calls asking why it's having to beg.

DilipJ2• 16 years ago

The only reason they're begging is because they think they can squeeze money out of Reddit's loyal (and generous) userbase. The costs to improve Reddit is nothing to CN, considering the millions they must waste on Vogue parties and whatnot. The total cost to run Reddit is probably less than Anna Wintour's personal expense budget!

My guess is that this is the brilliant idea of the McKinsey guys, whom CN has asked to streamline their operations. Some bean counter MBA probably suggested that Reddit be put on an austerity program, and if CN keeps listening to them then Reddit won't have much of a future.

jdbeast002• 16 years ago

i feel like i'm the only one, but isn't reddit just really really hard to use?

* No subreddit directory (you can't even group the reddits that you are subscribed to)

* no groupings of subreddits, or related subreddits

* help is really bad ("subscribe" means hitting '+frontpage'?)

* Postings would be so much better off with a tagging system that would prevent users from having to cross-post

* search

pavs2• 16 years ago

http://www.reddit.com/reddits/mine/

barredo2• 16 years ago

1) Sort of directory: http://www.reddit.com/reddits/

2) Usually, there are links in subreddits descriptions to similar subreddits.

2.1) MultiReddit! http://www.reddit.com/r/php+perl+python+startups

3) It should be improved, yes

4) I guess cross-post and double-post are hard, really hard to improve

5) search is a bit awful, yes

jdbeast002• 16 years ago

while i know it is possible to do many of the things i want with some tomfoolery, these should be built into the UI so anyone can find out about them easily.

est• 16 years ago

> no groupings of subreddits, or related subreddits

check this out

http://www.reddit.com/r/ada+applescript+Arc+asm+brainfuck+cl...

woodall4• 16 years ago

That is neat but I would hate to type that in or try to find it in my bookmarks. A better solution, IMO, would be to have a Programming "folder" where all these reddits could nest. I could then click that folder and the page would display stories from them.

ac1322• 16 years ago

It doesn't make sense to sell to CN and then beg users for money. If they stayed independent it'd be more logical.

Why don't the founders who cashed in put up some of their own money? What exactly was the purpose of selling if the founders are still broke and Reddit is hovering around break even?

webwright• 16 years ago

The founders are broke? As far as I know, the founders are now angel investors (and no longer work there).

ac1322• 16 years ago

I was being facetious, but I didn't realize that everyone that cashed out also moved on. Makes more sense now.

woodall4• 16 years ago

Co-Founder Alexis Ohania's current projects include TBA Startup(s), TBA iPad & iPhone apps, TBA Book by Zach Weiner,Angel Investor with Das Kapital Capital LLC, AwesomeFoundation Board Member, TEDx Yerevan, and Breadpig, Inc.[1]

[1] http://alexisohanian.com/

brianbreslin• 16 years ago

this struck me as slightly shameful. if they want to setup memberships and build a valid business model, great! but don't masquerade it under the veil of charity. they are a for-profit division of a for-profit corporation. they shouldn't have put it as a handout type excuse.

I suspect conde nast bought them thinking they were the "cheaper digg" and then didn't know what to do w/them.

john82• 16 years ago

This is lovely, considering that Reddit has, for years, been nothing more than a sounding board for a group of nasty, dishonest, pseudo-Marxist potheads. Take a look at /r/politics and you will see nothing but Obama-worship, profit-hating and Republican-bashing. On /r/programming, the subreddit I would visited the most, you will find plenty of mediocre programmers who do nothing but attack the work of others, especially when that work is done in a "boring" language like Java or C++, rather than producing anything of value themselves.

It is hard to see what value Reddit can provide to anyone outside of its current, very narrow demographic, and I haven't missed it much since leaving it last year.

john82• 16 years ago

A downvote because I bashed a YC-funded company? Look, I stopped reading Reddit for the reasons outlined above, and I am sure others left for similar reasons. If you don't smoke pot or don't think pot smoking is a good idea, didn't vote for Obama, and don't believe the government can solve all of our problems, you simply aren't welcomed there.

DilipJ2• 16 years ago

The downvote probably came because you seemingly registered just to post a comment listing your politics. The fact that you think the downvote came because of a YC-related conflict of interest suggests that you suffer from some form of paranoia or a persecution complex.

Reddit appeals primarily (but not exclusively) to young males in their 20's and 30's. As a subgroup, they tend to lean libertarian, which is why they are more accepting of recreational drug use.

Reddit has a bright future, but maybe not with CN. They don't know how to monetize it properly, and they seem to be tethered to the glossy world of magazines. Considering the success Tina Brown has had in moving away from that via The Daily Beast, it looks like IAC would be a better fit for Reddit than CN.

woodall4• 16 years ago

Their demo is narrow, but growing[1][2]. If they can shape up their game- design, revenue model, moderation- they have the potential to be very successful.

[1] http://www.google.com/trends?q=reddit

[2] http://www.businessinsider.com/chart-of-the-day-monthly-page...

DEADBEEF• 16 years ago

Average CPM is around $2.5 - $5. Reddit gets 280M pageviews pcm.

Therefore, if it's only breaking even and not turning a profit then their server, bandwidth & wage bill must be in the region of between $700,000 (2.8M/1000x2.5) and $1,400,000 (2.8M/1000x5) per month.

Either their servers are massively inefficient, they're paying their staff too much, they're selling themselves short to their advertisers, or their offices are wallpapered with banknotes.

Either which way, they're doing something massively wrong somewhere.

Conde Nast's Reddit Asks Users for Donations to Fix Site

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