According to Bloomberg reports, Reddit has entered into a significant content licensing deal with an AI company, which is said to be valued at approximately $60 million annually. While the identity of the AI company remains undisclosed, this agreement is anticipated to set a precedent for future contracts, potentially leading to more lucrative deals for Reddit.
Last year, Reddit announced its intention to charge companies for API access, with pricing structured in tiers to accommodate smaller clients. API access is crucial for companies seeking to train their chatbots using posts and comments from Reddit’s diverse range of subreddits, which have accumulated over 18 years. However, this decision sparked backlash from the community, resulting in the shutdown of numerous subreddits and causing site-wide stability issues.
With Reddit poised to go public with a valuation of $5 billion, the reported content licensing deal with AI companies could bolster investor confidence by demonstrating the platform’s revenue-generating potential. This move aligns with a broader trend in the AI industry, where companies are seeking partnerships to enhance their large language models (LLMs). OpenAI, for instance, has secured agreements allowing it to utilize content from reputable sources like Business Insider and Politico for training its AI models. Additionally, OpenAI is engaged in discussions with major publishers such as CNN, Fox Corp, and Time.
However, it’s worth noting that OpenAI is currently facing legal challenges, including lawsuits alleging unauthorized use of copyrighted content. For instance, The New York Times filed a lawsuit against OpenAI in December, despite the company’s claims of ongoing discussions for a partnership with the publication.
