With over 850 million active users, Reddit is the world’s most popular online community platform, where people from all around the world hang out and share their opinions on their favorite topics.
According to Similarweb, currently, Reddit is the world’s 16th most-visited website.
It’s also entrepreneurs’ and business owners’ favorite spot to find out new ideas and understand what their current customers think about their products or services.
Starting from movies and cartoons to coding and business, people from all different backgrounds and interests love to use this platform.
To be honest, it’s also one of my favorite spots where I hang out every day at least for 10-20 minutes.
Just before writing this post, while I was surfing Reddit, one thought clicked into my mind – how does Reddit make money?
If you’re also wondering about how this huge platform generates revenue to keep the platform up and running, buckle up.
Today, I’m going to show you the complete business model of Reddit and how it makes money from this free platform.
Keep reading this post until the end.
Reddit is actually an online community and forum where people share links, content and ask questions. Users can leave comments on other’s posts and also upvote the posts that they like.
This platform was initially founded by two Virginia University roommates, Steve Huffman and Alexis Ohanian.
But after a year, Condé Nast’s parent company, Advance Publications, acquired a 100% stake in the company and eventually became the owner of Reddit.
Later, plenty of other investors joined the boat, but to date, Advance Publications still holds the majority of the shares.
If you’ve been a lifelong Redditor and want to know how your favorite platform actually makes money, let’s have a look.
As per my research, Reddit makes money in two different ways:
Let’s have a deeper look at each of these revenue streams one by one.
Since Reddit is a free platform, just like most social media platforms and online communities, Reddit also makes a large chunk of its money from ads.
Companies pay for the ads that you see in your Reddit feed all the time.
Anyone who has a business, whether small or big, can run ads on Reddit to attract attention to their products or services.
Reddit basically sells ads in two ways:
As per sources, in 2021, Reddit earned an estimated $439 million from its advertising part of the business.
If you do not want to get bothered by ads while surfing Reddit, you can also buy their premium plan which removes all the ads for you from the platform.
But it’s just one of the benefits of Reddit Premium.
Reddit premiums also come with additional benefits, such as exclusive avatar gear, a members’ lounge, and custom app icons.
Any Reddit user can upgrade their profile to premium just by paying $5.99 per month or $49.99 per year.
Even though the idea of introducing a premium plan for Reddit users was outstanding and unique, Reddit still struggles to generate decent revenue from this.
In 2021, Reddit made an estimated revenue of just $17 million from its premium subscription part of the business.
Reddit makes most of its revenue from ads, and just like other social media platforms, it’s also a heavily ad-dependent company.
Out of the $456 revenue Reddit made in 2021, almost 96.3% of it came from advertisements.
While only 3.7% of the revenue came from premium subscriptions.
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