Reddit is set to introduce AI-generated summaries at the top of search results, aiming to enhance user experience by summarizing and recommending content.
CEO Steve Huffman announced during Tuesday’s earnings call that this feature, using a blend of first-party and third-party technology, will help users explore content more deeply and discover new communities on the platform. The experiment is slated to begin later this year.
Exploring New Revenue Sources
Huffman highlighted that Reddit’s search functionality has remained unchanged for a long time, presenting a significant opportunity to attract new users. He also noted that search could eventually become a major source of advertising revenue for the company.
The AI-powered search results will not only summarize content but also help users dive deeper into products, shows, games, and more.
In addition to AI search features, Huffman hinted at the possibility of introducing paywalled subreddits as a new revenue source. He suggested that while the current free version of Reddit will continue to thrive, the platform may unlock new use cases, including exclusive content or private areas within subreddits. This move aligns with Reddit’s broader strategy to monetize new features and expand its business since going public earlier this year.
Reddit’s AI Initiatives and Partnerships
This development follows Reddit’s recent AI initiatives. In May, Reddit partnered with OpenAI to leverage its large language models for developing AI-powered features for users and moderators. The agreement also allows OpenAI to use Reddit’s data. A similar deal with Google was inked earlier this year.
AI featured prominently in the earnings call. Huffman highlighted the success of Reddit’s AI-driven language translation tool, noting significant growth in France. The company plans to extend this feature to German, Spanish, and Portuguese.
Reddit has also taken steps to protect its content and user privacy by blocking search engines that do not pay for access. Huffman emphasized the need for transparency in how Reddit’s content is used, indicating that some players in the ecosystem have not been forthcoming with their practices.
Tuesday’s call marked the second time Reddit reported its quarterly earnings since becoming a public company. For the second quarter, the company reported 342.3 million weekly active users, representing a 57% increase from the previous year. Revenue also saw a significant rise, reaching $281.2 million, which exceeded Wall Street’s estimates of $253.8 million.
