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They are subsidizing the non-API use cases and overcharging on the API use cases.
by fluoridation 2mo ago
They are subsidizing the non-API use cases and overcharging on the API use cases.
- senordevnyc 2mo agoNo, almost everyone has been in agreement that they’re subsidizing subscriptions, but there have literally been dozens (hundreds?) of threads on HN in the past 12 months with people vehemently arguing that API prices are subsidized.
- jmuguy 2mo agoI think both can be true - they're losing money on the API and they're still charging too much. Which is really where the music stops for American AI investment. I also use K3 now and its perfectly capable for the development work I'm doing. I don't shed any tears for OpenAI or Anthropic.
- platinumrad 2mo agoAPI are not subsidized. We know this is true from the existence of independent inference providers (a lot of which are crypto companies that would otherwise just be mining if inference weren't actually profitable).
- jurgenburgen 2mo agoThose providers are VC-funded, they don’t have the leeway to pivot away from AI. I would be interested in some examples though.
- platinumrad 2mo agoI don't think the rando providers like Novita, Phala, AkashML, etc., which frequently provide discounts to compete for traffic, are VC-funded. They have to actually make money to stay afloat.
- Barbing 2mo agoAny public company providing inference who’s claimed its profitability in a way they risk legal penalties if untrue? (Makes sense to me, just curious about this additional piece.)
- lucassz 2mo agoCertainly not everyone. I find it far more likely that both subscriptions and API pricing are profitable in their own right. The fact that some people get great value out of their subscription (just like some people get great value out of their car insurance) doesn't mean it's subsidized.
- senordevnyc 2mo agoThat’s a fair distinction. I think they are willing to subsidize individual subscriptions for people who maximize usage, but their overall subscription business may be profitable.
- disgruntledphd2 2mo agoAnthropic are definitely profitable on my 20 eur subscription, as I have kids and no time.
- Der_Einzige 2mo agoAnd every one of them is wrong.
- deleted 2mo ago[deleted]
- pimeys 2mo agoIt's interesting if they need to cut off their subscriptions to be able to compete in API prices. Very interesting...
- edg5000 2mo agoI'm not happy about it, but API prices seem actually reasonable if you compare it to free-market pure inference providers. They need to buy the same power, same hardware as the big labs without needing any R&D. This means that the coding plans must be subsidized. I'm not happy about that, because it means we'll be paying more, until hardware and maybe power drops in price, which, if we look at e.g. the housing market, may never happen during my lifetime.
- eru 2mo agoI'm not actually sure anymore they are overcharging on the API use cases, because there's so much competition.