Why Reddit Wants A New 'Dynamic' Pricing Model From Google

Benzinga
2025.09.17 18:48
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Reddit is in talks with Google to renegotiate its content-sharing agreement, aiming for a new pricing model that reflects the value of its data for AI applications. After a $60 million deal, Reddit seeks deeper integration with Google's AI, linking traffic to user engagement. The platform's licensing agreements are valued at $203 million. Despite a 61% stock surge this year, Reddit faces challenges converting Google referrals into long-term users. Analysts predict profitability by 2025, driven by user growth and ad momentum, while RDDT shares recently fell 3.25%.

Reddit RDDT is in early discussions with Alphabet's GOOGL GOOG Google to renegotiate its content-sharing agreement, seeking a structure that better captures the growing value of its data for search and generative artificial intelligence applications.

More than 18 months after signing its first data-licensing deal with Google, reportedly valued at $60 million, Reddit is now exploring deeper integration with Google's AI products, Bloomberg reported, citing people familiar with the matter.

Executives told the outlet they want a new framework that links Google-driven traffic to user engagement, encouraging visitors to join discussions and generate fresh material for AI training.

Also Read: Reddit Partnerships With OpenAI, Google And Sprinklr Drive Upside: Analysts

Reddit confirmed in its January 2024 IPO filings that it had licensing agreements worth $203 million over two to three years with Google, OpenAI, and other partners. Management is now weighing a dynamic pricing model that scales payouts as Reddit's content becomes more essential to AI-generated answers.

Despite the platform's rising visibility in AI search results, executives acknowledge that Google referrals have not consistently translated into long-term community members. To address this, Reddit is working directly with Google's product teams to steer visitors deeper into its forums while delivering higher-quality datasets to partners.

Benzinga reached out to Reddit for comment on the Bloomberg report and is awaiting a response.

Reddit shares have surged 61% year-to-date, outperforming the NYSE Composite Index's 13% gain. Analysts view accelerating user growth and strong ad momentum as signs the platform is on track toward profitability.

JPMorgan's Doug Anmuth pointed to rising daily active users across U.S. and international markets, forecasting GAAP profitability in 2025 and long-term EBITDA margins approaching 50%.

Guggenheim's Michael Morris cited a 78% jump in second-quarter revenue, fueled by a 50% increase in active advertisers and deeper client spending, while noting that third-quarter guidance came in about 20% above consensus.

Needham analyst Laura Martin highlighted Reddit's AI-driven advantages, including greater exposure in Google search results, the use of AI translations to expand global communities, and continued talks with OpenAI and Google's Gemini.

Price Action: RDDT stock was trading lower by 3.25% to $258.00 at last check Wednesday.

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