As Bloomberg reported yesterday, the social media platform Reddit will enter into a data licensing agreement with an unnamed "large AI company" to allow the latter access to its user-generated content platform. The deal has an annual value of around $60 million (currently around Rs. 432 million), but details are subject to change as plans for Reddit's IPO are still being worked out.
Previously, mostArtificial Intelligence Companiesare training data from the open web without permission. However, the legality of this practice has been questioned, forcing these companies to seek out more formal sources of data. It's unclear which company Reddit struck a deal with, but the deal is significantly higher than the $5 million annual fee OpenAI pays to provide data to news publishers. Apple is also seeking multi-year deals with major news companies worth "at least $50 million," according to the New York Times.
Last October, there were rumors that Reddit was threatening to cut off access to Google and Bing search crawlers unless a data licensing agreement could be reached with the AI company.
Whether the rumors are true or not, Reddit has indeed demonstrated a tough negotiating stance before. Last year, a change in pricing for third-party API access caused popular Reddit app developers to deactivate the service, sparking the largest protest in Reddit's history. However, Reddit eventually managed to resist the pressure and did not change its stated policy.
Bloomberg reports that Reddit's year-over-year revenue growth of 20% through the end of 2023 is still $200M short of the $1B target it set two years ago. Reddit reportedly plans to go public in March with a valuation target of $5 billion, halving the $10-15 billion valuation target it had when it last filed for an IPO in 2021, which was shelved due to the market downturn.