Photo illustration: Intelligencer

Reddit's first year as a public company is going great. The nearly 20-year-old company released an extremely strong earnings report this week: Revenue was up 68 percent year-over-year, daily active unique visitors were up 47 percent, and Reddit turned a profit for the first time in its entire history . Earnings exceeded analysts' expectations and shares shot up more than 40 percent.

Reddit had no shortage of other good numbers to share. Advertising revenue rose 56 percent year-over-year to $315 million, while “other” revenue, primarily from AI licensing deals, rose 547 percent to $33 million, a comparatively small number but one that contributed greatly to the company's profitability company contributes. Revenue per user has also increased slightly, meaning visits are being monetized more effectively on average. After years of slow growth and a stubborn inability to make money despite its size and influence, Reddit is exploding.

Reddit's growth and development is undeniable. However, they are also somewhat undervalued in the press release and the letter to investors. Why could a mature, largely unchanged platform suddenly grow like a viral start-up? (Reddit's most recent quarterly report contained similarly eye-popping growth numbers.) The company suggests a number of factors—machine translation to localize content for new markets, better posting interfaces and tools for users—but ultimately skirts around the obvious answer: Google, the most popular website in the world and by far the largest traffic referrer on the Internet, is sending more and more people to Reddit. Much more.

The backstory here is a bit fuzzy and controversial, but the general gist is this: Late last year, Google began prioritizing certain sources of user-generated content in search in order to show more “first-person perspectives” in searches. This, among other, less clearly explained changes, appeared to result in greater visibility for forum-like sites like Quora and especially Reddit, which some users were already adding to searches as a sort of hack to improve search results (“best iPhone battery reddit”). For example).

This was also accompanied by a massive drop in traffic to a number of online publishers, caught the attention of Google analysts and search engine optimization (SEO) experts, and caused waves of panic across online media outlets that rely heavily on Google for reader searches are. “The rise of Reddit is unprecedented,” says Lily Ray, vice president of marketing consultancy Amsive. “We've never seen anything like this in SEO.” Ray says Reddit “really took off” in terms of visibility across thousands of popular searches between July and August 2023. Well, in informational searches – a made-up term that refers to searches that require the user to answer a specific question – “you'll see reddit.com at the top of the rankings.” (It's a popular opinion among web publishers and SEO experts that this change is related to Google's AI licensing deal with Reddit, which was announced earlier this year; the companies deny that the two are related.)

The source of Reddit's growth is also evident in the official numbers, although Google or search traffic are not specifically listed. For example, the number of daily active, unique visitors logged in worldwide has increased by 27 percent, while the number of logged-in visitors worldwide has increased by 27 percent.out of The number of daily active unique visitors has increased by 70 percent. In the third quarter of last year, logged in users accounted for a slight majority of Reddit's daily unique visits; This year, deregistered visitors took the lead. This is consistent with growth coming from people tapping Reddit links in Google, rather than organic growth from people specifically searching for Reddit.

In his letter to investors, CEO Steve Huffman mentions how important Reddit has become to Google – “Reddit was the sixth most Googled word in the US,” he notes – but speaks more indirectly about how important Google has become to Reddit. This is the closest thing to it (mine in bold):

Looking forward, improving the search experience on Reddit is an important part of our strategy. We want to ensure that all users have the best possible experience. This also includes users Get to Reddit via external search and those who search directly on Reddit for recommendations on what to buy, what to watch, or which products or services are the best. We know that many users are looking for more than just answers. They're looking for authentic, real-world insights and advice from the communities on Reddit. We're focused on making it easier and more intuitive to navigate conversations and content on Reddit.

Again, things are going well for Reddit and it's good news in several ways, attracting lots of new visitors, some of whom become active users and contributors to the platform, making it more useful and valuable. But getting much of your traffic – your primary source of revenue as an ad-supported business – from a much larger partner is not without risks. Just ask the websites that just watched their previous visitors get redirected to Reddit en masse. Or the collapsing American news media!

Reddit has built a reputation as a community of communities, a site where people intentionally spend time and occasionally provide input in the form of posts, conversations, or volunteer moderation. Its users were motivated by the presence of other users; Accordingly, for better or worse, the company had to be at least somewhat responsive to the demands of the Redditors on whom it depended both for advertising revenue and as a source of free content and labor. (In the run-up to its IPO, however, Reddit lost patience with this dynamic and reasserted its authority over a restive mod community.) When Reddit begins to function as more of a de facto company Expanding Google – as a website full of easily searchable content rather than a largely self-contained community – faces several challenges.

Spammers seeking to exploit Reddit's visibility on Google are already filling the site with inauthentic and often AI-generated “parasite SEO” content, creating new work for already overburdened volunteer moderators. In 2007, Demand Media, a company aimed at generating Google traffic, entered into a mutually beneficial agreement with the search engine, reaching a figure that briefly exceeded that of New York Just. Demand Media was a fairly cynical content farm that paid small fees to freelancers to produce massive amounts of passable search fodder that briefly filled gaps in Google's results pages. Reddit, which couldn't be more different in terms of its history, its role in the broader web, and its relationship with users, nevertheless finds that it performs a similar function and derives similar benefits from it. It's not a bad deal! But it's potentially risky, especially now that Reddit is denying indexing by other search engines with ties to AI companies, affecting basically everyone.

In other words, Reddit's new success is at the mercy of Google, a fact that both companies are keenly aware of: If the search giant decides to show fewer Reddit links, or perhaps aggregate more of them using AI, it will pay for access to all of that data could eventually cause the company's wild growth to stall or reverse, which is a bit more of a problem now that it has a ticker symbol.

Reddit's current job is to convert the new traffic into users who will stick around, talk to each other, and continue to produce enough actually credible, interesting, or useful content to retain other users – but also for Google to collect and promote it against. Reddit had to answer to its investors for years And its users, whose desires do not always coincide. Now it has to compete with the most powerful website on the internet.