Another news aggregation forum, Digg.com, also holds a critical lesson for websites like Reddit that depend on their online communities to determine their content and popularity: Don't tick off your user base.
Within two years of going live in 2006, Digg was the darling of the Internet, garnering 29.1 million unique visitors monthly and had an estimated value of $160 million, (not including $45 million in venture capital funding). By 2010, Digg's popularity was waning. Its monthly unique visitors had dropped to 9.2 million (still impressive), one-third of what it once boasted.
Today, Digg gets about 3.8 million unique visits a month, according to web traffic measuring site Quantcast, and is ranked the 918th most popular site in the world. Reddit is ranked 33rd and has 160 million unique visitors per month. In the U.S., Reddit is the ninth most popular website.
Digg's fast fall from grace is attributed by many to the website's changing its user experience and ignoring complaints from visitors that that "power users," or those with immense posting and commenting popularity, controlled too much of the content that made up the site's front page.
Chiagouris said what happened to Digg could "easily happen to Reddit."
On Reddit, moderators act as free labor, policing the site for inappropriate text and image submissions, trolls, hateful comments, or "brigades" of users who collaborate to control subreddits content. A moderator's only reward is social status among peers.
One complaint by moderators is that Reddit has not provided them with tools to answer user questions and manage their subreddits.
The moderators of the popular AskReddit section, for example, have threatened to shut down their subreddit on Dec. 31 if Reddit doesn't provide new tools for managing it.
"The admins have given us their word. If by September 23, we do not see the changes they promised (and they have not given us good communication as to why this has been happening), we will send them a written warning that we are planning on closing," the moderators wrote.
Additionally, while Reddit makes some money from ad revenue and sponsored posts, it is not profitable. As Reddit attempts to generate revenue, the moderators are concerned it will become too commercialized, and paid content could become a more common revenue source.
"They are concerned that the approach taken might not be to their liking," Chiagouris said. "However, if Reddit doesn't find a way to monetize itself soon, it will be a non-issue as Reddit will cease to exist."
To stay alive, Chiagouris said, it will have to accept a financial infusion from a large tech entity that can find synergy between what it does and what Reddit does.
"Think Apple or Amazon or even Google," he said.
Sign up for CIO Asia eNewsletters.