If they cant compete because the competition is freeloading on their APIs and community building efforts then it’s clear that they need to compensate the lost revenue by charging for the API usage. It seems Reddit has about 1.5b active monthly users, guess Reddit costs are about $0.3 per year per user. Would be fair to charge that for API usage. If the apps don’t like it, they’re free to create and host the community themselves, shouldn’t be too hard, as Reddit offers little value…
I think the argument you want to make is not about Reddit's costs (which are low), but rather that should be charging some fraction of their lost revenue per-user for API use, since API users don't see ads. (Or else require app developers to show Reddit's own ads.) The issue is presumably that Reddit isn't profitable, and free app users are a major source of lost revenue (in addition to being a fairly small cost due to API use).
Reddit costs are not low, running the organization costs at least 400M per year. You might state that they’re doing many things that are not core to running a community backend, but you can’t separate the core business from the supporting activities. They would have never reached their current scale if they hadn’t invested in marketing and ads for revenue. And that would reduce the value of the backend.
They state that for a typical user they expect an API cost of about $1 per user per month. Seeing that narwhal has a $6 per user per month plan, expecting 1/6 to go to the largest cost component doesn’t seem unfair.
