The Information's TITV
00:32:21 · Akash Pasricha
[00:32:21] S0: Well, this was kind of the irony of Reddit reporting results, I think, the day after Google. Google came out and said, Hey, our search advertising revenue is decelerating. Everyone got scared. And then Reddit comes out and says, Well, we're getting hit on the Google end of this. And so, is just doing what it needs to do presumably to try to maintain its growth. One of the other interesting parts though of the Reddit equation is that you didn't have to log in to see a lot of the content. This was a change that they now said that they're going to be making. My read on it was it's an effort to stop these chatbots or platforms from being able to access the data so freely. Do you think that this is going to work? Technically speaking, are there still ways around this for these agents and chatbots to read the data? Where is that going to go?
00:33:22 · Saanya Ojha, Akash Pasricha
[00:33:22] S4: Google, I think, has a direct licensing agreement for Reddit to train on their data. I don't think we're going to see as much of a ding to Google itself. But I think more broadly, that does is it makes users that do come to Reddit a lot more intentional about their engagement. 80% of their revenue already comes from users that are logged in and on their app. So, I think from their perspective, it really is about instead of Googling what stroller do I buy Reddit and then getting the answers through that. They want people to come directly to Reddit and that's kind of the thing that they're trying to facilitate. And maybe it is such that the licensing agreement allows the models to be trained on kind of Reddit language and content, but then because there's a login now, it doesn't surface it in AI overviews as easily. I'm not sure what the exact structure of that agreement is, But clearly, they're trying to have a direct user relationship instead of relying on Google to send the user their way, which they've been doing for years now. [00:34:33] S0: How do you think this changes the value proposition for Reddit insofar as how it pitches advertisers? How does it change product itself that they ultimately have to pitch if the news story is, Hey, these are people that are logged into our platform. I mean, on one hand, it's basically what? That these are more engaged people. You're likely to hit the same person more than once. On the other hand, the TAM of who you might reach is a little bit smaller. Is that sort of the story here?
00:35:07 · Saanya Ojha
[00:35:07] S4: Yeah. I mean, that's definitely the case. I think advertisers will care when their MAUs start going in reverse and if the ice cubes start shrinking. Then there's going to be a conversation about where do we spend our money. Honestly, I think even advertisers, it's hard to say where to go at this point because Google isn't working as effectively as it did. A lot of the underlying assets it relies on are also kind of struggling to find their footing in this new world. I think, theoretically, if they can keep their user growth and the login doesn't dissuade that, I think they're going to see a higher quality of base. From an advertiser perspective, a dedicated, engaged community where you know what you're getting is probably better than a lot of people that don't actually engage with the platform. So it can cut either way. And I think we're going to see a lot of people try to gate access and curate these communities on the web that are not as open as they used to be because they used to give away content in the hope of traffic and now they're not getting traffic. So there's no reason to give away content. The economic bargain completely shifts.
00:36:26 · Akash Pasricha, Saanya Ojha
[00:36:26] S0: Right. And you also pointed to some of the other platforms, Pinterest, Quora, Yelp, as other platforms that are probably going through the same story here. Do you see there being consolidation between some of these platforms as they all grapple with the same issue? Could we see, I don't know, maybe Reddit merge with one of these companies, acquire one of these companies? Don't even know what the relative size is of some of these businesses, but feels like it would be a better story here to consolidate, right? [00:36:57] S4: You know, they just serve very different niches. You go to Pinterest for a very different reason than you go to Yelp. I honestly think that if the overlap with the AI overviews, etc, whatever consumers are using now is very, very high, then you kind of get to a point of stack overflow ification of that entity. [00:37:25] S0: If What that mean? [00:37:27] S4: I mean, dude, have you seen the search traffic for Stack Overflow and the number of queries that are generated and the number of people that are on the platform? It's like this, and then there were the heyday of Stack Overflow and then AI came and it's kind of just gone out of existence. [00:37:43] S0: What is... Sorry. Stack Overflow. Am I maybe... Am I... Have I missed this whole?
00:37:43 · Akash Pasricha, Saanya Ojha
[00:37:43] S0: What is... Sorry. Stack Overflow. Am I maybe... Am I... Have I missed this whole? [00:37:48] S4: Stack Overflow was this website where, you know, goders, programmers would go and essentially write there would be a it's a bank of issues that they have run into. And other people would comment and tell them, Hey, this is how I solved this, etcetera, etcetera. So it sort of became the accumulated wisdom of coders and programmers over a number of years that helped people. It was like the Bible that you looked at when you ran into issues. It's just not how coding works anymore. Stack Overflow, ask any developer, they immediately know what you're talking about. It was like up there with lead code as like one of the things that every coder knows. Yeah, at this point it's kind of like an abandoned website. No one goes there anymore. If you have a question, you ask your LLM. And most of the time, you aren't even coding yourself anymore. You're just dangerously skipping permissions. I think probably either find a way if you're at the scale of Pinterest, Yelp, Reddit that are all doing very different things. So I don't think consolidation makes sense. Different models, everything. If you're at that scale, either you defend your castle or you go the path of Stack Overflow and become a feature within the chatbot. And that's that. The agent just does exactly what you promised.
00:39:19 · Akash Pasricha, Saanya Ojha
[00:39:19] S0: Right. Right. Okay. Yeah. I know. I seek... I hear you on them doing different things, but I don't know. I'm thinking about media businesses and different types of publishers and these media conglomerates that ended up shaping up. I wonder if this is just another version of that story playing out. I don't know the answer, and I'm also not I [00:39:47] S4: mean, that's the thought. You could have a whole... You're very creative. [00:39:50] S0: Yeah, no. Because Conde Nast, just because you had different magazines and different publishers, they ended up all being under a holding company. And then the holding companies are the ones that had the bigger issues, but they still stayed public companies in some cases. [00:40:06] S4: If they lose enough value and become very acquirable, then yeah, I guess it makes sense. You can just have a holding company that specializes. There has to be a unifying theme for that holding company. What are they really, really good at? And maybe there's someone who comes along and is like, I'm very good at extracting value and defending shrinking communities. And then that becomes the last bastion of kind of direct, indirect. And then advertisers go there for very specific audiences.