Reddit pauses paid subreddit plans to focus on search engine
What's the story
Reddit has put its plans for paid subreddits on hold, at least for now. CEO Steve Huffman said the company is "shifting resources away" from these initiatives and focusing more on transforming Reddit into a "go-to search engine." This marks a significant change in strategy from earlier this year when Huffman had hinted at the introduction of paid features by 2025.
Strategic pivot
Huffman's AMA reveals shift in resource allocation
Huffman confirmed the shift in strategy during an Ask Me Anything (AMA) session on Reddit. He said, "To stay focused on what matters most, we're shifting resources away from a few areas, such as work on the user economy." This includes what some have referred to as paid subreddits. However, Huffman also emphasized that "it's still an opportunity we believe in," indicating that while the focus has shifted for now, there is still potential for this model in the future.
Team reallocation
Team pivoting to improve core app
The team that was previously working on the user economy will now be part of Reddit's core app improvement efforts. This includes onboarding and personalization features, Huffman said in another AMA response. He emphasized that this move is aimed at achieving their most important need today: logged-in core user growth.
Revenue strategy
Advertising remains Reddit's primary revenue source
Despite hints of paid features over the past year, Reddit's primary business model still relies on advertising. In the last quarter, the company generated $465 million in ad revenue and a mere $35 million from other sources like data licensing and Reddit premium subscriptions. While paid subreddits could boost these "other" numbers, they would still be a small fraction of the overall revenue generated from advertisers.