Is Conde Nast Squandering Reddit’s Potential?

Senior Software Engineer Mike “Raldi” Schiraldi

How many software engineers does it take to operate a site that serves over 1 billion pageviews a month? At Reddit, the answer is (hopefully) one, at least for now.

Yesterday Senior Software Engineer Mike “Raldi” Schiraldi resigned to take on his “dream job” at Google, leaving the total headcount of software engines at one. David King left last week to join Reddit co-founder Alexis Ohanian at Hipmunk.

After eclipsing Digg to take the top spot amongst social news sites, Reddit has seen little in the way of “love” from their owners, Conde Nast. Promises have been made to dramatically increase the size of the skeleton crew that keeps the site running, but is that really enough?

Reddit is the biggest, most powerful social media site that nobody has heard of. It’s community is amongst the most passionate on the Internet and the potential to monetize the site is high. Unfortunately, T-Shirts, minor advertising commitments, and donations in the form of Reddit Gold memberships are the only things keeping it generating cash.

Will Conde Nast ever realize what they have in Reddit?

The Unwanted Potential

Very few communities are as powerful as Reddit. Sites like Facebook and Twitter have more users, but the semi-unified front that Reddit is able to muster behind various causes is in a league of its own. From helping people find stolen computers to building support for political rallies, Reddit is as much a meeting place as it is a news aggregation site.

Colbert Reddit

However, Reddit is not a community that necessarily wants the attention of the rest of the world. It has always maintained an unofficial sense of superiority that makes it unapproachable for many… including advertisers. Conde Nast has the power to change that.

Much like Russell Crowe’s character Maximus in the movie Gladiator, Reddit doesn’t want to be the emperor. Avid users would rather go about their business, share interesting and entertaining pieces of media, and posting the best comments on the web. Power? It simply doesn’t cross their mind.

What Conde Nast Can Do

Conde Nast

When a top-100 site worldwide continues to grow the way it does, there are only two real options that won’t squander the opportunity it presents. The popular choice (at least from the perspective of the Reddit community) would be to sell the site to a company that believes in what Reddit represents and that is willing to support the site with more resources. Few parent companies have been met with as much scorn from their own site as Reddit has dished towards Conde Nast.

The less popular, riskier possibility is to utilize the tremendous power that Reddit wields to promote “hidden” advertisers. Companies would pay money to get pageviews to positive press about them, particularly in the tech and entertainment industries as well as in political campaigns. It’s dirty. It’s evil. It’s definitely been considered by Conde Nast.

It may be going on currently without even the Reddit staff being fully aware.

Few sites can send the mass of quick traffic that Reddit can. Stories can get over 100k views in a day. Images can get much more than that. Having the ability and the power to promote stories artificially from the start would potentially send that story to the land of mass exposure if the content is strong enough to get through the community itself.

Redditors could never know. They would find the content. They would obliterate it. Then, they would attack the companies responsible for the paid promotions. It would get ugly.

If done right, however, it could be a dangerous weapon. Imagine a negative story about a political candidate’s rival. A little promotion could help the story skyrocket. It wouldn’t simply be the Reddit effect alone. Many sites find content through Reddit to report on or repost. Twitter is the only venue that is arguably as fast at spreading news virally and it never reaches the number of pageviews that Reddit can send.

Again, it would be a huge risk to both Conde Nast and their “clients.”

If it could be pulled off, the result would be revenue generation potentials unlike anything the site has ever produced.  Will it happen? Of course not. In many ways, Conde Nast fears what Reddit can do to them. It’s not the kind of community that one would ever want to make angry.

Comments

  1. says

    Actually, Jedberg revealed in comment threats that Conde is ponying up the resources now…

    http://venturebeat.com/2011/03/18/another-reddit-employee-says-goodbye-accepts-%E2%80%98dream-offer%E2%80%99-from-google/#disqus_thread

  2. says

    Jedberg didn’t “reveal” that “Conde is ponying up the resources now”. That is nothing but damage control. Reddit has a well-documented and rather pathetic history of trying to spin the facts as the news gets worse and worse for them.

    They are now down to one freakin’ developer, are spinning that as *good* news, and there are still people out there naive enough to buy it. Amazing.

    “Selling the site to a company that believes in what Reddit represents and is willing to support the site with more resources” would be great, but who in their right mind would buy it?

    They have existed for six years and have never made a dime of profit. They spend a million bucks a year on servers and bandwidth alone (http://bit.ly/fPKn2o) and don’t have nearly that much revenue. They get a lot of traffic but – after six years of losses – the site is a proven financial loser.

    The employees are seeking higher ground because they know that Conde Nast is shutting the site down. The lead developer is gone; the boss has been fired; they lost 2/3 of the programming staff last week alone; and the site crashes almost daily.

    It doesn’t take a gypsy to see what will happen next. Mike Schiraldi’s “dream job at Google” (that he, strangely, can’t provide any information about) has nothing to do with anything. When there is a mass exodus, there is usually a reason.

  3. Rmayo says

    LouF:

    If I were a top leader at conde nast and the company shut down reddit I would fire everyone’s ass who was even slightly involved in the reddit “experiment” If you can’t find a way to turn a billion pageviews a month into a tidy profit… what the hell are you doing in management. Honestly, whoever is actually calling the shots on the reddit business unit is doing a pretty piss poor job in my opinion. They need to invest resources into reddit to the point where the site is functioning sufficiently and then start brainstorming revenue generating ideas. I mean come on, even something as simple as just doubling the amount of advertising on the site would double reddit’s revenue and the ads would still be considered extremely non-intrusive by today’s standards.

  4. JohnnyB says

    You’re not an active Reddit user, are you? I doubt someone who uses the site consistently would ever suggest something so impractical. First off, Reddit users are smart. I don’t mean “better than average” I mean well educated in fields ranging from CS to political science- especially the top contributors (the users that drive the site in terms of comments and content). If you were to post a hidden sponsored link, it wouldn’t be upvoted or downvoted. It would be judged on merit, against the backgrounds of thousands of analytical minds. THIS is what makes Reddit special, the fact that the hive can root out spin and cut to the heart of something very quickly (with a slight liberal bias). Going with the politician example, the sponsor would get pummeled on the site even if no one could figure out the link was sponsored, which renders the plan worthless. If for example, Nike tried to play up the release of new running shoes, someone in the comments section would quickly point out they are made by Vietnamese children.

    Further, users will abandon the site very quickly if word ever gets out (see Digg). Freedom from corporate influence is taken very seriously on Reddit, which means the risks are huge. Also, I realize I am commenting 2 years late- it’s mainly so I can repost this comment on Reddit later :)

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