Reddit’s blackout issue points to a chasm between its ownership and its volunteer moderators. It also points to the fact that those moderators, like other prominent social media users, should be paid.

Ernie Smith

Ernie Smith is the editor of Tedium, a twice-weekly internet history newsletter, and a frequent contributor to Vice’s Motherboard.

There’s probably no stronger sign that social networks’ tendency to lean on the free work of its users was a losing strategy than the drama happening at Reddit.

You’ve probably heard about the saga that emerged after Reddit decided to begin charging for its API—for one, claims that popular app creators would be on the hook for bills in the tens of millions of dollars. But in many ways, the real story is how quickly the site’s own volunteer moderators turned on the network, leading to a blackout with extended impacts and a CEO who has responded defiantly to his users.

These moderators largely aren’t talking about the blackout in financial terms. But perhaps they should be. In a recent interview with NBC News, CEO Steve Huffman implied that the problem was that the leaders of these communities had too much power over how they were run, even though they are doing so on a volunteer basis.

The people who get there first get to stay there and pass it down to their descendants, and that is not democratic,”

Huffman said in reference to long-time moderators of the platform.

Huffman’s comments hint at something that I have noticed from many social networks over the years: A failure to see what leaders of online communities do as worthy of compensation or an equity stake. It’s a structural issue, one that appears to have existed from the start, but has reentered the public conversation recently.

Those who have been watching closely, however, might have seen signs of this problem simmering beneath the surface. Since 2020, Reddit has been legally entangled with the founder of a popular subreddit, r/wallstreetbets. Jamie Rogozinski, along with other moderators, built the group to high-profile mainstream success, but when he took steps to commercialize the group—selling a WallStreetBets book and filing for a WallStreetBets trademark for merchandising, media, forums, and entertainment—Reddit booted him from the group, claiming what he was doing wasn’t allowed.

Reddit then formally opposed Rogozinski’s trademark filing on the grounds that it owned the community and that the trademark would create confusion in the market. Rogozinski sued Reddit in early 2023, claiming that Reddit’s terms of service, which it says Rogozinski violated, effectively make it possible for the company to steal the intellectual property of its users.

“My real issue stemmed from trying to claim ownership over my creation,” he wrote in an IAmA thread. “Reddit systematically takes intellectual property from its users by registering trademarks, and I posed a threat to this.”

In effect, the WallStreetBets creator—whose subreddit directly inspired a forthcoming Hollywood movie starring Paul Dano and Pete Davidson—is challenging the legality of a policy that, in Reddit’s view, favors the power of the crowd over the work of the individual creator.

Rogozinski’s legal action is part of a long legacy of lawsuits by volunteers who felt their relationship with a tech company had crossed the line into work.

What Reddit Has in Common With AOL

In the early boom years of the internet, between 1990 and 2000, America Online convinced thousands of volunteers to take on various support roles to help keep its landmark online service running.

At first, users received free accounts and access hours in exchange for this work, which had developed in a similar sense of community spirit as other online communities like The WELL and CompuServe, as well as later communities like Reddit.

These roles, like on Reddit, were initially seen as collaborative. But as AOL grew larger and more dominant, its valuation grew to massive numbers, and the program grew increasingly exploitative. That led to claims the company was running, as Wired put it, a “cyber-sweatshop.”

This led to lawsuits, both individual and class-action, that ultimately took a decade to resolve. By 2005, after years of negative press, AOL no longer had a volunteer program. A couple of years later, the company paid a $15 million settlement to its army of volunteers.

A more recent parallel also involves a company AOL at one point owned, The Huffington Post, which used a free contributor model for years. It, too, faced lawsuits over the matter—and it, too, shut down the model. When AOL bought HuffPost, observers pointed out the parallels between the news outlet and AOL’s own volunteer army.

There’s a cultural chasm that networks like AOL can cross when something turns from volunteering into working for free. With the recent conflict, Reddit likely crossed it. It could find itself in similar hot water with its moderators, especially if Huffman makes good on his threats to boot some of them out.

Paid Creators & Moderators, Not Volunteers

Generally, I am strongly in favor of social networks having models that support contributors that play important roles in their networks, whether prominent creators, popular influencers, or moderators. Sadly, and frustratingly, many do not.

All commercial social networks should have tools available to make possible a capability for creator monetization, and those that don’t are failing to do their job as social networks. When it is not baked into the network’s DNA, you gradually see problems like the ones Reddit is currently facing, where the goals of Reddit’s user base become opposed to what its ownership wants. If moderators were getting some kind of direct financial support, the odds this would happen would decrease.

Compare this to YouTube, a platform that was founded just four months before Reddit, and has a thriving community, in part because creators are compensated based on the success they bring. 

You might think that YouTube and Reddit are apples and oranges, but when you break it down, the work of a YouTube channel operator is in many ways similar to a Reddit moderator, requiring keeping a close eye on comments, setting an overall vibe, and developing content that the community then reacts to. The main difference is that Reddit moderators generally don’t make videos.

Now, Reddit could do things like share banner ad revenue with moderators, offer tipping functionality, or let moderators paywall content, but unlike many creator communities such as Substack or Patreon, they don’t. (But, as recent events have shown, they can still get fired.)

And yes, creators do care about this: When the Twitter-owned Vine refused to pay its largest creators and didn’t solve longstanding product issues, many of them went to YouTube—likely killing Vine in the process.

Future social networks may be less likely to make the mistake Reddit is making. Earlier this year, I talked to Nico Laqua, the CEO of a network called Picnic, a Reddit-meets-TikTok site that is growing in popularity with teenagers. He specifically cited the issues with r/wallstreetbets in choosing to build a model where moderators will have fractional ownership and revenue-sharing equity in the groups they build and support.

“We want to take the exact opposite approach—the YouTube approach, where we not only share advertising revenue with the communities but allow them to own and govern themselves in whatever way makes sense,” he told me.

If Picnic someday finds itself picking up some of Reddit’s users, this design structure could make all the difference.

When a social network refuses to compensate its best users, it can all too easily turn into an us-against-them fight—and it can poison the community for good.

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