> Except that there was no investment to make Reddit more profitable. Arstechnica, Wired and Reddit are all owned by CN, not only does Ars and Wired have more employees

Ars has 9 employees, and a number of contract/freelance workers, including myself. That's not exactly a huge company. There were layoffs last year where the number of full-time staff was cut by ~half.

Anything done by Ars to be more profitable has come from within Ars itself, and the staffing to make it happen has come out of Ars's budget, not from the parent company's.

>specifically hired to bring in advertising and do market research

I don't know where your information is from, but it's wrong. Ars uses CN staff, as part of its business department. Presumably the same people that do reddit and the other Wired Digital properties. Each segment has its own budget that it must stay within. During rough times (last year, for example), the budgets may be cut, but often what revenue does come in doesn't cover costs. These cyclical fluctuations are painful, but expected in markets where advertising is the primary source of revenue. In this respect, the parent company floats the properties for a short time.

It's when the phenomenon is consistent -- as in reddit's case -- that this becomes a problem.

>Reddit traffic blows both Wired and Ars traffic out of the door, in every sense of the word. How much traffic per month specifically does Reddit get? Here is a snapshot from one of Reddit employees: http://i.imgur.com/mirir.jpg

That's less significant than you think. reddit's audience is diverse because it covers so many things. Not all pageviews are created equal. MySpace is the obvious posterchild for this phenomenon. There were rumors before the financial crisis that you could buy 1000 pageviews on MySpace for a penny. I don't know if that's true or not, but certainly Ars commands far more value per 1000 pageviews than that. Pre-acquisition, they did their advertising through Federated Media, and here's a screenshot of what ads cost at that time:

http://rianjs.net/media/2008/ars-federated-media.png

Because reddit doesn't really have a niche -- unlike Wired or Ars -- their audience is less desirable. Look at the stats about readership in that screenshot. That's the most desirable niche for advertising, and commands the highest CPM rates. I would be very surprised if reddit's audience was anything like that, given the fairly emo nature of many of their subsections. reddit is more like Facebook in its approach to advertising. I suspect it's harder for them, though, because the drill-down tools for targeting are more crude because Facebook is far more structured that the "Wild West" nature of reddit.

> They always had Subscription, but only recently they started to heavily promote their subscription model, presumably because they can't get enough money.

That's not correct, either. Ars was started in 1998, and the subscription model started in ~2002 and was a voluntary donation model that got users the "et Benefactor" title, and not much else. This wasn't enough after the initial bolus of donation money was spent down, and several of the forums went subscription-only. (The off-topic forums.) Later on, other things were added to make it more appealing to front-page readers that never make it to the discussion forums. An ad-free version of the site didn't exist until the most recent major revision to subscriber benefits.

> If you actually took the time to read the reddit blog post and the subsequent discussion on that subject you would have known that the whole purpose of that blog post was to generate conversation within the reddit community to see what they would more convenient with, which include discussions about having recurring paying model for customized option (including custom reddit email and other features). The whole idea was to generate conversation and see how many people are willing to pay if they try to go for a subscription model.

I skimmed it, but after I wrote my first reply. In a case like reddit, it's probably going to take a few iterations to come up with a sustainable business model. reddit is fundamentally different from a site like Ars or wired. It doesn't publish its own content, and its audience is diverse. It also eats up far more physical resources, thanks to its larger scale and dynamic nature.