Reddit purportedly inked a $60 million agreement with a “major AI firm” to permit the scraping of its online communities for AI training data, as per a report by Bloomberg on Friday. The undisclosed AI company will sift through vast numbers of posts on Reddit to train a substantial language model based on Reddit’s threads.
Despite generating only \(800 million in revenue last year, Reddit is reportedly contemplating an IPO with a valuation of \)5 billion. Although Reddit is not currently profitable, its significant valuation stems from the fact that its online communities serve as an ideal testing ground for AI models. Nevertheless, the practice of licensing out the thoughts and ideas of its user base does not always sit well. The most popular subreddits staged a blackout in protest last year following user discontent over the company’s decision to charge for access to its application programming interface (API), initially announced in April 2023.
The purported deal between Reddit and an “unnamed major AI company” aligns perfectly with what the platform has been seeking. The demand for data by Big Tech has transformed legacy news outlets, community forums, and even academic institutions like the University of Michigan into mere content sources. While these agreements may upset users, they present Reddit with a route to potential profitability.
Reddit CEO Steve Huffman stated to The New York Times in April, “The Reddit corpus of data is truly valuable. However, we do not need to provide all of that value to some of the largest companies in the world for free.”
Nonetheless, when Reddit began charging for API access, it not only targeted large corporations but also imposed fees on small, independent researchers. This transition made it more challenging for Reddit’s moderators to oversee their communities, leading some to argue that it resulted in a subpar experience for Reddit’s 800 million monthly active users.
In a joint statement from last June, Reddit moderators emphasized, “We firmly believe that the sustainability and prosperity of this platform hinge on preserving the vibrant ecosystem that has flourished around it. The potential loss of these services due to the pricing adjustment would significantly impede our ability to moderate effectively, thereby detrimentally impacting the user experience within our communities.”
Reddit did not provide an immediate response to Gizmodo’s request for input.
In December, Apple was exploring $50 million AI agreements with The New York Times, Condé Nast, and other media publishers. Additionally, Shutterstock is licensing its human-generated content to OpenAI for model training. Platforms like Twitter, Instagram, and YouTube have surged in value in recent years, being viewed as lucrative sources of content.
Moreover, Reddit has introduced advertisements in recent times and enforced the mandatory display of advertiser content for users in 2023. As Reddit transitions into a publicly traded entity, there are growing concerns among users that the management may jeopardize the vibrant community forum it has cultivated.
Furthermore, there is a broader apprehension regarding the licensing of data by AI companies. Content platforms are entering into multimillion-dollar licensing pacts with AI firms, yet the actual creators of this content are not reaping any benefits. Meanwhile, AI poses a threat to displacing content creators in fields such as editorial work, graphic design, and filmmaking.
