Comment by pavs | Hacker News Reader

Comment by pavs | Hacker News Reader

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There are so many things wrong with your comment I don't know where to start.

>CN/Wired Digital is in business to make money, and it's clear that reddit's model isn't working.

Except that there was no investment to make Reddit more profitable. Arstechnica, Wired and Reddit are all owned by CN, not only does Ars and Wired have more employees (its understandable since they are in publishing business) but they also have _dedicated_ people, specifically hired to bring in advertising and do market research. Reddit traffic blows both Wired and Ars traffic out of the door, in every sense of the word. How much traffic per month specifically does Reddit get? Here is a snapshot from one of Reddit employees: http://i.imgur.com/mirir.jpg

But this is a problem not specific to Reddit. Ars also have money problems, they recently had to tighten their revenue generation by blocking ad blockers, presumably because they don't have enough revenue to keep current employees or even expand. To read more specific comments to my claim go through 2000+ comments with heavy involvement from Ars employees: http://arstechnica.com/business/news/2010/03/why-ad-blocking.... They always had Subscription, but only recently they started to heavily promote their subscription model, presumably because they can't get enough money.

> What's going to happen is that the donations will create a little bolus of cash -- not nearly enough -- and then run out of steam. Then the reddit guys are going to have to go back to the drawing board to figure out a long-term solution. This will probably be a subscription model that offers benefits that non-paying users don't get.

If you actually took the time to read the reddit blog post and the subsequent discussion on that subject you would have known that the whole purpose of that blog post was to generate conversation within the reddit community to see what they would more convenient with, which include discussions about having recurring paying model for customized option (including custom reddit email and other features). The whole idea was to generate conversation and see how many people are willing to pay if they try to go for a subscription model.

> This works better when you have content that people are willing to buy, but communities by users for users don't generally monetize that well, I don't think.

See also: Facebook, digg, fark,

> They could probably talk to Ars Technica about that, seeing as how they're also a CN property, and have nearly a decade's worth of experience in monetizing a dedicated community of users.

Ars is trying to save their own ass, as we speak.

> If they don't figure it out, reddit will go out of business. Conde Nast isn't in the business of subsidizing money-losing propositions, nor is any other company. And there's no reason they should be.

I think CN is run the same way as any big corporations are run. You can't monetize something you don't understand. CN is famous for print publication, and I think they are trying to apply the same logic on online publication.

There is something horribly wrong when Reddit has 4 employees and not self-sustaining; when digg has 60-80 employees and they are very much self sustaining and hiring more people at this very moment. Digg is not 20-times bigger than reddit.

Edit: http://www.reddit.com/r/AskReddit/comments/co8n8/why_should_...

> Except that there was no investment to make Reddit more profitable. Arstechnica, Wired and Reddit are all owned by CN, not only does Ars and Wired have more employees

Ars has 9 employees, and a number of contract/freelance workers, including myself. That's not exactly a huge company. There were layoffs last year where the number of full-time staff was cut by ~half.

Anything done by Ars to be more profitable has come from within Ars itself, and the staffing to make it happen has come out of Ars's budget, not from the parent company's.

>specifically hired to bring in advertising and do market research

I don't know where your information is from, but it's wrong. Ars uses CN staff, as part of its business department. Presumably the same people that do reddit and the other Wired Digital properties. Each segment has its own budget that it must stay within. During rough times (last year, for example), the budgets may be cut, but often what revenue does come in doesn't cover costs. These cyclical fluctuations are painful, but expected in markets where advertising is the primary source of revenue. In this respect, the parent company floats the properties for a short time.

It's when the phenomenon is consistent -- as in reddit's case -- that this becomes a problem.

>Reddit traffic blows both Wired and Ars traffic out of the door, in every sense of the word. How much traffic per month specifically does Reddit get? Here is a snapshot from one of Reddit employees: http://i.imgur.com/mirir.jpg

That's less significant than you think. reddit's audience is diverse because it covers so many things. Not all pageviews are created equal. MySpace is the obvious posterchild for this phenomenon. There were rumors before the financial crisis that you could buy 1000 pageviews on MySpace for a penny. I don't know if that's true or not, but certainly Ars commands far more value per 1000 pageviews than that. Pre-acquisition, they did their advertising through Federated Media, and here's a screenshot of what ads cost at that time:

http://rianjs.net/media/2008/ars-federated-media.png

Because reddit doesn't really have a niche -- unlike Wired or Ars -- their audience is less desirable. Look at the stats about readership in that screenshot. That's the most desirable niche for advertising, and commands the highest CPM rates. I would be very surprised if reddit's audience was anything like that, given the fairly emo nature of many of their subsections. reddit is more like Facebook in its approach to advertising. I suspect it's harder for them, though, because the drill-down tools for targeting are more crude because Facebook is far more structured that the "Wild West" nature of reddit.

> They always had Subscription, but only recently they started to heavily promote their subscription model, presumably because they can't get enough money.

That's not correct, either. Ars was started in 1998, and the subscription model started in ~2002 and was a voluntary donation model that got users the "et Benefactor" title, and not much else. This wasn't enough after the initial bolus of donation money was spent down, and several of the forums went subscription-only. (The off-topic forums.) Later on, other things were added to make it more appealing to front-page readers that never make it to the discussion forums. An ad-free version of the site didn't exist until the most recent major revision to subscriber benefits.

> If you actually took the time to read the reddit blog post and the subsequent discussion on that subject you would have known that the whole purpose of that blog post was to generate conversation within the reddit community to see what they would more convenient with, which include discussions about having recurring paying model for customized option (including custom reddit email and other features). The whole idea was to generate conversation and see how many people are willing to pay if they try to go for a subscription model.

I skimmed it, but after I wrote my first reply. In a case like reddit, it's probably going to take a few iterations to come up with a sustainable business model. reddit is fundamentally different from a site like Ars or wired. It doesn't publish its own content, and its audience is diverse. It also eats up far more physical resources, thanks to its larger scale and dynamic nature.

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