According to a recent report from Bloomberg, social media platform, Reddit has signed a deal with an undisclosed AI company, permitting them to train their models on the platform’s content.
The move coincides with Reddit’s anticipated initial public offering (IPO), which could potentially debut as soon as next month.
Sources familiar with the matter revealed that Reddit disclosed the deal earlier in 2024 to potential investors, with the contract estimated to be valued at $60 million annually. This agreement, if finalised, could serve as a precedent for future collaborations with other AI firms, as speculated by Bloomberg insiders.
In light of recent shifts in the tech landscape, where AI companies are increasingly seeking licensing agreements for training data, Reddit’s seems to be moving to take advantage of the demand. Previously, AI firms often used such data without explicit rights agreements. Notably, OpenAI struck a landmark deal with German publisher Axel Springer in December, gaining access to its articles. OpenAI has also engaged in discussions with CNN, Fox, and Time, signalling a broader trend toward formalising data access arrangements.
Reddit’s founder and CEO, Steve Huffman, previously hinted at plans to monetise the platform’s huge mine of user-generated content during an interview with The New York Times in April 2023. The reported $60 million annual deal could potentially enhance the company’s IPO valuation, speculated to reach $5 billion.
Despite facing internal challenges and controversies in recent times, Reddit’s financial performance remains robust. Bloomberg reports that the platform generated over $800 million in revenue in 2023, marking a 20% increase from the previous year.
If finalised, the reported deal could have significant implications for Reddit users, as their contributions to the platform may be used to train the next generation of AI models, spanning text, images, and videos. Reddit has long been recognised as a valuable source of training data for AI technologies, and formal agreements such as this could further solidify its role in shaping AI advancements.
