Reddit plans logged-in experience as search referrals fall
Reddit says search referrals fell by more than 1 million a week in October, and it wants signed-in users to shield its data from scrapers.
In brief
- Reddit will test a primarily logged-in experience outside the US in the fourth quarter
- Search referrals fell by more than 1 million a week on average in October
- US daily active users dropped to 50.7 million in Q3 from 53.2 million in Q2
Reddit said on Thursday it is moving to a primarily logged-in experience, announcing the change on its third-quarter earnings call as traffic referred by search engines declines.
The shift takes Reddit away from the open web that for years delivered millions of visitors through Google, as AI-generated summaries answer more queries without a site visit. Co-founder and CEO Steve Huffman said in an interview with Axios that the change is meant to improve the user experience, strengthen the ads business and stop bots from scraping the company's data.
Protecting that data also positions Reddit to sell access through licensing deals with model developers, TechCrunch reported. Signed-in users also give more signals about their interests, which makes them more valuable to advertisers.
The company said search referrals fell by more than 1 million a week on average in October and that daily active users could decline by a low-double-digit percentage next quarter if the trend continues. Global daily active users were flat from the previous quarter at 130.3 million, while US users fell to 50.7 million from 53.2 million in the second quarter, down 2% from a year earlier.
Revenue rose 53% from a year earlier to $895 million, ahead of Wall Street expectations of about $875 million, and net income rose 74% to $283 million. Advertising revenue grew 54% to $847 million, while other revenue, which includes data licensing, grew 35% to $48 million. Average revenue per US daily user rose 53% to $13.82.
Chief operating officer Jen Wong told Axios the move is not a change in strategy, because Reddit has always focused on being a direct destination. Huffman described the decision in a post on Reddit.
I don’t know about you, but as someone whose life has been defined by the open internet, it’s a big change for me.
— Steve Huffman, Reddit co-founder and CEO
Reddit said logging in will not require users to give up anonymity, that it is rebuilding its incognito browsing mode and that access to a logged-out front page remains important. Its shares fell after the results, which included a sales forecast below expectations, Bloomberg and CNBC reported.
Reddit, founded in 2005, has long drawn visitors from Google, many of whom add the word “Reddit” to their searches. On Wednesday it announced an algorithmic “For You” feed that mixes posts from users’ communities with recommendations. Publishers that rely on search have faced similar losses, and The Verge argued on October 25 that Google’s AI search changes upended online publishing.
Reddit will begin testing the logged-in experience in select markets outside the US in the fourth quarter. It has not set a timeline for a worldwide rollout.