Reddit reportedly signed a multi-million content licensing deal with an AI company

The company will use Reddit content to train its AI models, Bloomberg says.

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Ever posted or left a comment on Reddit? Your words will soon be used to train an artificial intelligence companies' models, according to Bloomberg. The website signed a deal that's "worth about $60 million on an annualized basis" earlier this year, it reportedly told potential investors ahead of its expected initial public offering (IPO). Bloomberg didn't name the "large AI company" that's paying Reddit millions for access to its content, but their agreement could apparently serve as a model for future contracts, which could mean more multi-million deals for the firm.

Reddit first announced that it was going to start charging companies for API access in April last year. It said at the time that pricing will be split in tiers so that even smaller clientele could afford to pay. Companies need that API access to be able to train their chatbots on posts and comments — a lot of which had been written by real people over the past 18 years — from subreddits on a wide variety of topics. However, that API is also used by other developers, including those providing users with third-party clients that are arguably better than Reddit's official app. Thousands of communities shut down last year in protest and even caused stability issues that affected the whole website.

Reddit could go public as soon as next month with a $5 billion valuation. As Bloomberg notes, the website could convince investors still on fence to take the leap by showing them that it can make big money and grow its revenue through deals with AI companies. The firms behind generative AI technologies are working to update their large language models or LLMs through various partnerships, after all. OpenAI, for instance, already inked an agreement that would give it the right to use Business Insider and Politico articles to train its AI models. It's also in talks with several publishers, including CNN, Fox Corp and Time, Bloomberg says.

OpenAI is facing several lawsuits that accuse it of using content without the express permission of copyright holders, though, including one filed by The New York Times in December. The AI company previously told Engadget that the lawsuit was unexpected, because it had ongoing "productive conversations" with the publication for a "high-value partnership."