Reddit trumpets revenue source besides ads: Lucrative AI deals
Artificial intelligence will become an important part of Reddit Inc.'s business, the company said Thursday in its long-awaited filing for an initial public offering — tapping into a revenue stream that could be both lucrative and controversial.
San Francisco-based Reddit, a platform that hosts conversations on thousands of different topics, makes most of its money by selling ads that appear alongside social content. In its filing, the 19-year-old company outlined another line of additional business: selling that content to companies building ChatGPT-like chatbots.
Big tech companies, like Google and OpenAI, are willing to pay a lot of money for content to improve their large language models, AI software that is built using troves of data. On Thursday, in addition to its public filing, Reddit announced a deal with Alphabet Inc.'s Google, allowing Google's AI products to use Reddit data to improve their technology. Bloomberg had earlier reported the existence of a $60 million AI deal.
“Reddit's vast and unmatched archive of real, timely, and relevant human conversation on literally any topic is an invaluable dataset for a variety of purposes, including search, AI training, and research,” Reddit co-founder and Chief Executive Officer Steve Huffman wrote in the filing, which described such deals as an “emerging opportunity” for the company.
In its S-1 filing, Reddit said that in January it entered into licensing agreements with an aggregate value of $203 million, with terms ranging from two to three years. The company also said that it expected to bring in at least $66.4 million from such deals this year.
AI companies are snapping up licensing deals to feed their models more content. In December, OpenAI inked a deal worth tens of millions of euros with Axel Springer SE, which owns Politico and Business Insider. Such agreements are high-stakes, because AI models are often training on copyrighted information, muddying claims of ownership. For example, the New York Times
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