Photo-Illustration: Intelligence Officer

Reddit’s first year as a publicly traded company is going great. The nearly 20-year-old company shared a post. extremely strong This week’s earnings report: Revenue up 68% year over year, daily active unique visitors up 47%, a Reddit profit for the first time in its history. Earnings beat analyst expectations and the stock price rose more than 40%.

Reddit had no shortage of other good numbers to share. Advertising revenue rose 56% year-over-year to $315 million, while “other” revenue, mostly from AI licensing deals, rose 547% to $33 million; This is a relatively small number, but it contributes greatly to the company’s profitability. Its revenue per user also increased slightly; This means that visits are monetized more effectively on average. After years of slow growth and a stubborn failure to make money despite its size and influence, Reddit is booming.

The growth and trajectory of Reddit is undeniable. in the newsletter and letter to investorsbut at the same time they are not adequately explained. Why might a mature, popular, and mostly unchanged platform suddenly start growing like a viral startup? (Including Reddit’s latest quarterly report similarly Eye-popping growth figures.) The company touts a number of factors, such as machine translation and better publishing interfaces and tools for users, to localize content for new markets, but it ultimately boils down to the obvious answer: Google is the world’s most popular website, and by far the most popular website on the internet. big traffic driver sends more people to Reddit. Much more.

The background here is a bit vague and controversial, but here’s the basic outline: Late last year, Google began prioritizing certain sources of user-generated content in Search in an effort to surface more”first person perspectivesThis, along with other less clearly explained changes, appeared to provide greater visibility for forum-like sites like Quora and especially Reddit, which some users had already added to queries as a sort of hack to make search results better (“best iphone battery reddit”) ,” For example).

It also corresponded to something big fall in traffic to various online publishers, some spammy, others less so. This caught the attention of Google analysts and search engine optimization (SEO) experts and sent waves of panic through online media, which are heavily reliant on Google to find readers. “Reddit’s rise is unprecedented,” he says Lily RayVice president at marketing consultancy Amsive. “We have never seen anything like this in the SEO space.” Ray says that between July and August 2023, Reddit “really took off” in terms of visibility in popular searches. Now, for many informational queries (a term that refers to queries where there is a specific question the user must answer) “You will find that Reddit.com ranks near the top.” (Web publishers and SEO experts are aware of this change.) relating to Google’s artificial intelligence licensing agreement with Reddit announced at the beginning of this year; companies to reject that the two are related to each other.)

The source of Reddit’s growth is also evident in its official numbers, although it doesn’t break down Google or search traffic specifically. For example: Daily active unique visitors logging in increased by 27% globally.outside The number of daily active unique visitors increased by 70%. In the third quarter of last year, logged-in users made up a slight majority of daily unique visits to Reddit; This year, departing visitors led the way. This is consistent with growth driven by people tapping on Reddit links on Google, rather than organic growth from people specifically searching for Reddit. Some find a way back to a site they already use. Many of these show up on Reddit as just another link in Google’s results, just like any other website.

CEO Steve Huffman talks about how important Reddit has become to Google in his letter to investors — “Reddit was the sixth most searched word on Google in the US” — but he’s a little more oblique when talking about how important Google has become to Reddit speaking. This is as close as he can get:

Looking ahead, improving the search experience on Reddit is an important part of our strategy. We want to ensure that all users have the best experience possible. This includes users Coming to Reddit from external search and those searching directly on Reddit for recommendations on what to buy, what to watch, or which products or services are best. We know that many users are looking for more than just answers; They’re looking for authentic, real-world information and advice from communities on Reddit. We’re focused on making the experience of navigating conversations and content on Reddit easier and more intuitive.

Things are going well for Reddit again, and in many ways it’s good news that a lot of new visitors are coming in, some of whom are becoming active users and contributors of the platform, making it more useful and valuable. However, as an ad-supported business, getting the majority of your traffic, your main source of income, from a much larger partner is not without risk. Ask websites that track previous visitors being redirected to Reddit en masse. Or The collapse of the American news media!

Reddit has earned its reputation as a collection of communities where people intentionally spend time and occasionally contribute through posts, chats, or volunteer moderators. Its users are motivated by the presence of other users; Accordingly, for better or worse, the company had to respond at least to some extent to the demands of Reddit users, on whom it depends both for advertising revenue and as a source of free content and labor. (But as it approaches its IPO, Reddit I’ve run out of patience for this dynamic, and he has reasserted his authority over the restive mod community.) If Reddit starts to function more like a mod actual Google’s extension – as a website full of highly searchable content rather than a primarily self-contained community – will have to deal with different challenges.

Already, spammers Attempting to capitalize on Reddit’s visibility on Google makes the site appear unoriginal and often AI-generated.parasite SEO” content creates new work for already beleaguered volunteer moderators. Demand Media, a company founded in 2007 to get Google traffic. mutually beneficial arrangement its search engine reached a valuation that briefly exceeded that of The New York Times. Demand Media was a rather cynical content farm that paid small fees to freelancers to produce large amounts of plausible search bait, briefly filling in the gaps in Google’s results pages. Historically, Reddit could not be more different in terms of its role in the broader network and its relationship with users, yet it finds itself performing a similar function and reaping similar benefits. Not a bad deal! But it’s a potentially risky situation, especially since Reddit now refuse indexing From other search engines that have connections to AI companies, so basically all of them.

Reddit’s new success is at the mercy of Google; in other words, a fact that both companies are keenly aware of: If the search giant decides to show fewer Reddit links, or perhaps start summarizing more with AI, it will be paying for access to them all. it’s data after all – the company’s wild growth could stall or reverse, which is a bit more of a problem now that it has a ticker symbol.

Reddit’s current mission is to convert its new traffic into users who will stick around, talk to each other, and continue to produce enough real, trustworthy, interesting, or useful content to keep other users around, while Google collects and advertises it. against. Reddit has had to answer to its investors for years And users whose desires are not always compatible. Now he has to answer to the most powerful website on the internet.