I’m going to share, what I expect to be, a controversial opinion about the new API pricing from Reddit. Not because I’m some big fan of Reddit — I follow a single subreddit through RSS and only do so because that same information isn’t easily digestible from anywhere else.
I would prefer that everyone leave Reddit and move to the open web for distributed, open source, community-run alternatives. We’ve allowed the current crop of social media companies to overstay their welcome. We should have all moved on from Reddit, Twitter, Facebook, and the rest of the bunch years ago.
But — brace yourself — I don’t think Reddit’s new API pricing is catastrophic for the third-party app ecosystem.
We can quibble about whether or not developers need to pay their “fair share” and what exactly “fair” would be in this context, but it seems to me that you can still build a third-party Reddit client that is economically feasible with this new pricing. But these third-party developers would need to charge more than they currently do.
We’ll look at Apollo here since that’s the app I’m most familiar with and the one that’s received the most attention throughout this within my circle.
Christian Selig, writing on Reddit about the API pricing:
Apollo made 7 billion requests last month, which would put it at about 1.7 million dollars per month, or 20 million US dollars per year. Even if I only kept subscription users, the average Apollo user uses 344 requests per day, which would cost $2.50 per month, which is over double what the subscription currently costs, so I’d be in the red every month.
Based on the $20 million per year in API fees number and the average per user per month cost of $2.50, that puts Apollo at about 666,000 active users.
How much was Apollo charging for the app, you may ask? According to Juli Clover at MacRumors:
Right now, Apollo Pro is a one-time $4.99 fee that unlocks additional features, and Apollo Ultra is an even more premium tier that costs $12.99 per year.
I’m not a fan of subscription pricing, generally, but this seems criminally underpriced for what the app is providing. It’s a far better experience than what you get from Reddit themselves and a significant discount compared to Reddit Premium — which is $5.99 per month or $49.99 per year.
So what if Apollo charged $6 per month — the same as Reddit Premium? Taking out $2.50 for Reddit’s cut and about $1.80 for Apple’s, that would give Apollo about $1.70 per user per month.
If every existing user paid, that would be about $1.1 million per month in earnings after Apple and Reddit’s cut.
If only a third of those users paid, that would be over $350,000 per month.
I don’t know what the operating costs are for Apollo and, in an ideal world, perhaps Reddit’s fees are a bit higher than they should be. But my back of the napkin math tells me that it’s totally feasible to develop a third-party Reddit app and make enough money from it for a small team to earn a reasonable living.
But to do so, Reddit’s essentially forcing third-party developers to charge at least as much per month as Reddit’s own premium subscription. From Reddit’s perspective, this makes total sense. Why would they want third-party apps to provide a better experience at a lower cost than Reddit’s own offering?
Now this isn’t to say that third-party developers should just put on their big boy pants, pay the new fees, and end the boycotts. By all means, continue with the boycotts, try to convince Reddit to lower their API fees as much as possible, and move as many communities to the open web as you can.
But don’t say that the new pricing makes it impossible to build a third-party app. Because that’s not true. It would just require pricing apps so they’re more in-line with Reddit’s own offering.