Reddit's problem is not its business model. It is that they are more focused on being a household name than being a successful business. They are running under the old assumption that if you get enough eyes on your site, somehow you will monetize it.
But that assumption is based on the premise that your visitors are coming to your site because you offer something of value. They need to refocus on doing exactly that - offering value to people, not just entertainment. Entertainment drives ads, but true value drives direct cash flow.
The gifts are really just a variation on the ad theme - get enough traffic that people will leave the core functions of the site, and go buy something. This is dangerous - both gifts and gold subscriptions are making an income by monetizing the pop culture value of reddit. If/when reddit is no longer a hub of pop culture, those income streams will vanish.
They have some time, while those income streams still work, to develop core functions that are a valuable product in their own right, and learn how to monetize those functions. I'd encourage them to start on that path immediately, so they can stabilize themselves as a real business before their pop culture status fades.
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Reddit's problem is not its business model. It is that they are more focused on being a household name than being a successful business. They are running under the old assumption that if you get enough eyes on your site, somehow you will monetize it.
But that assumption is based on the premise that your visitors are coming to your site because you offer something of value. They need to refocus on doing exactly that - offering value to people, not just entertainment. Entertainment drives ads, but true value drives direct cash flow.
The gifts are really just a variation on the ad theme - get enough traffic that people will leave the core functions of the site, and go buy something. This is dangerous - both gifts and gold subscriptions are making an income by monetizing the pop culture value of reddit. If/when reddit is no longer a hub of pop culture, those income streams will vanish.
They have some time, while those income streams still work, to develop core functions that are a valuable product in their own right, and learn how to monetize those functions. I'd encourage them to start on that path immediately, so they can stabilize themselves as a real business before their pop culture status fades.