Reddit has confirmed a partnership deal with OpenAI to bring content from the platform to ChatGPT, in a move that will further diversify its income streams.
Following on from a similar recent agreement with Google worth an estimated $60 million per year, OpenAI will be granted access to Reddit’s Data API “which provides real-time, structured, and unique content from Reddit,” to transmit discussions from the site to ChatGPT.
In return, the social media site will be able to roll out selected AI features to users and moderators, powered by OpenAI, which will now be an advertising partner on the platform.
Sam Altman, OpenAI CEO, is a former board member and current major shareholder in Reddit, with his share value soaring to $750 million after the post-deal rise on Thursday.
Overall, Reddit’s share price spiked by over 10% as the company strives toward its ambition to move beyond advertising as its predominant revenue source.
The San Francisco-based media company combines elements of social media, message boards and news aggregation. It was founded in June 2005 by Steve Huffman and Alexis Ohanian who sold the platform to Condé Nast the following year. Huffman departed the company in 2009 before returning as CEO, in 2015, and currently holds the position.
Reddit and OpenAI today announced a partnership to benefit both the Reddit and OpenAI user communities in a number of ways. Learn more on our corporate blog. https://t.co/qah9TaRjVU
— Reddit (@Reddit) May 16, 2024
Reddit rings the changes to move toward profit
In a press release, Huffman said, “(connecting Reddit to) ChatGPT upholds our belief in a connected internet, helps people find more or what they’re looking for, and helps new audiences find community on Reddit.”
He previously spoke of pending changes to usher in the AI era, but the Reddit community had expressed fears Big Tech giants such as Google and OpenAI were using Reddit’s scale and depth of detailed info on a vast array of subjects to mine the knowledge for the benefit of its chatbots.
That has materialized, but the partnership will bring mutual benefits as much as it will also bring change to Reddit from a user perspective.
Investors have backed Reddit thanks to its willingness to trade with its data. This was one of the main drivers to create demand for shares when the company was floated on the New York Stock Exchange with its March IPO.
Last year Reddit returned a net loss of $91 million, having never recorded a profit since its inception.
Image credit: Ideogram
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