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A lot of people are betting their money on infinite growth forever of AI performance, compute usage, user base, subscription price. I think cost will decrease

A lot of people are betting their money on infinite growth forever of AI performance, compute usage, user base, subscription price. I think cost will decrease forever.

bilater 21d ago
Cost will keep dropping, but the frontier will keep getting pushed. The whole "give me today's model 10x cheaper and I'm good" line is a fallacy. It isn't true now and it never will be for the top 1% of tasks, which will create the most economic gains.
- adam_arthur 21d ago
  There are an enormous number of tasks that can get by on good enough. If you need image recognition, and a 30B model saturates the use case with 100% accuracy, you absolutely wouldn't continue to use the next frontier model as they come out. And I'd argue most economically meaningful tasks will be saturated by cheaper models than those requiring frontier. Think about what today's models can do with pretty close to 100% accuracy, and then consider that they will be orders of magnitudes cheaper over the years. 5.6 Sol can already obviate tons of labor, and why would you pay 2x or more for no meaningful gain? The relative gap between frontier and non frontier also continues to shrink, so it's not like you take a meaningful performance loss by rewinding to models from 3-6 months ago. And soon that gap will expand to 12-24 months. I get the impression the majority of people on here only think about coding, which net net will be a tiny volume of overall AI use in the end.
  - bilater 21d ago
    That can all be true but the frontier models will still have a huge market. You're thinking of all tasks as a fixed pie. The top 1% of intelligence opens up a whole new pie, stuff nobody does today because it's too expensive: daily cancer scans instead of one every few years, asteroid mining missions that need ten thousand PhD-hours of planning, custom drugs designed for your specific tumor, a personal lawyer and doctor for every person on earth, auditing every line of code in every bank and hospital continuously and so on.
    - michaellee8 21d ago
      yea you see no body are vibecoding games before opus 5 and astra, after they are released games basically got commoditized
      - adam_arthur 21d ago
        If the output is commoditized, how much can you afford to pay for the input?
      - sampullman 21d ago
        Is this sarcasm? I assume most studios are integrating AI into their workflows, but I still haven't seen a single vibecoded game that looks interesting.
      - chasd00 21d ago
        I was yelled at repeatedly here that AI is not used in gaming.
    - adam_arthur 21d ago
      Yes, agree that token consumption will increase exponentially for the next while. Disagree that the frontier model is where the economic gains will be realized. The smaller the relative gap between frontier and non-frontier/open weights, the less pricing power. This gap has shown only to shrink over time, not expand. Businesses will pay more for frontier, but not meaningfully more to justify the economics. It's always going to be a low margin business, perhaps outside of cyber security, warfare/intelligence and perhaps drug discovery. Though the expensive and time consuming part of drugs is doing the trials and getting approval, not coming up with ideas
      - bilater 21d ago
        how much would you pay for a prompt that could cure cancer? if you're a pharma company you would pay millions to get there days faster than your competitor. as intelligence rises the marginal value it can deliver rises with it.
- saulpw 21d ago
  I think there's an intelligence limit, or at least asymptote. It may be above human intelligence, but I don't think it's miles above it (at least not the kind of intelligence humans can create, recognize, or use). For example in Go, most estimates place God or "perfect play" three ranks above top professionals[0]. In the latest human-AI Go match, the human got a 2 stone handicap. So it's not like we have a lot more frontier to push there. [0]https://senseis.xmp.net/?HandOfGod https://senseis.xmp.net/?HandOfGod
  - bilater 21d ago
    this assumes our whole universe and what we can do in it is a finite go board. maybe it is. but we are no where close to exploring even a fraction of it. lots of things need to happen before any limit is reached. the cavemen would also probably think we saturated tools once they saw bows and arrows.
  - pixl97 21d ago
    Intelligence is spiky. In some things humans may play near the limit (Go possibly), but if you look at parts of mathematics like addition, humans can add in their head just fine but its a few trillion times faster to use a computer on addition problems of any size. And that's not even really touching societal/network intelligence. A single human isn't that smart and can't accomplish that much. Hence we form families, and companies, and societies, and governments. What does a society of AIs look like?
    - saulpw 21d ago
      Note that addition that's "trillion times faster" is purely an optimization, not greater intelligence. And a society of humans does not increase our overall intelligence. It allows all of humanity to access the accomplishments of our most intelligent members throughout history (which is huge, don't get me wrong!) but it seems almost self-evident that our civilization as a whole is not smarter than Newton/Einstein/von Neumann/etc.
      - pixl97 21d ago
- czhu12 21d ago
  its already true today according to openrouter usage stats. https://openrouter.ai/rankings https://openrouter.ai/rankings Most people just use cheaper open weight
  - kennywinker 21d ago
    Intuitively I agree with you, but you've cited evidence that doesn't actually prove what you said. Yes, openrouter users choose cheaper open weights. If you're on openrouter, you're already shopping around. We'd need stats for claude, codex, gemini, grok (yuck), AND openrouter, to determine what people in general (not just the subset of people who decided to shop around) are actually doing.
    - czhu12 21d ago
      "Almost nobody is using fable 5" at anthropic apparently https://analyticsindiamag.com/ai-features/almost-nobody-is-using-anthropics-fable-5 https://analyticsindiamag.com/ai-features/almost-nobody-is-u...
- OtherShrezzing 21d ago
  > It isn't true now and it never will be for the top 1% of tasks, which will create the most economic gains Vulcan Materials Company has produced some of the strongest and most resilient economic gains for investors at around 25% gross margins for 50 years. Vulcan’s business is crushing rocks, and then driving those rocks to where people need crushed rocks. I mention it because Vulcan isn’t a sophisticated business at its core, but its economic returns are exceptional, because they do their unsophisticated work exceptionally well, and exceptionally efficiently. Across the economy, most economic gains are created by companies like Vulcan, who do boring repetitive work exceptionally well and efficiently. I expect this to hold true into the era of AI. Most stuff probably doesn’t need an exceptional model, and paying for an exceptional model to do unsophisticated work will leave your business vulnerable to competitors who take time to find the most efficient model for the task, and undercut you.
  - yowlingcat 21d ago
    I just wonder whether the analogy holds from atom based businesses to byte based businesses. At the end of the day, there are pretty hard constraints on how much a competitor could undercut Vulcan - they'd need to be better a) crushing rocks and b) driving those rocks to where people need it. Something about that, while simple, seems really nonfungible to do well. The business may traffic in commodities, but the service and quality it provides ironically seems to be not really a commodity. Conversely, AI models feel pretty different. People will swap models at the drop of a hat and while not perhaps fully fungible, the cost of switching can be as low as one engineers it to be. In this case, the service does really seem to feel more like a commodity. Not sure where this leads or how this ends. Perhaps those two will swap poles for me (IE as robotic automation improves, there are more commoditized Vulcans, and as metered intelligence improves, they become less fungible). I just can't quite see how yet. Just food for thought.
blake__dev 21d ago
I agree, but I also think as AI gets better we're going to see Jevons paradox in full swing, which might delay lower costs. We've seen this with Astra according to Tibo: https://x.com/thsottiaux/status/2097559315150426222 https://x.com/thsottiaux/status/2097559315150426222

A lot of people are betting their money on infinite growth forever of AI performance, compute usage, user base, subscription price. I think cost will decrease forever.

bilater 21d ago

Cost will keep dropping, but the frontier will keep getting pushed. The whole "give me today's model 10x cheaper and I'm good" line is a fallacy. It isn't true now and it never will be for the top 1% of tasks, which will create the most economic gains.

adam_arthur 21d ago
There are an enormous number of tasks that can get by on good enough. If you need image recognition, and a 30B model saturates the use case with 100% accuracy, you absolutely wouldn't continue to use the next frontier model as they come out. And I'd argue most economically meaningful tasks will be saturated by cheaper models than those requiring frontier. Think about what today's models can do with pretty close to 100% accuracy, and then consider that they will be orders of magnitudes cheaper over the years. 5.6 Sol can already obviate tons of labor, and why would you pay 2x or more for no meaningful gain? The relative gap between frontier and non frontier also continues to shrink, so it's not like you take a meaningful performance loss by rewinding to models from 3-6 months ago. And soon that gap will expand to 12-24 months. I get the impression the majority of people on here only think about coding, which net net will be a tiny volume of overall AI use in the end.
- bilater 21d ago
  That can all be true but the frontier models will still have a huge market. You're thinking of all tasks as a fixed pie. The top 1% of intelligence opens up a whole new pie, stuff nobody does today because it's too expensive: daily cancer scans instead of one every few years, asteroid mining missions that need ten thousand PhD-hours of planning, custom drugs designed for your specific tumor, a personal lawyer and doctor for every person on earth, auditing every line of code in every bank and hospital continuously and so on.
  - michaellee8 21d ago
    yea you see no body are vibecoding games before opus 5 and astra, after they are released games basically got commoditized
    - adam_arthur 21d ago
      If the output is commoditized, how much can you afford to pay for the input?
    - sampullman 21d ago
      Is this sarcasm? I assume most studios are integrating AI into their workflows, but I still haven't seen a single vibecoded game that looks interesting.
    - chasd00 21d ago
      I was yelled at repeatedly here that AI is not used in gaming.
  - adam_arthur 21d ago
    Yes, agree that token consumption will increase exponentially for the next while. Disagree that the frontier model is where the economic gains will be realized. The smaller the relative gap between frontier and non-frontier/open weights, the less pricing power. This gap has shown only to shrink over time, not expand. Businesses will pay more for frontier, but not meaningfully more to justify the economics. It's always going to be a low margin business, perhaps outside of cyber security, warfare/intelligence and perhaps drug discovery. Though the expensive and time consuming part of drugs is doing the trials and getting approval, not coming up with ideas
    - bilater 21d ago
      how much would you pay for a prompt that could cure cancer? if you're a pharma company you would pay millions to get there days faster than your competitor. as intelligence rises the marginal value it can deliver rises with it.
saulpw 21d ago
I think there's an intelligence limit, or at least asymptote. It may be above human intelligence, but I don't think it's miles above it (at least not the kind of intelligence humans can create, recognize, or use). For example in Go, most estimates place God or "perfect play" three ranks above top professionals[0]. In the latest human-AI Go match, the human got a 2 stone handicap. So it's not like we have a lot more frontier to push there. [0]https://senseis.xmp.net/?HandOfGod https://senseis.xmp.net/?HandOfGod
- bilater 21d ago
  this assumes our whole universe and what we can do in it is a finite go board. maybe it is. but we are no where close to exploring even a fraction of it. lots of things need to happen before any limit is reached. the cavemen would also probably think we saturated tools once they saw bows and arrows.
- pixl97 21d ago
  Intelligence is spiky. In some things humans may play near the limit (Go possibly), but if you look at parts of mathematics like addition, humans can add in their head just fine but its a few trillion times faster to use a computer on addition problems of any size. And that's not even really touching societal/network intelligence. A single human isn't that smart and can't accomplish that much. Hence we form families, and companies, and societies, and governments. What does a society of AIs look like?
  - saulpw 21d ago
    Note that addition that's "trillion times faster" is purely an optimization, not greater intelligence. And a society of humans does not increase our overall intelligence. It allows all of humanity to access the accomplishments of our most intelligent members throughout history (which is huge, don't get me wrong!) but it seems almost self-evident that our civilization as a whole is not smarter than Newton/Einstein/von Neumann/etc.
    - pixl97 21d ago
czhu12 21d ago
its already true today according to openrouter usage stats. https://openrouter.ai/rankings https://openrouter.ai/rankings Most people just use cheaper open weight
- kennywinker 21d ago
  Intuitively I agree with you, but you've cited evidence that doesn't actually prove what you said. Yes, openrouter users choose cheaper open weights. If you're on openrouter, you're already shopping around. We'd need stats for claude, codex, gemini, grok (yuck), AND openrouter, to determine what people in general (not just the subset of people who decided to shop around) are actually doing.
  - czhu12 21d ago
    "Almost nobody is using fable 5" at anthropic apparently https://analyticsindiamag.com/ai-features/almost-nobody-is-using-anthropics-fable-5 https://analyticsindiamag.com/ai-features/almost-nobody-is-u...
OtherShrezzing 21d ago
> It isn't true now and it never will be for the top 1% of tasks, which will create the most economic gains Vulcan Materials Company has produced some of the strongest and most resilient economic gains for investors at around 25% gross margins for 50 years. Vulcan’s business is crushing rocks, and then driving those rocks to where people need crushed rocks. I mention it because Vulcan isn’t a sophisticated business at its core, but its economic returns are exceptional, because they do their unsophisticated work exceptionally well, and exceptionally efficiently. Across the economy, most economic gains are created by companies like Vulcan, who do boring repetitive work exceptionally well and efficiently. I expect this to hold true into the era of AI. Most stuff probably doesn’t need an exceptional model, and paying for an exceptional model to do unsophisticated work will leave your business vulnerable to competitors who take time to find the most efficient model for the task, and undercut you.
- yowlingcat 21d ago
  I just wonder whether the analogy holds from atom based businesses to byte based businesses. At the end of the day, there are pretty hard constraints on how much a competitor could undercut Vulcan - they'd need to be better a) crushing rocks and b) driving those rocks to where people need it. Something about that, while simple, seems really nonfungible to do well. The business may traffic in commodities, but the service and quality it provides ironically seems to be not really a commodity. Conversely, AI models feel pretty different. People will swap models at the drop of a hat and while not perhaps fully fungible, the cost of switching can be as low as one engineers it to be. In this case, the service does really seem to feel more like a commodity. Not sure where this leads or how this ends. Perhaps those two will swap poles for me (IE as robotic automation improves, there are more commoditized Vulcans, and as metered intelligence improves, they become less fungible). I just can't quite see how yet. Just food for thought.

blake__dev 21d ago

I agree, but I also think as AI gets better we're going to see Jevons paradox in full swing, which might delay lower costs. We've seen this with Astra according to Tibo: https://x.com/thsottiaux/status/2097559315150426222 https://x.com/thsottiaux/status/2097559315150426222