I think the question is how much money they apps can make from having users, not Reddit.

The apps can make whatever they charge. $2.50 is now the base cost to add to every subscription. If the users value the service they will pay.

> Developers already pay Apple & Google 30% for the privilege of being in the app stores. Is it too much for the very service that is powering your entire app to ask for their own cut?

Mind you that price is just part of the problem - the 30-day to start charging, was just as bad. It's absurd and completely made to kill the 3PS. Maybe if they have maintained the price but gave time for apps to discuss/adapt/replan, they could have found other options.

Even granting the rest of your argument, that math stops working for users who don’t use a particular app as their primary/only method to access reddit.

I use reddit 80% on the web, 10% on iOS and 10% on Android. I’m not going to pay reddit that full $2.50 (plus app store cut) for 10% of my usage twice. I’m just going to stop using reddit on mobile and stick to the web.

The “pay for reddit premium and get ad-free reddit plus unrestricted third-party app use” model makes more sense for users, for third party apps, and for reddit.

Many financial sites have reported Reddit users are worthless. CNBC estimated in 2019 that FB’s ARPU monthly is $7.37 per month but Reddit’s monthly ARPU is $0.30. (Though even that number should be revised down as revenue is slower than growth of users).

Again the devs are willing to pay some multiplier on this.

Sign me up for this long awaited IPO…

Seems like the winning strategy for Reddit & Facebook is for Facebook to acquire. Facebook can improve monetization.

Reddit reported that they had 430 million monthly active users in 2019.

$500 million per year / 430 million users = $1.16 per user per year

$1.16 / 12 months = $0.10 per user per month.

Pretty big difference between users who open the site once a month to look at a meme someone sent them vs those who are online for multiple hours a day. The ones who use third party apps are more likely to be in the latter bucket, and the loss of revenue from them will be significant more than the bottom tier of users.

Revenue is generated by ads. The power users are also the savvy users with ad block. Their value added is making the content for average users to engage and consume. Those are the users that will make up the base of the as revenue.

Alienating power user seems like the exact opposite.

Let's do some back-of-the-napkin math. Selig estimates that the average user would cost him $2.50/mo and his annual costs would be $20m/yr, so it seems like Apollo has 600–700k monthly active users — something like 0.16% of all 430m active Reddit users. That is simply not going to represent a significant opportunity cost to Reddit's overall ad revenue.

Plus, I'd bet that third-party app users are far more likely to be mods and/or heavy content creators, which means that alienating them will have outsized negative effects on the engagement of the rest of the userbase.

Where do you account for opportunity cost and future growth/loss in these (also old and also imprecise) estimates?

Ok, multiply that by 5, it’s still nowhere near 2.5.

Well, guess what? Your starting point is just an estimate and its accuracy cannot be sourced, so this is all meaningless

Exactly. Regardless of estimates, 20 mil to run custom Reddit client is ridiculous.