The recent blackout on Reddit was triggered by the company's decision to charge app developers for access to its platform through the API. The Reddit API, up until yesterday, had been free and available to its community since 2008. It's becoming clear to some that centralized social media companies like Reddit and Twitter are turning, according to Forbes, into giants of  "anti-social media."

This move resulted in the shutdown of nearly 9,000 subreddits and caused an indefinite blackout in protest. Reddit went dark as the people who do all the work expressed their frustration and dissent. Third-party apps like Apollo ($20 million/yr alone), RIF, Sync, and BaconReader also shut down indefinitely, amplifying the backlash.

The lost of these apps poses a threat to the long-term survival of Reddit and is altering the trajectory of the internet. Third-party app growth was among the outward signs of Reddit's health and growth but those were traded for a valuation, and they are shutting down for good.

Users are realizing the value they contribute to tech companies, often with no compensation. Moderated live events are indefinitely canceled.

Reddit Blackout and Twitter View Limits: Decentralization is on the Horizon

People are genuinely moving toward decentralized social media where the control doesn't all depend on a board of directors' wishes or advertiser influence.

Decentralized social media is a lot like email. You may have Gmail and your friend has Yahoo Mail but you can both interact with each other freely despite being on two different platforms and servers. This is because email is decentralized. If email were centralized, it would be easy to charge for email usage, restrict it into pay tiers, and make app creators pay API fees. Can you imagine if your email provider set limits on how many emails you could view per day if free alternatives exist?

Compelling Reason for a More Decentralized System

With privacy viewed as more critical than ever, centralized social media can be and has been used by the highest bidder to manipulate communities, disrupt elections, or spread terror and misinformation. Decentralization can potentially remove much of that.

The protest has revitalized the decentralized social media space like Mastodon which is filling up. In addition, Twitter and Reddit clones are popping up and sign-up lists are being flooded like for Jack Dorsey's Bluesky (a Twitter clone) which had to pause enrollments this weekend due to rising demand for its beta test version. All weekend the trending topics dealt with the end of Twitter in the face of limits on users' number of viewable Tweets

Threads, Meta's Twitter clone and new rival appeared on the App Store this weekend, albeit briefly.

Despite the widespread discontent, Reddit has made little, if any, effort to address the concerns of its users and moderators. The platform has exempted accessibility-focused apps from the pricing changes, ensuring their continued existence but ensuring accessibility is mandated by law. On Friday, RedReader and Dystopia announced they received exceptions. Why they granted some exceptions and not others like Apollo is a mystery. People used Apollo because it's more accessible than standard Reddit.

Reddit's CEO and one of three co-founders, Steve Huffman, has defended the business decisions but faces strong opposition. Huffman told NPR that the protest is limited to a minority or cadre of discontents and the majority of the community was ok with it which just made things worse. While many moderators have returned, the apps are going bye-bye and it confirmed something: the company's problems are larger than they appear.

Consider why Reddit will likely never be the same after starting to charge for its API. The price is exorbitant for users and developers and apps will disappear as a result. Reddit has unwittingly accelerated the move toward decentralized social media. This is a defining moment, in fact, and the disruption may catalyze the rise of alternative social media.

The blackout not only affected Reddit users but will also have a broader impact on the internet as a whole. Major search engines like Bing and Google heavily rely on Reddit's data to refine their search results, and the unavailability of Reddit posts and comments during the blackout had an immediate negative effect on search engine rankings and user experience.

The Impending API Changes and Developer Dilemmas

Reddit's new API pricing took effect, forbidding free access for most third-party apps, leaving developers scrambling to adapt to the new model and users in the dark. While some Reddit apps have found survival strategies, others are shut down indefinitely including the most popular Reddit alternatives, like Apollo and rif (RIF). Many Redditors said they would be leaving when Apollo shuts down.

Let's explore how some popular apps are coping to make the difficulties more concrete:

1. Narwhal for Reddit - iOS

Narwhal for Reddit, a well-loved app, plans to release Narwhal 2 as a subscription-based service, hoping to gather valuable user data on API usage before its launch. The developer, Rick Harrison, is considering a base subscription fee with additional API call purchases to keep the app running. However, uncertainties loom due to undisclosed terms outlined in an NDA.

2. Infinity for Reddit - Windows Open Source

Infinity for Reddit, an open-source app, aims to offer a subscription model, contemplating a $3 per month fee. The developer, Alex Ning, is aware of the challenges of changing the API key, which could temporarily render the app unusable during the update process.

While developers provide potential solutions, nothing guarantees the user base will be there to pay for it. Many who preferred Apollo to the actual site are disillusioned and swore they were done when Apollo shut down. Still, most of the moderators begrudgingly returned, according to the Verge,  but they are not finished, emphasizing: their demands were simply that the apps not be canceled by the changes and that the price be lowered. Neither happened.

"Reddit needs to move....We are holding the line. And if we lose the sub, we lose the sub."

This Reddit blackout underscores the ongoing tension between the commercial interests of tech companies and the contributions of internet users and highlights the need to find a balance that respects labor and ensures the sustainability of online communities.

Turns Out, Without Mods, Reddit is Just Data

The thousands of volunteer moderators believe they are responsible for taking it from a site of just hundreds of fake profiles in 2005, to what it is today. The user base transformed it into the internet giant it is today, and they are not happy but are stuck with it.

Indeed, the moderators make Reddit content credible to read and the site tolerable to visit. But we're seeing the limit of that power as attempts to post only John Oliver and NSFW posts did not have the intended effect.

Without these apps Reddit's future is uncertain but the damage is ostensible already.

The Ripple Effect: Labor on the Internet

The Reddit blackout and the subsequent changes to its API raise important questions about labor on the internet and the value that users contribute to tech companies. By charging for API access, Reddit's decision reflects a growing awareness of the work and contributions made by communities.

Unlike their counterparts elsewhere, Reddit’s mods are unpaid. That makes them an odd hybrid of employees, customers, influencers, and suppliers. Northwestern University published an estimate that Reddit’s mods perform at least $3.4 million worth of annual labor. While this is all fine and good, free labor is not ideal, it's a liability for a business as the blackout protest proved.

Many Reddit third-party app developers said they'd rather shutter their doors than pay the fees. And that's what is happening. These aren't prototypes, we're talking about apps like Apollo that alone make $20 million a year. The sole developer of Apollo stands to lose $20 million a year at this rate if charged what Reddit proposes. He was initially tentative before protesting until he saw the price yesterday and it is unsustainable.

As we navigate this evolving landscape, it is essential to critically examine the power dynamics and labor practices that underpin our online experiences. The decisions made by Reddit's leadership have far-reaching implications not only for the platform itself but also for the wider internet community.

The Impact of the Reddit Blackout on Its IPO

Many fear that these new policies may lead to an exodus of moderators and users because it's already started. This could result in a decline in content quality, an increase in spam and misinformation, and a potential loss of helpful contributions. This will certainly not help search engine quality.

This disruptive move makes sense in light of an upcoming IPO (second half of 2023) they've waited two years for...but Reddit is not profitable. The company's profitability has been publicly acknowledged as an ongoing challenge.

The infrastructure to support third-party apps costs Reddit $10 million annually Charging for the API could wipe out that loss and potentially be a net positive on their balance sheet which is among the key data used to determine the true value of the company when it's assets go public on IPO day.

To demonstrate profitability to Wall St. before its IPO is one very good explanation for the move. But it's fairly safe to assume for now that Reddit will not get the valuation it thinks it deserves.

The company's aspirations for a $15 billion valuation may not align with its true worth, and this inconsistency erodes investor and user confidence in the company.  Efforts to achieve unrealistic goals harm what initially made Reddit popular: the community.

The company was valued at $10 Billion in August of 2020 when it was originally filed to go public during the ramp-up to the meme stock frenzy. The company set its target higher at $15B. The previous valuation in February was only $6 billion. Ultimately, Reddit's value lies in serving its users and providing valuable content, regardless of its financial returns, because it was not likely they will even see a $10 billion valuation, and the odds of outperforming as a stock are even lower.

What We Learned From the Reddit Blackout:

The blackout has shed light on the challenges Reddit faces in striking a balance between monetizing its vast user data and addressing the needs and concerns of its user base, making moves prospective investors would find attractive. Reddit chose to make a unilateral decision that it will have to live with.

While the full extent of the impact remains to be seen, several factors warrant consideration, the ongoing protests on Reddit highlight a larger problem: a disconnect between how the company perceives itself and its actual value. Reddit has inherent value to its users and the world, even if it falls short of delivering substantial returns to potential shareholders.

It may just get pushed down by market makers out of spite for its pivotal role in triggering a meme craze in the stock market for assets like AMC and Gamestop in 2021.