Reddit Rakes in $60M by Letting AI Firms Access a Decade of User Content Goldmine

QUICK ZAPS

*Update: The unnamed company has been confirmed to be Google.

Reddit has signed a new licensing deal worth an estimated $60 million annually that will allow an unnamed large AI company to access and use Reddit's vast user-generated content. This user-created content, which has built up over more than a decade on the site, will now be available to help train advanced AI systems. Previously, AI companies would scrape open websites for data, but formal agreements like this one help ensure the legalities are clearer.

The financial terms of Reddit's new deal dwarfs similar arrangements struck by other companies. It comes as Reddit prepares to go public, with an initial target valuation of $5 billion, though market conditions may lower that to half that figure. Reddit has shown it is not afraid to take a hard stance, like threatening to cut off search engines' access to the site if it couldn't make a training data deal.

While relying on search traffic is not Reddit's only survival strategy, the deal indicates it wants to maximize the value of its treasure trove of content before going public. It also follows Reddit's successful resistance last year to a large user protest over pricing changes.

With growing demand from tech giants for vast troves of real-world data to fuel AI, Reddit is ensuring its community-driven contributions are capitalized on in the company's next chapter as a publicly traded firm.