Is Reddit Ready to Earn Profit?

If you spend most of your time surfing the Web, there’s a huge possibility that you’re also fan of Reddit, a social news and entertainment website that’s been dubbed as “the front page of the Internet.” With its wide array of funny pictures, interesting stories, and clever memes, Reddit is a website that millions wouldn’t mind losing themselves in.

But although Reddit reaches up to 90 million unique visitors per month, the site has continuously struggled to earn profit since it was founded in 2005. Reddit Chief Executive Officer Yishan Wong confesses that the social news site is “still in the red” despite having a user base that equals that of other popular websites like eBay.

Reddit Doesn’t Run Annoying Ads

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Generating revenue isn’t the problem. With the site’s massive audience, it’s no surprise that advertisers want a slice of the Reddit pie. Wong says he is more worried about installing ads that would betoo intrusive or spammy for readers.  The site doesn’t allow big, invasive flash ads, which pays more money than regular ones. The company also has high standards for thetype of ads that it runs, lessening the amount of money the site can earn from advertising.

Profiting from Reddit Gifts Marketplace

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Because Reddit refuses to earn money from advertising like most publishers do, Reddit is trying to earn profit through Reddit Gifts, a gift exchange program that allows redditors (Reddit users) to give gifts to strangers. Reddit makes money by cutting15% to 20% off every purchase that its users buy. The goods that the site sells reflect its fun and geeky user base, with products that include funny pictures, bacon-related products, and cat collages.

Strong Holiday Sales

According to Reuters, Reddit estimates that it sold over 250,000 products during the 2013 holiday season. This is largely due to Secret Sana gift exchanges, in which users gave other users geeky presents such as fantasy or zombie themed items. Even Microsoft co-Founder Bill Gates joined in the fun and sent a Reddit user a travel booked and a stuffed cow, symbolizing the charity he donated to in her name.

Reddit is highly optimistic that Reddit Gifts will provide sustainable profit for the company, given that the site has reiterated that it will not use advertising as its main source of revenue. If the company continues to find ways to make gift-giving appealing to its users, then the idea just might work.

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