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0 pointsAlupis2y ago0 comments

Fair points.

Specifically, the $12.99/year model is floating a ton of free users, in addition to paying for server resource usage. None of that $12.99 currently was allocated to paying Reddit, and we know Apollo calculated an approximate cost of $2.50 per user per month with the new API fees.

This $2.50 fee seems to align costs with what we can reasonably expect Reddit to earn per user on their platform. Reddit prices Premium membership at $5.99 monthly, which among other benefits removes all ads. $5.99 likely indicates a $2-3 profit when all ads are removed but user engagement remains constant.

The typical mildly engaged Reddit users probably easily spends an hour a day looking at ads via the app - so while the math may be fuzzy, it seems like Reddit possibly based their API pricing off something like this.

At a minimum, that is $2.50 x 12 = $30 of cost annually per user. This means all users need to pay Apollo $30 a year to break even on just Reddit fees, or some subset of users needs to pay a lot more than $30 a year to float a bunch of free users. Apollo has other expenses too (labor, servers, etc.).

Even if the API fees were reduced 80% down to $0.50 per user per month, that's still $6 annually per user - and Apollo has a lot of free users.

All of this is to say, the $12.99/year membership for Apollo was never going to work with any API fees.

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Dylan168072y ago

Apollo seemed willing to make $12.99/year mandatory, pay some to Reddit, and cut the free users. That would have worked if Reddit started charging fees that were in line with either imgur's prices or their existing revenue numbers or a small multiple of them. Which is a range between 50 cents a year and 6 dollars a year.

I expect that the reddit premium price is far above the ad revenue from a mildly engaged user.

AlupisOP2y ago

> in line with either imgur's prices

These things are different though, we must admit. Imgur used to be much bigger, but today hardly pulls the same audience volume that Reddit or Twitter do, for instance. I don't think Imgur could get away with API pricing like Twitter is, and Reddit will soon be.

> I expect that the reddit premium price is far above the ad revenue from a mildly engaged user.

Given the number of ads you see while browsing via the official app, I would peg it around $2 per user per month (which mostly aligns with my previous statements and estimates, as well as with API pricing), for someone that uses Reddit for 1-2 hours daily. I suspect, without evidence and can be wrong, that 1-2 hours daily is typical for a mildly engaged Reddit user.

Apollo doesn't need to drop free users - they need to get revenue from them. If not directly, then via ads. Although that seems antithetical to what Apollo was trying to create... but reality has come knocking.

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