Reddit's 57 million regular users are accustomed to fighting one another. Now, Steve Huffman, the CEO, is the target of its keyboard trolls' rage. Numerous moderators who manage the site's subreddits are on strike. It is a flaw in Reddit's plan to go public and a hint that the time is not right for that plan.
Reddit's community moderators are similar to those that monitor prohibited content on other sites, but with a few differences. Many forum moderators act as quasi-influencers that engage and recruit users in addition to establishing rules for their communities. Additionally, Reddit moderators are unpaid, unlike their counterparts anywhere else. They are thus an odd mix of suppliers, customers, and workers. The labor performed by Reddit moderators is estimated to be valued at least $3.4 million yearly by researchers from Northwestern University.
Although willing labor for free sounds cool, in reality it leaves you open to attack. Moderators can shut down forums permanently without suffering a financial cost, unlike Starbucks baristas or Hollywood scriptwriters. The continuing strike was intended to last for 48 hours, but it's still going on because of Huffman's proposal to charge third-party apps that provide Reddit content money. Five days later, a lot of subreddits are still closed by moderators who believe that such apps, some of which would shut down if asked to pay, keep communities alive.
It's commendable that Huffman has an investor's mindset. The owner of the still-unprofitable Reddit certainly would prefer to split the revenue generated by some third-party apps that use Reddit content. A more significant aim is artificial intelligence firms like OpenAI that gain value from analyzing Reddit communities to improve their own products. That source of free data would be cut off by Huffman's proposal.
Still, there hasn't been an IPO because a significant portion of Reddit has been shut down. Huffman must therefore find a method to bring investors and moderators into alignment if he truly wants to go public. Paying moderators is one solution, or rewarding them in other ways if they don't want to be treated like employees in the first place. For instance, he has promised to create fresh tools to take the place of popular apps. Either route has more expensive costs and a more difficult road to profitability.
In conclusion, the moderators have demonstrated that Reddit needs to change its business model. Additionally, prospective investors would like to see it in practice before investing in the shares, making a hurried IPO seem immature. The self-described "front page of the internet" had been waiting to go public since 2021; nevertheless, it may need to lower its hopes once more.