Reddit's data is valuable to AI vendors as it provides a vast corpus of conversational data for training AI models. The company has reversed its previous policy of allowing free access to its data for AI training, arguing that it should not be given to large companies for free. This shift towards data licensing agreements is becoming increasingly common among content producers, as AI chatbots threaten to reduce traffic to their sites. Meanwhile, AI vendors are also pursuing licensing agreements to avoid legal issues related to using data without permission or payment.
Key takeaways:
- Reddit is emphasizing the importance of its data licensing agreements with AI vendors in its IPO prospectus, stating it has gained and stands to gain significantly from these relationships.
- The company has entered into data licensing arrangements worth $203.0 million, with a minimum of $66.4 million of revenue expected to be recognized in 2024.
- Reddit's data is valuable for AI training, and the company has reversed its previous stance of providing data for free, arguing that it should not be given to large companies without compensation.
- AI vendors are increasingly pursuing data licensing agreements as they face legal challenges for training their models on data without permission or payment, with OpenAI having agreements with Shutterstock and publishers like Axel Springer.