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What just happened? Reddit is putting user-created content to work. The social news aggregator reportedly signed a contract earlier this year that grants a large AI company permission to train its models using the platform’s subject matter.
Sources familiar with the matter told Bloomberg that Reddit has been sharing the news with prospective investors ahead of its IPO. The deal is said to be worth around $60 million per year. The identity of the AI company that partnered with Reddit wasn’t mentioned, nor do we know how long the contract is good for.
Insiders told the publication that Reddit generated roughly $800 million in revenue in 2023, an increase of about 20 percent over the previous year. Adding an extra $60 million or so to its bottom line on a yearly basis will no doubt help Reddit’s cause as it relates to bringing investors aboard.
Bloomberg previously reported that Reddit has been advised to seek a valuation of at least $5 billion in its IPO, which could take place as early as March 2024.
Reddit’s AI content deal isn’t the first of its kind, nor will it be the last. Late last year, OpenAI signed a contract with German media company Axel Springer SE to train models using its content. Bloomberg at the time said that deal was valued at tens of millions of dollars. Axel Springer SE is responsible for several well-known media publications including Business Insider and Politico.
In January, Bloomberg reported that the ChatGPT maker was also holding content licensing talks with other news organizations including FOX, CNN, and Time. AI trained on up-to-date news articles would be more well informed and be able to provide more accurate, real-time results compared to those only trained on legacy material.
It remains to be seen how Reddit users will react to their content being used to train AI. Registered users are responsible for the site’s content and some can be quite particular about how their data is used.
Image credit: Brett Jordan, Igor Omilaev
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