Reddit is allegedly planning a lucrative licensing deal, giving a major AI firm – whose identity remains under wraps – access to its huge trove of user-generated content.
This deal, valued at approximately $60 million annually as reported by Bloomberg, is part of a trend for AI companies to deal with content instead of risking copyright issues.
With the New York Times lawsuit against OpenAI still in progress, the race is now on to seal legitimate deals to data – which is the new oil.
Apple is also reportedly pursuing multi-year agreements with major news outlets, potentially worth upwards of $50 million.
The firms involved include Condé Nast, publisher of Vogue and The New Yorker; NBC News; and IAC, which owns People, The Daily Beast, and Better Homes and Gardens.
Reddit’s ambitious plans to go public are the backdrop to this latest development.
Despite a 20% increase in year-over-year revenue by the end of 2023, Reddit fell short of its billion-dollar revenue target by $200 million.
The company is eyeing a $5 billion valuation for its impending IPO in March, a slight step back from the potential $10-$15 billion it could have commanded in 2021.
Reddit’s stance on data usage and its negotiation tactics with AI entities came to light following reports that the platform threatened to block Google and Bing from indexing its content unless a satisfactory data usage agreement was reached.
This bold strategy and its resilience in the face of internal challenges – like navigating the largest protest in its history over API access pricing – shows Reddit’s determination to leverage its unique position and wealth of content.
As Reddit prepares for its IPO, which is set to be one of the most notable events in the social media sector since Pinterest’s market debut in 2019, the company’s appetite for partnerships could redefine its role in the evolving AI ecosystem.
This move to go public while capitalizing on its rich data through strategic AI partnerships will redefine Reddit and alter how people interact with it. Will long-term users go elsewhere or stay faithful?
We eagerly await news on who the unnamed AI company is.
