Community network administration, Reddit, has entered a licensing agreement with Google. The deal allows Google to utilize Reddit’s content in training artificial intelligence (AI) models, according to three sources acknowledged by Reuters. The contract is estimated to be worth approximately $60 million per annum.
Reddit’s Monetization Strategy
In a bid to secure new revenue streams amid intense competition on the digital advertising market from the likes of TikTok and Facebook, Reddit, which is preparing for an initial public offering (IPO), has been planning this move for over three years. In preparation for the IPO, Reddit will need to provide prospective investors with a detailed financial performance report. Last year, Reddit introduced fees for API access, which permits access to content via third-party software. The Google agreement marks its first tie-up with a significant player in the AI sector.
Reddit’s Valuation and IPO Planning
During a funding round in 2021, Reddit was valued at $10 billion, and it plans to sell approximately 10% of its shares in the IPO. The IPO, marking the first for a large social network since Pinterest’s in 2019, will list the platform’s assets on the stock exchange.
AI Models and Content Collaborations
AI model developers often form such content-licensing agreements to diversify data beyond publicly accessible internet resources. When collating datasets for training, copyright issues need to be resolved, as there is currently no established legal practice in this area.
The Origin of Reddit
Launched in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian, Reddit is known for its diverse discussion groups, some of which host tens of millions of participants.
