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Enjoying the article, but feel the "Economies of scale" section makes an incorrect comparison between a Spotify business model to a theoretical business using O
by yeck 4y ago
Enjoying the article, but feel the "Economies of scale" section makes an incorrect comparison between a Spotify business model to a theoretical business using OpenAI's API. The author suggests that since Spotify pays royalties per song played, getting more users doesn't mean more money for them and then claims a business using GPT-3 would have a similar limitation.
There are a couple things I think is wrong with this. First, depending on the sort of users acquired by Spotify it does directly translate to more earnings. What doesn't scale well for Spotify seems to be how active the subscription-paying users are. To which I mean that a user who listens to 50 songs a day will cost more than a user only listening to 10 since the subscription price is static and common across users despite usage.
That last point is where the author gets the next thing wrong: assuming that services employing GPT-3 will be fixed subscriptions instead of a pay-as-you-go model (like AWS). I am sure there will be business using fixed sub prices that are independent of usage, but we shouldn't assume that there is anything about GPT-3 that makes that more likely or even very different from other cases where fixed subs are used. There will always be some costs per user, be it the raw cost of electricity or cloud infrastructure. GPT-3's API would just be one more cost per request to consider.