Reddit, Twitter and the [price] war on third-party developers
It is no secret that Twitter HQ is having money problems. Elon Musk himself, Twitter’s new owner, recently said Twitter is “negative cash flow” and that ad revenue has been cut in half since his acquisition. But he seems to be working on that problem.
Reddit, too, has been trying to figure out new ways to monetize. As a point of comparison, Meta brought in $113 billion in ad sales last year, Twitter generated nearly $7 billion and Reddit banked just $350 million.
In light of these money issues, Twitter and Reddit decided to try something new: They introduced new pricing schemes for third-party developers who use their platforms. And the result has not been spectacular.
Matt Binder, a senior tech reporter at Mashable, has written about the clash over social media APIs. He joined Marketplace’s Kai Ryssdal to talk about how it’s playing out and what kind of downstream effects we might see. The following is an edited transcript of their conversation.
Kai Ryssdal: For those who are not well-versed, could you give the layman’s description of what APIs are, please?
Matt Binder: Sure. So API stands for application programming interface. But, basically, they allow third-party developers to work directly with their platform. So say I want to create an app that makes it really easy for my customers to post on Facebook and Instagram and all these platforms at once. And you could do it the other way around to where you pull data from platforms to, you know, do searches or collect data. All these platforms have routinely provided API in some fashion.
Ryssdal: We are talking to you then because, most recently, Twitter, and then Reddit a number of weeks or months ago, in terms of their API they started charging for it. And by charging, I mean a lot of money and prevented some access. Could you remind us what Reddit and Twitter have done? And then I want to get into the “why it’s a big deal” thing.
Binder: Shortly after Elon Musk took over Twitter, he made some changes that put a price on various different features on the platform. One of those things was to start charging for what was previously a free API access. And according to Reddit’s CEO, Steve Huffman, they sort of looked at what Musk was doing over at Twitter and were sort of inspired by it, regardless of what everyone else seems to think of it. And it’s not completely out of the ordinary to charge for API access. But the prices that Twitter and Reddit were subsequently asking for, it’s practically unheard of in the industry.
Ryssdal: It makes some sense that Twitter and Reddit want to charge for access to their data. Here’s the thing, though: That data that they have is kind of us. It’s our data. It’s how we use their service.
Binder: Exactly, exactly. That’s one of the major things here. Users provide these platforms with data by just using it. Like when you post, that’s the data we’re talking about, along with all the information you give them when signing up. So the unwritten rule’s sort of been, you know, you provide users with the platform to post, you then can woo or bring in advertisers with this data, but at the same time, when these third parties come along and want to do something, you let them. Like a lot of the big Twitter usage back in the early days of Twitter was through Twitter clients, like Twitterrific and Tweetbot.
Ryssdal: So I was a Tweetbot user. And look, one data point does not a trend make, but as soon as that API changed and Tweetbot went away, my usage of the Twitter service plummeted. So the question then is, let’s expand this out and get away from Twitter and Reddit. If companies keep on charging for access to their APIs having seen, you know, that Twitter and Reddit are doing it, and those are heavy hitters, what’s that going to mean for the internet as we know it and the user experience?
Binder: I do think there’s going to be a larger equality gap in the tech industry. Traditionally, these developers who build these small microapps, they’re usually self-taught, they, some of them, even use, like, no code systems. So I do think that’s one of the things that people don’t realize. Silicon Valley, and the tech industry as a whole, can become a less diverse place, and it’s already got its issues with that. But it’ll be even less diverse without the ability to sort of even that out with this.
Ryssdal: Steve Huffman at Reddit, the CEO, he’s got his own sort of business imperative, thinking about [an initial public stock offering]. He needs to demonstrate cash flow and all that jazz. Twitter and Musk, who knows what he’s gonna do? But it doesn’t look like this trend is gonna go the other way anytime soon, does it?
Binder: You know, it’s hard to tell because, so far, it’s just been Reddit following Twitter’s lead. But the fact that you have two big companies in the space doing this, it does serve as an opening for the other big tech companies to follow their lead. But at the same time, some of them might view the opposite. If you’re Mark Zuckerberg and trying to create a competitor in Threads, for example, a big opening could be to bring aboard all those third-party developers. I mean, the Threads API doesn’t even exist yet, so they have a real opportunity here to really compete on that level if they want to.