CNA Explains: Reddit's gone public. What does it mean for users?
The platform occupies a unique niche online – including in Singapore. An IPO and any moves to become more "commercially friendly" could put that at risk.
The trading floor of the New York Stock Exchange prepares for the social media platform Reddit's initial public offering on Mar 21, 2024 in New York City. (Photo: Getty Images/Spencer Platt via AFP)
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SINGAPORE: Social media site Reddit made a keenly anticipated debut on the New York Stock Exchange on Thursday (Mar 21), finishing its first day of trading up 48 per cent.
The listing of the San Francisco-based company is the first time a major social media company has gone public since Pinterest in 2019.
What's Reddit?
Founded in 2005, the platform’s tagline is “dive into anything”.
It's a network of online communities where users can discuss topics ranging from the general (countries, music acts) to the niche (such as photos of bread being stapled to trees).
These communities take the form of discussion boards or subreddits denoted with “r/” (as in “r/TaylorSwift”). Users, called Redditors, can initiate posts and leave comments.
The site has 267.5 million weekly active users across more than 100,000 subreddits.
In 2023, Reddit was among the top 10 most-visited sites in the United States and averaged 1.2 million posts and 7.5 million comments daily, according to the company’s prospectus.
Notably, unlike other social media, Reddit is moderated by volunteers who are users, and not employees.
Communities create their own rules, which are enforced by moderators and backed by a site-wide content policy.
How big is Reddit in Singapore?
There are a number of Singapore-specific subreddits. The largest is r/Singapore with almost 980,000 members.
Others include r/askSingapore and r/SGExams with about 230,000 members each, and r/singaporefi with 158,000 discussing financial independence.
Social media spaces like forums have always been important to Singaporeans as a "last bastion" to share thoughts freely, said Professor Crystal Abidin, who teaches and researches internet cultures at Curtin University.
Because of this, forum users in Singapore tend to code switch or use language where insider knowledge is needed to decode its meaning, she added.
For instance, on local forum HardwareZone and its popular Eat-Drink-Man-Woman discussion board, new users almost need a glossary to understand specific terms. Not everyone is able to enter and participate equally, said Prof Crystal.
In contrast, Reddit still generally uses plain English.
This gives rise to more foreigners in Singapore turning to local subreddits, along with overseas Singaporeans trying to keep in touch with local trends.
“It's just more welcoming because the barriers to entry are a lot lower,” the professor said.
And if anything about that were to change, it would be "as if we’re losing mainstream forum culture in Singapore”.
Why is Reddit going public?
This will let it raise capital to grow the business. The initial public offering (IPO) valued the company at US$6.4 billion, and raised US$748 million.
Until now, Reddit had generated “substantially all” its revenue – US$804 million last year – from advertising, the firm's prospectus said.
“We are going public to advance our mission and become a stronger company. We hope going public will provide meaningful benefits to our community as well,” CEO Steve Huffman said in a founder’s letter.
The company also took the unusual step of setting aside 8 per cent of shares for eligible US-based Redditors and moderators to buy at the IPO price, before the stock started trading.
“Our users have a deep sense of ownership over the communities they create on Reddit,” said Mr Huffman. “We want this sense of ownership to be reflected in real ownership – for our users to be our owners. Becoming a public company makes this possible.”
What could change now?
It's common for community-focused internet start-ups to struggle with balancing monetisation and community engagement, said Mr Li Jianggan, CEO of tech venture builder Momentum Works.
He pointed to China’s video-sharing platform Bilibili as an example that has “suffered big time” since its IPO.
While Reddit has an older and more limited format compared to other community-centred platforms like Discord and Pinterest, it “surprisingly has attracted and retained a young audience”.
Three monetisation strategies were highlighted in the Reddit prospectus.
- Advertising
Currently, ads are displayed on the site’s "home" and "popular" feeds, and on community threads.
Ads in comment threads and search pages, as well as video ads, have been identified as potential future opportunities.
Reddit also wants to use artificial intelligence (AI) to predict user engagement with ads and expand ad reach, as well as to track conversion (actions that consumers take after interacting with an ad).
These help to deliver and show return on investment, which could in turn help attract more advertisers.
Prof Crystal pointed out that in Singapore, local influencers are intentional about tying up ads with their personal backstories.
“So content, as opposed to just ads for ads’ sake, is something that Singaporeans are more forgiving towards,” she said.
“If you’re talking about Reddit just posting ads and interrupting our experience … that’s not going to be very, very helpful.”
- Data licensing
Reddit has started allowing third parties to access user-generated data, for purposes including training large language models for AI. The US Federal Trade Commission is looking into these AI-related deals.
Another potential purpose is data targeting, where companies take the demographic information of users to tailor content and ads, as outlined above.
One of Reddit’s features is that users are pseudonymous, so the community is not bound by its members having “a singular, coherent, long-term user identity and chain”, Prof Crystal said.
A “throwaway culture” also exists, where individuals have several handles, sometimes in order to “safely and actively participate in conversations that may be frowned upon in Singapore”.
Parts of this could be compromised in the name of more effective data targeting.
Prof Crystal pointed to Facebook, which implemented a real-name system in 2014. But she also noted that this would not necessarily be the case with Reddit.
“It’s just that you have to now be loyal and committed to the one account ... which is probably going to be off-putting to a lot of Singaporeans who are already familiar with tabbing,” or the practice of switching between different accounts, she said.
National University of Singapore Associate Professor Natalie Pang pointed out that advertisers will want to know who they're reaching and targeting. Marketplaces also cannot function without a form of identification.
But she said it would also be possible to target ads based on topical interests and locations already identified through subreddits.
- Developing a user economy
This strategy has three parts to it: A developer platform where users can build applications for use on Reddit; a contributor programme for users to give and receive monetary benefits; and a community marketplace to drive commerce.
Currently, users can “downvote” or “upvote” posts and comments, similar to “likes” and “dislikes” on other social media. Until last September, Redditors could also use coins and awards to reward users making valuable contributions to discussions.
In some cases, coins and awards were also given out to help push useful comments to the top of posts. This way, vulnerable users – like someone asking for help with domestic violence or child abuse – could find the information more easily.
These coins and awards could not be bought with cash back then. But Prof Crystal raised the possibility that a user economy could involve monetising such rewards in the future.
This, however, could cause Reddit to “lose its flavour of being drawn together by community”.
Monetising rewards would “make Reddit culture become less of a community-minded space and more of a commercially prompted space”, she said.
What are other potential repercussions?
Reddit going public entails a change of ownership, which ultimately means a change of community guidelines as the platform needs to be made more commercially friendly, said Prof Crystal.
One social media space that suffered after such changes was Tumblr. Ownership of the US microblogging site changed hands in 2013, although through an acquisition and not an IPO.
Among other things, Tumblr was initially known for celebrating body and sex positivity, and making conversations and resources about mastectomies and abortions available online in Singapore, said Prof Crystal.
In 2018, much of this was lost when community guidelines were modified to ban nudity and sexually explicit content.
An exodus of users followed and Tumblr has largely stagnated since, according to US news outlets.
“That is a cautionary tale for when there is very unique niche value attached to a platform, and the ownership decides to rejig community guidelines, structure and framework," said Prof Crystal.
“We lose the essence of what made people want to go there to begin with."
