Reddit Inc. has signed a contract enabling a business to train its artificial intelligence models on the content of the social media platform as it approaches the possible launch of its eagerly anticipated initial public offering.
Reddit signs contact with AI company
According to the people, the San Francisco-based company announced to potential investors during its initial public offering (IPO) that it had signed the deal, which was valued at roughly $60 million annually. According to one of the people, Reddit’s deal with a big, unnamed AI company might serve as a template for similar contracts in the future.
According to people familiar with the matter, Reddit made more than $800 million in revenue last year, roughly 20% more than it did in 2022. Reddit may be able to capitalise on the AI wave that is sweeping the business world by appealing to investors’ enthusiasm for the technology, which would help the platform.
Reddit to venture into IPO
According to Bloomberg News, the company has been advised to take into account an IPO valuation of at least $5 billion, which could take place as early as next month.
The people, who wished to remain anonymous because the information isn’t public, stated that discussions regarding the IPO are still in progress and that specifics regarding the listing and the AI deal may change. A Reddit representative declined to provide a comment.
Content providers looking for new revenue streams have been linked to data licensing agreements by AI companies, which are ravenous for data to train their programs on. According to a Bloomberg News report, OpenAI and the massive German media company Axel Springer SE reached an agreement in December for tens of millions of dollars to be used for AI training.
The company behind the ChatGPT text generation tool is in talks to licence the content of publishers like CNN, Fox Corp., and Time so that the AI chatbots it uses can receive data that will improve the relevancy, accuracy, and timeliness of its results.
Working on the IPO are about sixteen banks, headed by Goldman Sachs Group Inc. and Morgan Stanley. Included in the deal are JPMorgan Chase & Co., Bank of America Corp., and Citigroup Inc.
