But Reddit’s licensing agreements with AI companies like OpenAI and Google, while offering guaranteed revenue, also place the social forum at the whims of a new, untested paradigm of AI search.

When Reddit IPO’d last year, this newsletter described its AI ambitions as a Faustian bargain. The beloved forum was trading a piece of its soul for a short-term promise of payment. Empowering the companies behind large language models might sabotage Reddit’s advertising potential and its relationships with the very users who make the service valuable in the first place. Surrendering itself as training material seemed short-sighted and ill-advised.

But investors had other ideas. Reddit shares have exploded, rising more than 200% over the past year.

Like any sudden drop after a huge run-up, this week’s sell-off could ultimately turn out to be a blip.

Besides, Reddit is aware of the problem of losing user engagement to the encroachment of AI answer engines and is pursuing creative ways to get around it. If AI systems are becoming less reliant on Reddit inputs, one strategy is to make Reddit content even more useful and, in turn, valuable.

As Bloomberg reported last month, part of Reddit’s negotiations with Google to re-up their licensing agreement is a discussion of a new kind of partnership that would steer Google users to contribute to Reddit’s forms. Google traffic would generate Reddit content, boosting its relevance and elevating its importance in the AI ecosystem.

In addition to talks about dynamic pricing — with Reddit receiving more money as AI answers rely more heavily on its posts — the discussions reflect a strategy by the social forum to get more bang for their content buck.