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Is a cost-free digital community a thing of the past?


Right now, thousands of pages known as subreddits on the social media platform Reddit are dark because today is the last day of a blackout protest against plans by the company to make developers, whose apps make Reddit easier to navigate, pay for access to the company's data starting July 1. If you're not familiar with Reddit, it's a place where people create chat groups, really communities, around common interests - sports, politics, music, reality TV. And Reddit says despite the protests, they're going forward with plans to start charging developers who use their data because they're done giving away something so valuable to other companies for free, they say. Dan Ives is a tech analyst at Wedbush Securities, and he's here to discuss.

Good morning.

DAN IVES: Great to be here.

FADEL: So if you could just explain first what Reddit is actually charging for. This isn't going to impact regular users, right?

IVES: It's really the developers in terms of the APIs. But when you really look at the ripple effect, something that was free is now going to be something charged for. And it's something we're seeing across social media. The clock has really struck midnight when it comes to free content. That's what we're seeing happen from Reddit to Twitter to Facebook and others.

FADEL: So why are they starting to charge now?

IVES: It all comes down to the dollar. I mean, you know, advertising continues to really be something that has been a headwind for a lot of these companies. And when you look at Reddit, you build it, they come. The more developers, the more consumers that are on Reddit - now they can monetize. And that - ultimately what this is all about, we're seeing this trend across social media. It's not just Reddit. It really started with Twitter - Zuckerberg and Facebook obviously following. And I think this is a trend that's not slowing down.

FADEL: So you see this as a path for regular users to get charged because Facebook, Instagram, Twitter - they're charging for verification, but those are all still free. Reddit is still free for users. So is it only a matter of time until the regular people online are going to be paying for this?

IVES: Well, I think for Reddit, it would be more freemium. Of course, there's going to be a free service, but ultimately it's all about premium content. That's where this is all eventually heading. If users find it valuable, they'll pay. But that is a very tough climb to charge for something, just like we're seeing today for APIs, that were free.

FADEL: And for the layman, if you could explain an API.

IVES: And what that's really about is developers now need to pay in terms of access to Reddit and really developing on top of the platform. That's really the issue.

FADEL: Now developers are protesting because they say that the amount they're going to be charged will break their companies, put them out of business. Christian Selig developed one of the most popular third-party Reddit apps, called Apollo. Here's what he told NPR.

CHRISTIAN SELIG: For virtually all apps, the pricing is so high that things would either have to drastically change or things would have to shut down.

FADEL: Now, you said, you know, people will pay if they want this access. Will they pay if it's going to break their business?

IVES: It's a risky proposal, really - what Reddit's doing. It's a calculated risk. For developers, I mean, this is a gut punch. It's something that they were not expecting. And, you know, I believe this is all a game of poker between developers and Reddit. And, you know, I still think the chapter is going to be written in terms of how successful this is going to be.

FADEL: So how do you see this playing out in the days ahead? It sounds like Reddit plans to go forward.

IVES: I think they're going to go forward, but I do believe that there could be some negotiation that ultimately happens here because developers are the lifeblood when you look at Reddit, when you look at all these platforms. And that's why I think this is something where the last thing you want to do is really, you know, suffocate what's been the core hearts and lungs of your base, the reason it's known around the world.

FADEL: So it sounds like this could actually backfire.

IVES: It definitely could backfire. I mean, this is essentially a "Game Of Thrones" going on between developers and Reddit. And it's not just Reddit. I mean, we're seeing backlash on Twitter, eventually on Facebook and on some of these other premium platforms where these platforms are trying to get more and more monetization. But it's easier said than done as we're seeing, especially if things that are free now getting paid for.

FADEL: Yeah, I mean, people don't like to pay for things that they used to have for free, do they?

IVES: I mean, it comes down to, you've been at the restaurant. Bread's for free. Now you're going to pay four dollars. You're not going to be happy. And that's what developers are now going through with Reddit. But this is an old Western standoff that's going on, and I think there's still more to be written.

FADEL: Dan Ives is a managing director and senior equity research analyst covering the tech sector at Wedbush Securities.

Thank you.

IVES: Thank you. Transcript provided by NPR, Copyright NPR.

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