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Reddit is profitable for the first time ever, with nearly 100 million daily users (www.theverge.com)

submitted 1 day ago by [email protected] to c/[email protected]

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Reddit’s advertising revenue grew to $315.1 million, while “other” revenue reached $33.2 million on account of “data licensing agreements signed earlier this year.” Both Google and OpenAI have cut deals with Reddit to train their AI models on its posts.

In a letter to shareholders, Reddit CEO Steve Huffman attributed the recent increase in users to the platform’s AI-powered translation feature. Reddit started letting users translate posts into French last year before expanding to Spanish, Portuguese, Italian, and German. Now, Huffman says Reddit plans to expand translation to over 30 countries through 2025.

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[–] [email protected] 5 points 1 day ago

I fucked it up and switched the terms, sorry. Look for "value extraction" instead; you'll find multiple references to the concept such as this or Mazzucato's "The Value of Everything".

To keep it short: you create value when you produce desirable goods/services for the customers; however, when you extract it, you're picking the value that was already created (by society, your customers, or even your own business) and turning it into profit. The later is faster but unsustainable, as that value doesn't pop up from nowhere, so when a business shifts from value creation to value extraction it'll get some quick cash and then go kaboom.

In Reddit's case, this value is mostly users willing to generate, curate, and share content with the platform, and other users knowing this:

someone recommends you a product/brand. The person might be wrong, but you were reasonably sure that they aren't a corporation astroturfing their own product. Someone else might criticise it instead.
you hop into your favourite subreddit and, while the content there isn't the best, it's still good enough - because the mods gave some fucks about growing their subreddits;
you discuss some controversial topic. You might get dogpiled, but at least you know that the dogs piling you are human beings, that sometimes might listen to reason; a bot will never;
et cetera.

All that value was being slowly extracted through the last years, but the changes in 2023/2024 did it the hardest.