Apollo App Faces Exorbitant Costs to Continue Operating
In a recent update from Reddit, a significant blow was dealt to third-party app developers as the platform announced pricing that closely resembles Twitter’s model. Notably, the popular Apollo app would be required to pay Reddit a staggering $20 million annually to maintain its current operations.
The Unexpected Figures:
The revelation came as a shock, with the cost of 50 million requests amounting to $12,000—an astonishing sum that surpassed all expectations. Considering Apollo’s impressive record of generating 7 billion requests in the previous month alone, the costs would skyrocket to approximately $1.7 million per month or an astronomical $20 million per year. Even if the focus were solely on subscription users, each average Apollo user’s 344 daily requests would amount to $2.50 per month, more than doubling the current subscription fee and resulting in a monthly deficit.
Unfulfilled Promises:
Disappointment permeates the developer community due to Reddit’s pricing policy contradicting its initial promises. Reddit had assured developers that the pricing would be reasonable and grounded in reality, emphasizing their intention not to follow in Twitter’s footsteps. However, Twitter’s pricing was widely criticized for its exorbitant charges of $42,000 for 50 million tweets, while Reddit’s pricing remains high at $12,000. To provide context, a comparable platform, Imgur, demands only $166 for the same volume of 50 million API calls, highlighting the disparities.
Questionable Reality-Based Pricing:
Despite Reddit’s claims of basing pricing on reality, the proposed figures fail to align with that principle. Less than two years ago, Reddit reported crossing the $100 million mark in quarterly revenue for the first time in its history. Assuming they have consistently achieved that figure every quarter, even doubling it for their best quarter to reach $200 million, let’s generously estimate an additional $50 million from Reddit Premium subscriptions. This would bring their total annual revenue to $600 million. In 2019, Reddit boasted 430 million monthly active users, and let’s assume no additional users have been added since then (considering that revenue per user decreases with more users). Based on these generous estimates, each user would contribute approximately $1.40 per year or $0.12 monthly. These figures align with industry estimates.
Apollo’s Disproportionate Burden:
Examining Apollo’s user activity reveals the disproportionate burden imposed by Reddit’s proposed pricing structure. On average, an Apollo user generates 344 requests daily or 10.6K monthly. With the proposed API pricing, the cost for an average user would be $2.50, an astonishing 20 times higher than a generous estimate of the revenue Reddit receives from each user. Subscription users, who typically make 473 requests, would face a charge of $3.51, amounting to a staggering 29 times higher cost.
The Way Forward:
While Reddit has maintained open communication and displayed civility throughout the process, the pricing structure raises doubts about its alignment with reality and reasonability. It is worth noting that the financial burden imposed by these costs is beyond the means of most developers, including Apollo’s Christian Selig, who expressed concern about the feasibility of such pricing.
Looking ahead, careful consideration and analysis are required to navigate this situation. Selig has approached Reddit seeking flexibility on the proposed pricing, but it appears that the announced figures are non-negotiable. In the spirit of transparency, Selig has been granted permission to share the details of the call.
The recent pricing discussion with Reddit has sent shockwaves through the third-party app developer community. The implications of the announced costs, coupled with the disparity between promised pricing and reality, have left developers like Christian Selig of the Apollo app grappling with the future of their platforms. The significance of this issue may be unfamiliar to those wondering about the importance of an API and why it has sparked such concerns.
An API, or Application Programming Interface, is essentially a means of accessing a website’s information. To put it simply, imagine Reddit as having a bouncer at its entrance. Since the inception of third-party apps, this bouncer has been accommodating, providing requested data when asked, as long as the frequency remains reasonable. This is the essence of the Reddit API – developers request data from Reddit, and it is provided so they can display it in their apps for users. However, the proposed changes by Reddit entail the bouncer demanding an exorbitant fee for each inquiry.
The ramifications of this pricing shift extend beyond individual developers and their apps. Third-party apps have played a crucial role in enhancing the user experience on platforms like Reddit, offering unique features, improved interfaces, and specialized functionalities. These apps have contributed to the platform’s growth and engagement by providing users with alternative ways to interact with the content and community.
The potential demise of third-party apps due to prohibitive costs threatens to create a significant void in the Reddit ecosystem. Users may lose access to their preferred app interfaces, features, and customized experiences. Moreover, the innovation and competition fostered by third-party developers could be stifled, impacting the overall growth and diversity of the platform.
The pricing discrepancy between Reddit and similar platforms like Twitter and Imgur raises questions about fairness and sustainability. Developers argue that the costs should reflect the value they bring to the platform, considering factors such as user engagement, revenue generation, and the overall enhancement of the Reddit experience. While Reddit’s revenue numbers indicate a thriving business, the proposed pricing structure appears out of touch with the reality of the developer community.
As the situation unfolds, developers like Christian Selig are left with the daunting task of reassessing their business models and exploring alternative options. The financial burden imposed by the proposed pricing may force difficult decisions, such as discontinuing operations or significantly altering app functionalities to accommodate the new cost structure. These choices are not made lightly and have implications for both developers and users alike.
The future of third-party apps on Reddit remains uncertain. It is unclear whether Reddit will reconsider its pricing strategy or offer more flexible terms that align with the contributions and value provided by developers. The resolution of this issue will undoubtedly shape the landscape of the Reddit ecosystem and impact the experiences of millions of users.
In the coming weeks and months, the Reddit community will closely monitor the developments surrounding this pricing dispute. The hope is for an outcome that strikes a balance between the platform’s financial objectives and the sustainability and diversity of third-party app development. Ultimately, finding a solution that allows developers to thrive while enhancing the Reddit experience for users should be the shared goal for all parties involved.
Sourced from: https://reddit.com/r/apolloapp/comments/13ws4w3/had_a_call_with_reddit_to_discuss_pricing_bad/
The post below is copy pasted for archival purposes. In case reddit decides to censor and delete anti-reddit posts in its platform
📣 Had a call with Reddit to discuss pricing. Bad news for third-party apps, their announced pricing is close to Twitter’s pricing, and Apollo would have to pay Reddit $20 million per year to keep running as-is.
Hey all,
I’ll cut to the chase: 50 million requests costs $12,000, a figure far more than I ever could have imagined.
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.
I’m deeply disappointed in this price. Reddit iterated that the price would be A) reasonable and based in reality, and B) they would not operate like Twitter. Twitter’s pricing was publicly ridiculed for its obscene price of $42,000 for 50 million tweets. Reddit’s is still $12,000. For reference, I pay Imgur (a site similar to Reddit in user base and media) $166 for the same 50 million API calls.
As for the pricing, despite claims that it would be based in reality, it seems anything but. Less than 2 years ago they said they crossed $100M in quarterly revenue for the first time ever, if we assume despite the economic downturn that they’ve managed to do that every single quarter now, and for your best quarter, you’ve doubled it to $200M. Let’s also be generous and go far, far above industry estimates and say you made another $50M in Reddit Premium subscriptions. That’s $550M in revenue per year, let’s say an even $600M. In 2019, they said they hit 430 million monthly active users, and to also be generous, let’s say they haven’t added a single active user since then (if we do revenue-per-user calculations, the more users, the less revenue each user would contribute). So at generous estimates of $600M and 430M monthly active users, that’s $1.40 per user per year, or $0.12 monthly. These own numbers they’ve given are also seemingly inline with industry estimates as well.
For Apollo, the average user uses 344 requests daily, or 10.6K monthly. With the proposed API pricing, the average user in Apollo would cost $2.50, which is is 20x higher than a generous estimate of what each users brings Reddit in revenue. The average subscription user currently uses 473 requests, which would cost $3.51, or 29x higher.
While Reddit has been communicative and civil throughout this process with half a dozen phone calls back and forth that I thought went really well, I don’t see how this pricing is anything based in reality or remotely reasonable. I hope it goes without saying that I don’t have that kind of money or would even know how to charge it to a credit card.
This is going to require some thinking. I asked Reddit if they were flexible on this pricing or not, and they stated that it’s their understanding that no, this will be the pricing, and I’m free to post the details of the call if I wish.
-Christian
(For the uninitiated wondering “what the heck is an API anyway and why is this so important?” it’s just a fancy term for a way to access a site’s information (“Application Programming Interface”). As an analogy, think of Reddit having a bouncer, and since day one that bouncer has been friendly, where if you ask “Hey, can you list out the comments for me for post X?” the bouncer would happily respond with what you requested, provided you didn’t ask so often that it was silly. That’s the Reddit API: I ask Reddit/the bouncer for some data, and it provides it so I can display it in my app for users. The proposed changes mean the bouncer will still exist, but now ask an exorbitant amount per question.)
Source: https://reddit.com/r/apolloapp/comments/13ws4w3/had_a_call_with_reddit_to_discuss_pricing_bad/