As search traffic dries up, Reddit announces it’s shifting to a logged-in experience

As search traffic dwindles due to AI-powered search, Reddit is pivoting to a "logged-in experience" in its third-quarter earnings announcement. This shift aims to shield data from AI scraping and opens the door for lucrative licensing deals with model providers. Even though daily active users in the U.S. declined 2% year-over-year to 50.7 million in Q3, Reddit's revenue climbed 53% to $895 million, surpassing Wall Street's expectations.

Net income expanded 74% to $283 million, driven by a 54% jump in advertising revenue to $847 million and a 35% increase in non-advertising revenue, including its AI data-licensing business. Reddit's decision to transition to a logged-in experience could further enhance its revenue, as logged-in users generate more value for advertisers.

This move, however, may mark a significant shift in the open web landscape. Reddit co-founder and CEO Steve Huffman acknowledged the magnitude of this change, stating that while it's a significant evolution, it's the right decision for their platform and business. The transition won't happen overnight; Reddit plans to test it in select markets outside the U.S. first before rolling it out globally.

Reddit also assured users that being logged in doesn't mean losing anonymity, as an incognito mode will still be available.