I'm not sure that math is right? If the API access actually costs reddit $20m/year then charging Apollo users $20m/year just offsets those costs. So in the first year they actually lose $10m, and just break even in following years. It only makes sense to buy Apollo if the api costs are low.
Re:Apollo will close down on June 30th
by Dylan16807 on Thursday June 08, 2023 @02:58PM
(#36246875)
> If the API access actually costs reddit $20m/year
Do you think anyone believes that to be true?
Not at all. But it seems like the Apollo dev’s argument was “if it actually costs reddit $20m they why not buy Apollo for only $10m”, which doesn’t make sense.
This doesn’t make what reddit is doing any more reasonable though, imo.
Re:Apollo will close down on June 30th
by Dylan16807 on Thursday June 08, 2023 @03:35PM
(#36247500)
The dev specifically said "opportunity cost" as they explained, so the suggestion is that reddit thinks there's that much revenue available.
Ah, that makes much more sense. But, it could be the case that reddit thinks someone will end up paying their outrageous fees, just not him. It doesn’t necessarily follow that they think Apollo is actually worth that much. Then again, if that’s the case it would be reasonable to work out some sort of discount that reflects the true value of the Apollo user base.
If Reddit purchases Apollo for $10 million, then those customers now belong to Reddit. For the first year, Reddit would "only" earn $20 - $10 = $10 million, but after that those customers would continue directly earning revenue.
It's all about reasoning with the value of the app in terms of the api rates. Either the rates are unreasonable, or that would be a reasonable sale to Reddit.