Reddit’s Multimillion-Dollar AI Licensing Deal Boosts Industry Suppor

MetaversePlanet February 20, 2024Last Updated: March 25, 2024

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The news that Reddit has entered into a multimillion-dollar licensing agreement with an artificial intelligence company to utilize its content has garnered significant attention in the tech and social media spheres.

This development signifies a critical step towards enhancing the role of artificial intelligence technologies in content creation and improvement. The strategic decision by Reddit to shape the user experience and its impact on the digital content ecosystem remains a topic of intrigue.

In a move to train Reddit’s AI models, a contract was established with an artificial intelligence company, involving millions of dollars in content licensing deals. This marks a noteworthy advancement in the technology world. According to Bloomberg, the deal is valued at approximately $60 million annually and was disclosed to investors ahead of Reddit’s anticipated IPO. It is believed that this agreement could pave the way for more multimillion-dollar contracts in Reddit’s future.

Last April, Reddit announced that it would start charging companies for API access. Notably, this announcement highlighted that pricing would be tiered, ensuring that smaller customers could also afford access.

Huge support for the artificial intelligence industry from Reddit

Reddit's Multimillion-Dollar AI Licensing Deal Boosts Industry Suppor

Companies require API access to post on subreddits and train their chatbots using comments. However, this API is also utilized by developers who provide third-party clients considered superior to Reddit’s official app, affecting the entire website’s stability due to protests from thousands of communities last year.

With a valuation of $5 billion, Reddit may go public next month. According to Bloomberg, by securing lucrative deals with artificial intelligence companies, Reddit demonstrates its potential for revenue generation, which could sway hesitant investors. Companies behind creative AI technologies are engaging in various partnerships to update their large language models (LLMs). For instance, OpenAI has signed deals with Business Insider and Politico, granting them rights to use their articles for training AI models. Additionally, OpenAI is reported to be in discussions with several media outlets, including CNN, Fox Corp, and Time.

OpenAI faces several lawsuits alleging unauthorized use of content, with one case filed by The New York Times in December. Despite this, OpenAI informed Engadget of having “productive discussions” for a “high-value partnership,” expressing surprise at the lawsuit.