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Inference costs scale linearly with usage. R&D expenses do not. That's not to mention that Dario Amodei has said that their models actually have a good return,

Inference costs scale linearly with usage. R&D expenses do not. That's not to mention that Dario Amodei has said that their models actually have a good return, even when accounting for training costs [0]. [0] https://youtu.be/GcqQ1ebBqkc?si=Vs2R4taIhj3uwIyj&t=1088 https://youtu.be/GcqQ1ebBqkc?si=Vs2R4taIhj3uwIyj&t=1088

Eisenstein 9mo ago
> Inference costs scale linearly with usage. R&D expenses do not. Do we know this is true for AI?
- sothatsit 9mo ago
  Yes. R&D is guaranteed to fall as a percentage of costs eventually. The only question is when, and there is also a question of who is still solvent when that time comes. It is competition and an innovation race that keeps it so high, and it won't stay so high forever. Either rising revenues or falling competition will bring R&D costs down as a percentage of revenue at some point.
  - saagarjha 9mo ago
    Yes, but eventually may be longer than the market can hold out. So far R&D expenses have skyrocketed and it does not look like that will be changing anytime soon.
    - sothatsit 9mo ago
      That's why it is a bet, and not a sure thing.
- brookst 9mo ago
  It’s pretty much the definition of fixed costs versus variable costs. You spend the same amount on R&D whether you have one hobbyist user or 90% market share.