Note: I recently forwarded this post to a good friend of mine who just happens to be a Redditor and has made the front page numerous times. I updated it based on his feedback. The content of his original response is here. All my changes are bolded.
I was recently at a conference and we had one of the top people from Reddit speaking. I struck up a conversation with the person from Reddit and one of the conference leads. When the person from Reddit walked away, the conference lead – a very successful business man – said, “Man, I wouldn’t want to have to figure out how to monetize Reddit.” He’s right. It’s a huge challenge. Reddit is known as the front page of the Internet and is a collection of passionate niche communities (known as subreddits) where redditors discuss/share their favorite topic(s). (For a detailed description of what Reddit is, please click here.) A few examples of subreddits are below and you quickly get a feel for how high engagement is.
Of course the question is: how can Reddit make money? (I’m going to go out on a limb and guess that the ads aren’t providing a torrent of money.) Reddit has some of the most sophisticated users on the Internet and yet they’re not profitable. Below are some thoughts on how to monetize.
Community Enablement – Reddit is a collection of macro and micro influencers. (They’re also, all about bullshit. As in, they’re incapable of it and can detect it a mile away.) Each community member has needs that get served by businesses. Online or local businesses.(Remember many of these subreddits are centered around a personal passion.) Why not service those needs through the Reddit platform. For example, a subreddit focused on European motorcycles has members that are sharing insights into rebuilding engines and then going to their local dealer to buy parts. A user could bring the local dealer into the community and Reddit could enable the business to sell their products within the subreddit (and collect a small percentage). The business would have an essential  endorsement of the community member that brought them in. That said, this model would need to be discussed with influencers in the community. In fact, hyper-transparency on all of these monetization strategies is recommended. Treat the subreddits, like they’re members of a co-op.) This revenue model is on a case-by-case basis. Each community has a specific threshold what they’re willing to tolerate and they’re quite literally in charge. Community members could help figure out if there is an opportunity there and if so, what products/services should be offered. This idea has the most potential.
The Reddit Store – This is 100% Jason’s idea and I love it. This would be a searchable ecommerce platform with the best “products” voted to the top and segmented by product type (knives, mens clothes, art, etc). I’ve seen numerous amateur artists/photographers begin their career on Reddit/Imgur and it would be great to get a chance to see them early on in their artistic development and potentially buy a piece. Over time you could see the platform grow to embrace services.
Also, let me be clear: I am in know way saying that the purpose of Reddit should be ecommerce. I’m only suggesting that worthy products – as decided by the communities -Â are available in a separate area of the site.Â
Monetize Data – Reddit recently partnered with Brandwatch to begin monetizing their user’s data. In fact, the data that’s being pulled could help identify which communities would be the most likely to be the beta for the community enablement program above. Usually, when data is monetized, it’s marketingSpeak for “help target ads”. And if Reddit is thinking of placing sponsored text – native advertising within Reddit’s interface – they could shooting themselves in the foot, by way of the chest. (In other words, this isn’t Facebook and slipping content into a stream of interaction will cause a revolt.) I would instead use the data collected to target them elsewhere. Places they expect to see ads. They’ll just be far more targeted. That said, all advertising fueled by Reddit data should be opt-in. Given the nature of Reddit AND until companies get their shit together in regards to contextual ads you will only alienate community members if you don’t go with an opt-in model.Â
Membership Fee – Active members are passionate about their interactions with their peers and recognize that the platform enables this interaction. I don’t believe that most users would have an issue with paying a flat fee to be given access to the platform. I wonder if Redditors are more “loyal” to Reddit or their specific subreddits. I also remember what happened to Digg. I guess the question is whether community members are loyal or habitual. (Amazon for me is habitual.) I’m also going to guess that answer is different for each community.