Reddit and Google working on a deal on AI Content!

@vlemon 78

about 15 hours ago

LeoFinance

Hi HODLers,

Wednesday, Bloomberg reported that Reddit and Google are in discussion for their next "content agreement".

Feb 2024 Reddit/Google Deal

$60mn/year to make ontent available for training the search engine giant's artificial intelligence models

You can read the news here

What's inside this potential new deal?

The new agreement would allow deeper integration of Reddit's content into Google’s AI products.

The new partnership would encourage users to become active contributors to Reddit’s popular online forums, so Google traffic could help the company grow and generate content for future training, the report said, citing executives familiar with the discussions.

We will go over potential payouts Reddit could receive from this updated arrangement but the highlighted sentences make me very positive!

The biggest issue for Reddit has been to convert people just looking for an answer to Reddit Active Users. Or at least, Reddit signed-in users.

These platforms can leverage signed-in users in a much more profitable and organic ways.

They can tailor their feed, which should make them more active. Reddit can tailor the ads they see... In this new AI world, AI can learn from each of these "users"

Reddit is just the best data for AI LLMs

Reddit mentioned they are discussing an agreement which could allow for dynamic pricing, where the social platform can be paid more as it becomes more vital to AI answers.

This is also such a positive for Reddit, not all data used to build an AI answer have the same value. I am a strong believer that Reddit answers are some of the most valuable out there as they are genuine and updated in real times by millions of users!

Finally, the report concluded that discussions between Reddit and Google have been productive.

I mean, does it get better than this?

Potential Financial Impact

2025 Net Income Estimates are around $370mn
2 Years ago, Google paid $60mn to train its AI model when Reddit was less than half the zies (user and revenues) that it is today. Also, AI valuation were a fraction than what they are today.
Reddit is currently suing Anthropic AI (Amazon) for scrapping its data. Recently Anthropic AI was valued at $183bn and agreed to The company has agreed to pay $1.5bn for using an estimated 500,000 books without their authors' authorization.

For all these reasons, I could see such deals going in the high $300mn/year as capital is flooding into the space and adoption of AI is accelerating.

That would mean that Reddit could double its net income overnight by making a single deal with one of the 3/4 AI leading companies in the world.

This is why I have been adding to my already large $RDDT position.