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But they do? Paid subscriptions for Gemini, ChatGPT and Copilot are a thing. If Google throws in a free AI summary in their search it only helps promoting Gemi

But they do? Paid subscriptions for Gemini, ChatGPT and Copilot are a thing. If Google throws in a free AI summary in their search it only helps promoting Gemini in the long run.

ileonichwiesz 1y ago
Look up the numbers. OpenAI actually loses money on every paid subscription, and they’re burning through billions of dollars every year. Even if you convince a fraction of the users to pay for it, it’s still not a sustainable model.
- nicbou 1y ago
  Even if they were profitable, the investors would feel that it's not profitable enough. They won't stop at breaking even.
  - generic92034 1y ago
    And even if it was the highest profit branch of the company, they still would see a need to do anything possible to further increase profits. That is often where enshittification sets in. This currently is the sweet phase where growing and thus gaining attention and customers as well as locking in new established processes is dominant. Unless the technical AI development stays as fast as in the beginning, this is bound to change.
- lelanthran 1y ago
  I actually wondered about this myself, so I asked Gemini with a long back and forth conversation. The takeaway from Gemini is that subscriptions do lose money on some subscribers, but it is expected that not all subscribers use up their full quota each month. This is true even for non-AI subscriptions since the beginning of the subscription model (i.e. magazines, gamepass, etc). The other surprising (to me, anyway) takeaway is that the AI providers have some margin on each token for PAYG users, and that VC money is not necessary for them to continue providing the service. The VC money is capital expenditure into infrastructure for training. Make of it what you will, but it seems to me that if they stop training they don't need the investments anymore. Of course, that sacrifices future potential for profitability today, so who knows?
  - fl0id 1y ago
    That’s just a general explainer of subscription models. As of right now VC money is necessary for just existing. And they can never stop training or researching. They also constantly have to buy new gpus unless there’s at some point a plateau of ‘good enough’
    - vidarh 1y ago
      The race to continue training and researching, however, is drive by competition that will fall away if competitors also can't raise more money to subsidise it. At that point the market may consolidate and progress slow, but not all providers will disappear - there are enough good models that can be hosted and served profitably indefinitely.
      - sfmz 1y ago
        Seems like there can never be good enough models; the user will want it up-to-date models with respect to news and culture.
        vidarh 1y ago
        For some uses, sure. But for plenty of uses that can be provided in context, RAG, or via tool use, or doesn't matter. Even for the uses where it does matter, unless providers get squeezed down to zero margin, it's not that new models will never happen, but that the speed at which they can afford to produce large new models will slow.
  - malfist 1y ago
    Why do you think Gemini is the authority on the internal costs of AI providers and their profit margins?
    - lelanthran 1y ago
      > Why do you think Gemini is the authority on the internal costs of AI providers and their profit margins? Where did I say I think that?
seunosewa 1y ago
The mediocre AI summaries aren't promoting Gemini when you can't use them to start a chat on Gemini. They effectively ads and search results for no benefit.

But they do? Paid subscriptions for Gemini, ChatGPT and Copilot are a thing. If Google throws in a free AI summary in their search it only helps promoting Gemini in the long run.

ileonichwiesz 1y ago

Look up the numbers. OpenAI actually loses money on every paid subscription, and they’re burning through billions of dollars every year. Even if you convince a fraction of the users to pay for it, it’s still not a sustainable model.

nicbou 1y ago
Even if they were profitable, the investors would feel that it's not profitable enough. They won't stop at breaking even.
- generic92034 1y ago
  And even if it was the highest profit branch of the company, they still would see a need to do anything possible to further increase profits. That is often where enshittification sets in. This currently is the sweet phase where growing and thus gaining attention and customers as well as locking in new established processes is dominant. Unless the technical AI development stays as fast as in the beginning, this is bound to change.
lelanthran 1y ago
I actually wondered about this myself, so I asked Gemini with a long back and forth conversation. The takeaway from Gemini is that subscriptions do lose money on some subscribers, but it is expected that not all subscribers use up their full quota each month. This is true even for non-AI subscriptions since the beginning of the subscription model (i.e. magazines, gamepass, etc). The other surprising (to me, anyway) takeaway is that the AI providers have some margin on each token for PAYG users, and that VC money is not necessary for them to continue providing the service. The VC money is capital expenditure into infrastructure for training. Make of it what you will, but it seems to me that if they stop training they don't need the investments anymore. Of course, that sacrifices future potential for profitability today, so who knows?
- fl0id 1y ago
  That’s just a general explainer of subscription models. As of right now VC money is necessary for just existing. And they can never stop training or researching. They also constantly have to buy new gpus unless there’s at some point a plateau of ‘good enough’
  - vidarh 1y ago
    The race to continue training and researching, however, is drive by competition that will fall away if competitors also can't raise more money to subsidise it. At that point the market may consolidate and progress slow, but not all providers will disappear - there are enough good models that can be hosted and served profitably indefinitely.
    - sfmz 1y ago
      Seems like there can never be good enough models; the user will want it up-to-date models with respect to news and culture.
      - vidarh 1y ago
        For some uses, sure. But for plenty of uses that can be provided in context, RAG, or via tool use, or doesn't matter. Even for the uses where it does matter, unless providers get squeezed down to zero margin, it's not that new models will never happen, but that the speed at which they can afford to produce large new models will slow.
- malfist 1y ago
  Why do you think Gemini is the authority on the internal costs of AI providers and their profit margins?
  - lelanthran 1y ago
    > Why do you think Gemini is the authority on the internal costs of AI providers and their profit margins? Where did I say I think that?

seunosewa 1y ago

The mediocre AI summaries aren't promoting Gemini when you can't use them to start a chat on Gemini. They effectively ads and search results for no benefit.