Reddit Moves to Logged-In Experience as AI Search Erodes Traffic

Reddit has long drawn millions of visitors through Google—many users even append the word "Reddit" to their search queries to surface better answers. But as search traffic dries up amid the shift to AI-powered search, Reddit is rethinking its relationship with the open internet. In its third-quarter earnings on Thursday, the company announced it is transitioning to a primarily "logged-in experience."

Protecting Data, Forging Licensing Deals

The move is designed to protect Reddit's data from AI scraping, allowing the company to instead forge lucrative licensing deals with model providers. Just as important, the shift could help Reddit grow revenue even as it faces daily active user declines in its largest market, the U.S.

User Growth Stalls in the U.S.

Globally, Reddit's daily active users were flat quarter-over-quarter in Q3, reaching 130.3 million. U.S. daily active users, however, fell from 53.2 million in Q2 to 50.7 million in Q3 and were down 2% year-over-year.

Image Credits: Reddit

Reddit is not alone in seeing such declines. The shift to an AI-centered web has now impacted most websites and publishers, leading to fewer click-throughs as AI summaries provide answers that no longer require a site visit, while Google's traditional "ten blue links" have diminished in relevance. The change is now even affecting Google's bottom line, as its earnings revealed.

The Scale of the Search Decline

At Reddit's scale, the numbers tied to such a decline are enormous. The company said search referral traffic dropped by more than 1 million referrals on average per week in October. It warned that if the trend continues, daily active users could decline by a low-double-digit percentage by next quarter. To put that in perspective: a hypothetical 10%–12% decline could bring Reddit to roughly 115 million–117 million daily actives, down from 130.3 million in Q3—a substantial drop.

Monetization Improves Even as Growth Weakens

At the same time, Reddit has become significantly better at monetizing its audience. Revenue increased 53% year-over-year to $895 million, ahead of Wall Street's expectations of about $875 million. Net income rose 74% to $283 million. Advertising revenue grew 54% to $847 million, while non-advertising revenue—which includes its AI data-licensing business—grew 35% year-over-year to $48 million.

Despite a 2% year-over-year decline in U.S. daily users, Reddit's average revenue per daily active user in the U.S. rose 53% to $13.82. Globally, average revenue per daily active user increased 36% year-over-year to $6.87.

Shifting to a logged-in ex

via TechCrunch AI