Reddit Says It Will Shift to a Logged-In Experience
Announcing third-quarter results, Reddit said it will move to a mostly logged-in site as search referrals fall and U.S. daily users decline.
Reddit said on Thursday that it is transitioning to a primarily "logged-in experience." The company announced the change with its third-quarter earnings, as search traffic to the site keeps falling with the shift to AI-powered search.
The company said referrals from search dropped by more than 1 million a week on average in October. It warned that if the trend continues, daily active users could decline by a low-double-digit percentage by next quarter.
Global daily active users were flat from the previous quarter at 130.3 million. In the U.S., they fell from 53.2 million in the second quarter to 50.7 million, down 2% from a year earlier.
Revenue up 53%
Revenue rose 53% from a year earlier to $895 million, above Wall Street's expectation of about $875 million. Net income increased 74% to $283 million.
Advertising revenue grew 54% to $847 million. Non-advertising revenue, which includes the AI data-licensing business, grew 35% to $48 million.
Average revenue per daily active user in the U.S. rose 53% to $13.82 despite the drop in users. Globally it climbed 36% to $6.87.
What changes, and when
The move is designed to protect its data from AI scraping and so allow licensing deals with model providers. Logged-in users are typically worth more to advertisers: they give the company more signals about their interests, which helps target ads and personalize feeds. A new algorithmic "For You" feed, announced on Wednesday, mixes posts from a user's communities with recommendations based on their interests.
The change will not happen overnight. Reddit will first run tests in select markets outside the U.S. in the fourth quarter, and it has no timeline yet for a worldwide rollout. The company acknowledged that a logged-out front page is important. It also said being logged in does not mean giving up anonymity, and that the "incognito mode" browsing option is being rebuilt.
"I don't know about you, but as someone whose life has been defined by the open internet, it's a big change for me," co-founder and CEO Steve Huffman wrote in a post on Reddit. He added that he has "come to the conclusion that this is the right decision for our platform and the right decision for our business."
Huffman also wrote that "there are still plenty of questions that are unanswered, particularly around where the boundaries should be between logged-in and logged-out experiences."
Source: TechCrunch