Reddit Joins Twitter In Squeezing Devs With Unreasonable Fees

Reddit is following in the footsteps of Twitter and charging developers for accessing the platform data and running third-party clients. Earlier this year, Elon Musk killed the free API (Application Programming Interface) tier at Twitter and officially banned the development of third-party Twitter apps like Albatross, Fenix 2, and Hootsuite, among others. Instead, the company aggressively monetized the API access – it starts at $100 for access to just 10,000 tweets, goes up to $42,000 for the enterprise tier on a monthly basis, and touches the $2.5 million mark at its peak.

It looks like Twitter set a precedent that is leaving developers hapless and users devoid of good options. Christian Selig, the developer of the popular Reddit client Apollo, said in a post on Reddit that the company's new API policy announced in April will cost him up to $20 million in fees annually based on the latest user engagement figures. Reddit said that except for "reasonable and appropriate use cases," it will start charging for user data and API callbacks, putting third-party clients like Apollo in financial trouble.

Selig says in his post that he has had multiple calls with Reddit representatives, but despite the courteous communication, it appears that a fat bill awaits him regardless of good faith efforts. Reddit is said to be charging $12,000 for 50 million API requests, which is an extremely small number for a platform as deeply engaging as Reddit, whether you visit it directly or through a third-party app.

In Apollo's case, it made a staggering 7 billion API requests, which puts the monthly amount owed to Reddit at $1.7 million and the annual fee at roughly $20 million, according to the app's developer. Selig says if he boots every non-paying Apollo user, the average subscriber still makes over 300 API requests on a daily basis, something that costs $2.50 per month, which is currently more than the subscription price itself.

To recall, Apollo currently charges $1.49 per month for its paid subscription, the annual tier costs $12.99, and the lifetime premium package costs $50. Selig also made rough estimations about Reddit's own revenue stream and concludes that the self-proclaimed internet's first page would dramatically overcharge Apollo users, though Reddit hasn't weighed in on his claims.

"With the proposed API pricing, the average user in Apollo would cost $2.50, which is 20x higher than a generous estimate of what each user brings Reddit in revenue," Selig says in his Reddit post. He also says that Reddit is unwilling to adjust the API pricing for Apollo, which means either Selig pays up by whatever means he can or he sunsets the project. From the comments on Selig's post, it appears that some Apollo users would ditch Reddit entirety if the third-party client dies, just the way many Twitter users migrated to alternatives like Mastodon or BlueSky.

While killing third-party apps to increase its own traffic sounds natural, howsoever small the growth might be, it appears that Reddit is more interested in riding the AI wave. Just like Twitter, Reddit is a green pasture for training AI models, primarily because the two platforms are brimming with human conversations, which is a goldmine for improving the conversational abilities of chatbots.

Both OpenAI and Google have reportedly used Reddit to train ChatGPT and Bard, respectively. Reddit is not shy about grabbing a piece of the hot AI pie, either. Reddit founder and CEO Steve Huffman told The New York Times that "the Reddit corpus of data is really valuable" and that the company doesn't "need to give all of that value to some of the largest companies in the world for free."

"Crawling Reddit, generating value, and not returning any of that value to our users is something we have a problem with," Huffman remarked. Right now, Reddit's prime source of income is ads and a cut of financial transactions via the platform. But the company is currently planning to go public, and pushing its indispensable value to AI labs up front could do wonders for it on Wall Street, especially given the AI boom that is making trillionaires out of AI-catering brands like Nvidia.