All posts by hajarazrioual

A central place for all your communities? Reddit is your go to!

A lot of people use online communities for several purposes. The primary reason is to connect to other people, may it be friends, family or people with similar interest. The latter reason has opened doors for the startup of many online communities existing only for a certain interest. These communities are scattered across the internet, dividing individuals across platforms that are close to their interest. However this leaves people, including myself having to jump from one platform to another to reach communities regarding different topics of interest. If I want to be kept up-to-date on technology, but at the same time want to be updated on new game releases and science, it would be easier for me if this information would be all in one place. One platform in particular comes to mind when thinking of a central place for communities: Reddit.

What is Reddit?

Reddit is one of the largest communities in the world with over 200 million unique visitors every month. It was formed in 2005 by Steve Huffman and Alexis Ohanian. It started out with focus on one community: programmers. Soon the platform turned into a place that people could consider a home for discussing anything, no matter how weird or niche it is. With over 7000 active subreddits it shows how the platform is truly used as a place where its users can talk about any topic. Companies often find their way to this platforms in order to engage with their customers, who have created a subreddit for discussion regarding particular brands, products or services or to monitor particular trends that often become apparent first within Reddit . As you can see, Reddit is a versatile platform.


Business Model

The main selling point of Reddit is its subreddits. Subreddits are user-generated topic creations to which other users can subscribe and discussion about this topic can take place. The users (Redditors) create a topic that is then upvoted or downvoted by other users and their opinion of the topic importance. The same system filters out the inappropriate comments from the conversation oriented comments. A few popular subreddits for example are: Science, News, Funny, Gaming, AskReddit etc. Within these subreddits users can create a headline related to the topic, share information, pictures, videos and exchange opinions with other users. Reddit keeps its users engaged by giving them the freedom to decide what they care about and to talk about what is trending for them instead of what the company thinks is relevant. Reddit drives their product by giving up control to the users. The communities appoint their own moderators and rule enforcers and steer their subreddits the way the users want  it collectively (ref). We have come to understand the main operation of Reddit as a community, but how is it monetized? Reddit is earning money in 2 ways:

 Selling advertising space (since 2009)

Reddit has been making money selling advertising space through managed or self-serve ads. Managed ads start at a price of $30,000 and self-serve ads start at a price of $5,00 cost per thousand. These ads are positioned in such a way that it is whitelisted by Google’s AdBlock and earned a non-intrusive status. However ads alone won’t be enough to monetize the platform due to its users potentially looking for alternatives if excessive advertisement takes place, hence why Reddit has not exploited advertisement to the lenghts that they could. Instead Reddit Gold was invented.

Reddit Gold

Reddit Gold is a member subscription plan that gives users premium features when purchased. The features include: removing ads, change Reddit themes, create a custom Reddit avatar, excluse lounge, awards, better comment and community management features and participation in beta-testing (Reddit, 2017). The membership plan costs $3,99 per month or $29,99 a year. In addition to purchasing Reddit Gold it can also be gifted to other users out of goodness or because they have contributed to the community in such a way that a user deems it fit to gift them Reddit Gold. Reddit’s goal is to rely on Reddit Gold for monetization by increasing features and subsequently help support the community as well.

Efficiency Criteria

Reddit creates value by joint creation and participation of user-generated contect. This value creation is not limited to a specific brand, product or service as this platform serves to create value for anything the users wants. As the users can use this platform to facilitate conversation about certain brands, games, technology, politics etc. or even facilitate exchange of products as a marketplace or facilitate a community for finding ideas as part of a company’s challenge, its limitations are far and few in between. Having introduced Reddit Gold, Reddit can profit from the platforms while enforcing ways of improving the platforms with user input, making sure the users and the company iteratively help each other achieve a better massive community which several parties can benefit off in creating more value.



Which way should I go? To the left, where nothing is right or to the right where nothing is left?

In the last couple of years there has been a pricing strategy which is becoming more popular amongst different companies. The ‘pay what you want’ pricing strategy concerns the freedom of consumers to pay any price they desire for a certain product or service. Certain companies who have implemented this pricing strategy include a floor price or set a minimum price for their products and/or services to be able to pay for the costs that they make. Thus, the question that comes in mind is if these companies who use this pricing strategy stay in business as long as other companies who use other pricing methods. I know that, in order to answer this question, different variables need to be researched.

As stated before, there are several companies who use the pay what you want pricing strategy. has offered their products to their consumers with no price attached to the products. The CEO states that the goal of implementing this price strategy is to lower the boundary for consumers to try different products. It interesting to see that managers are experimenting in different ways to encourage their consumer to try different products. Product which a consumer would have never chose in the first place. There are also services in which this pricing technique can be used. Jessica Martin is the owner of a consultancy company who uses this pricing method. For an two-hour business strategy session the customer can pay whatever he/she desires. She states that this pricing method encourages consumers to, early in the problem-solving process, ask for the advice of an experts. From my point of view this pricing method can be very beneficial in this situation. Maybe certain companies who would never ask for the opinion of an expert are more willing to grasp this opportunity with both hands.

Another company which also uses this pricing method is Bonvoy adventure Travel. Although this company let’s their consumers pay a price that the consumer have chosen, the consumers are not completely ‘free’ in determining the price of the trips. Bonvoy Adventure Travel offer different prices for different domestic places that a consumer can chose from.

The company that has impressed me the most is the restaurant Panera Bread restaurant who let their consumers pay any price for each item on the menu. The consumers can also chose to pay nothing at all. Interesting is to see that this restaurant uses the profit to help stabilize the community by helping homeless people finding a shelter, trying to find jobs for the unemployed etc. They attract more people in paying a ‘regular’ amount for the food, by ‘giving’ back to the community. The question that I asked earlier about the longevity if a company that uses the pay what you want pricing strategy is answered by the owner of Panera Bread. He states that his restaurant stays in existence by the community, if they start caring less than there will be an end of the existence of the restaurant.




The Power of the Like button

Traditionally movie studios have used the same marketing strategies to promote their movies. Think about advertisements through different channels on the television, release announcements in the newspapers or even advertisement which are visible for us to see on different billboards. According to McKinsey the global cinema advertising expensive where approximately 2.1 billion US dollars in 2014. This amount is expected to grow up to 2.8 billion dollars in 2018. So, in the near future we can state that the advertising expediture will grow. From a logical perspective I would assume that companies are blessed with the arrival of different great social media platforms. These platforms have a gigantic reach where consumers make use of but also corporations. In the past consumers could only inform eachother about a certain product verbally or via letters. Nowadays, the consumer has a much greater reach due to social platforms such as Facebook etc. These platforms make it easier and also less expensive for us to communicate. Thus, companies should also make use of these platform to have less expenditures, right?


To argue that the use of social media platforms can indeed decrease the advertisement expenditure and still increase box office performances I read an article about ‘the Power of the Like button’. The authors in this article state that before a certain movie is released the ‘likes’ of this prerelease have a signigicantly positive impact on box office performance. With box office performances the authors mean the opening week box office records. Thus, they state that a 1% increase in the number of ‘likes’ in the week prior to the release of the movie, is associated with an increase of the opening week box office records with 0,2% (Cheng et al, 2017). The authors did the research by firstly collecting data from the websites IMDb, Facebook and Box Office Mojo throughout the calendar year 2013. The data that they collected included movie-specific characteristic, ‘like’ activities on Facebook and the box office performance which is the amount of opening box office records. In the figure below you can see that the opening records of Star wars: The Force Awakens is roughly 248 billion US dollars.


There are two main stages in which the generated data was analysed. Firstly the authors wanted to understand the relationship between prerealesed ‘likes’ and box office performances by running a cross-sectional regression.  Secondly the authors applied the Fama-McBeth regression to estimate the prerelease ‘like’ impact over time. It is interest to see that a 1% increase in ‘likes’ prior to the release of the movie indeed increased the opening week box office record with 0,2%. Even more interesting to see that the prerealesed ‘like’ effect becomes stronger as it approaches the release date. This research makes a huge contribution to businesses that are considering to use the Facebook like button as a marketing tool. On the other hand, this article does not take the popularity of the actors in the movies into consideration and it is not clear whether the results of this research apply for other products which are movie related.

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Ding, C., Cheng, H., Duan, Y. and Jin, Y. (2017). The power of the “like” button: The impact of social media on box office. Decision Support Systems, 94, pp.77 84.

McKinsey & Company, Global media report 2015, 2015. 16.08.17).