• Reddit has more users and more revenue than ever, but net income still marks a loss for the company.
• As such, other monetisation options are being explored, including paywalled content.
• While still being discussed, users aren’t a fan of this idea.

One of the benefits of Reddit going public earlier this year is that we now get a better look at the business side of the website.

On Tuesday Reddit published its financial results for the second quarter of 2024 and revealed that revenue and users grew over 50 percent compared to Q2 of 2023. The company brought in revenue amounting to $281.2 million, with $253.1 million of that coming from advertising on the website.

The company also said that “other revenue” over the quarter climbed 690 percent compared to 2023. However, that “other revenue” is data licensing agreements, something that was likely only taking shape in 2023 so the growth figure here is heavily skewed.

With so much reliance on advertising for revenue and net income sitting at a loss of $10.1 million, Reddit has to start exploring other ways to make money, and it is doing that according to chief executive officer, Steve Huffman.

Responding to a question posed by Needham & Company’s Laura Martin about monetisation of content for creators and balancing that with Reddit’s free and open culture.

“In my experience on Reddit, whenever we add basically a new way of using Reddit, what happens is it expands Reddit, but we’ve not seen it cannibalize existing Reddit. So I think the existing altruistic, free version of Reddit will continue to exist and grow and thrive just the way it has. But now we will unlock the door for new use cases, new types of subreddits that can be built that may have exclusive content or private areas, things of that nature,” said Huffman.

The CEO acknowledged that what makes Reddit “magical” is the time folks spend helping others. He doesn’t seem to think that adding a way for folks to monetise content would be a bad thing, but it depends on how these cordoned off areas are implemented.

Thankfully it doesn’t seem is if Huffman wants to take the same line as X, formerly Twitter, by paying folks for engagement but rather wants to allow for the creation of sub-Reddits with premium content.

But users on Reddit are hesitant to buy into what Huffman is proposing. Some have said that if communities get paywalled, free alternatives on the topic will spring up in their place. There’s also no telling how many Redditors are willing to pay for access to premium content on Reddit, where many go to share premium content from other websites for free.

There are also concerns that despite the paywalls, the content will be scrapped for AI training purposes, rendering its exclusivity moot.

As mentioned though, Reddit needs to make money and become profitable because it now has public investors to answer to, and investors aren’t generally the most patient bunch.

We don’t expect Huffman to drag his feet on this idea though and we suspect that before too long we’ll be seeing paywalled sub-Reddits and potentially other monetisation beyond Reddit Premium.