Reddit Licenses User Content to AI Company Ahead of IPO

Social media platform Reddit has entered into a content licensing agreement with an unnamed artificial intelligence (AI) company, according to people familiar with the matter.

The deal, valued at around $60 million per year, will grant the AI company access to Reddit’s vast trove of user-generated content. This includes posts, comments, images, videos, and other media uploaded by Reddit’s 52 million daily active users.

Experts say the move represents a significant new revenue stream for Reddit as it prepares for an initial public offering (IPO) this year. Reddit is aiming for a valuation of at least $5 billion.

“This deal allows Reddit to capitalize on its most valuable asset – the sheer amount of content created by its users,” said Marc Randall, a social media analyst. “It sets an intriguing precedent for how social platforms may monetize user data through partnerships with AI firms.”

The data will be used to train the AI company’s natural language processing and computer vision models. Access to large datasets of authentic human conversations is crucial for enhancing AI capabilities.

Reddit has faced criticism over its decision last year to charge for API access, seen by many users and third-party developers as contradicting its open ethos. However, investors will likely welcome this new monetization path.

“This shows Reddit is exploring innovative ways to boost revenue,” said Randall. “It’s a smart strategy as the company positions itself for the public markets.”

The deal follows similar agreements by AI firms, such as OpenAI, with media companies to license content. It highlights the convergence of social media and AI, as platforms leverage user data while AI firms seek to refine algorithms.

Reddit and the AI company have declined to comment on the licensing arrangement.