Reddit is also betting that the 'sticky' users who contribute won't leave. And I think they grossly underestimated just how fast content creators can abandon your platform for a more friendly one.
I also surmise that the API charging is to claw money back from aggregators and those YT shorts and Tiktoks that badly read a post and some comments along with an unrelated video. And also killing 3rd party API clients also helps adblocking efforts and control of the 'narrative'.
https://www.reddit.com/r/boardgames/comments/13xydtw/the_leg...
https://www.reddit.com/r/woodworking/comments/13y7iit/made_a...
https://www.reddit.com/r/Baking/comments/13ybcbk/first_time_...
This would still hurt free third party apps, but I'm sure power users wouldn't mind paying $1/month to keep their favorite third party app going.
Instead, Reddit went for insane API pricing that app developers can't realistically afford at the subscription rates people are willing to pay.
Far more sensible is to charge the apps, and have them monetize with their own ads.