"But I kind of think of ads as like a last resort for us for a business model. I would do it if it meant that was the only way to get everybody in the world access to great services. But if we can find something that doesn't do that, I'd prefer that."
What I think is really incredible about this is that they are selling a ton of subscriptions, both personal and business subscriptions. So the fact that they are doing advertising on top of this suggests to me that they are in a deep deep hole, much deeper than he probably would have imagined when making this statement. If your revenue is 25 billion and you still need ads, your costs must be running you down at a pace you really didn't anticipate.
It isn't. They had a one-month period around February that, if every month ran like taht, would constitute a yearly revenue of 25 billion. The fact that they appear to not have published a new annualized revenue number since then suggests that the trend is not upwards, which would make sense with the growing number of companies that are asking questions about ROI on AI expenses and cutting their token spend.
Even if they were the most profitable company on earth, I wouldn't be surprised if they still ran ads. Making money isn't enough, you always have to make more money.
I think a lot of people are missing the fact that this is for the free tier, not their subscriptions.
OpenAI has an unbelievable number of free users. People paying $20 a month or more are in the minority.
It’s not cheap to serve LLMs to hundreds of millions of users for free. They either cut the free tier or add ads to cover the costs.
Extrapolations about OpenAI being in dire financial straights are generally coming from people who don’t understand the extreme scale of their free plan or who didn’t read far enough to understand that the ads aren’t going into the $20 plan everyone knows.
> But if we can find something that doesn't do that, I'd prefer that.
There's nothing plausible that can do that, and he knew that, and was basically just saying "we're going to put ads on it" in a way that challenges you to explain what a better option would be.
Yes, the quote was "Ads plus AI is sort of uniquely unsettling to me. I kind of think of ads as a last resort for us for a business model." (Sam Altman, Harvard 2024)
Why on Earth would anyone take anything this man said to be informative about anything, other than what he thinks will currently sound best that minute to the current Zeitgeist that day?
You misunderstand. They are going to force everybody to pay $5, then force everybody to use chatgpt. 8 billion times 5 isn't much money, but the advertisers will surely pay a lot for that many captive eyeballs!
At this point why forcing people to use the service, if you can forcefully extract these eyeballs and then sell them directly to advertisers in large enough jars?
My jurisdiction just legalized sports betting (or something similar, I don't care all that much about what specifically got legalized), and there's been an immediate explosion in gambling ads across various media formats.
A very common refrain is "these ads are terrible, but I refuse to consider paying for any ad-free subscriptions."
They are simply spending more money than they are making, burning cash like crazy and they got investments to try and prop up their chest, but this tells me they are desperate
In case anyone is out-of-the-loop
https://youtu.be/FVRHTWWEIz4?si=btZnQp0IEnmgrtWV&t=2388
"But I kind of think of ads as like a last resort for us for a business model. I would do it if it meant that was the only way to get everybody in the world access to great services. But if we can find something that doesn't do that, I'd prefer that."
What I think is really incredible about this is that they are selling a ton of subscriptions, both personal and business subscriptions. So the fact that they are doing advertising on top of this suggests to me that they are in a deep deep hole, much deeper than he probably would have imagined when making this statement. If your revenue is 25 billion and you still need ads, your costs must be running you down at a pace you really didn't anticipate.
> If your revenue is 25 billion
It isn't. They had a one-month period around February that, if every month ran like taht, would constitute a yearly revenue of 25 billion. The fact that they appear to not have published a new annualized revenue number since then suggests that the trend is not upwards, which would make sense with the growing number of companies that are asking questions about ROI on AI expenses and cutting their token spend.
I think there are rules about public disclosures in a run up to an IPO. They may not be able to publish updates until the official IPO process begins.
Even if they were the most profitable company on earth, I wouldn't be surprised if they still ran ads. Making money isn't enough, you always have to make more money.
I think a lot of people are missing the fact that this is for the free tier, not their subscriptions.
OpenAI has an unbelievable number of free users. People paying $20 a month or more are in the minority.
It’s not cheap to serve LLMs to hundreds of millions of users for free. They either cut the free tier or add ads to cover the costs.
Extrapolations about OpenAI being in dire financial straights are generally coming from people who don’t understand the extreme scale of their free plan or who didn’t read far enough to understand that the ads aren’t going into the $20 plan everyone knows.
Or they ran the numbers and saw that they'll make more money with ads than without. I doubt they care about anything but the bottom line.
> But if we can find something that doesn't do that, I'd prefer that.
There's nothing plausible that can do that, and he knew that, and was basically just saying "we're going to put ads on it" in a way that challenges you to explain what a better option would be.
You're giving Sam too much credit. I think he had no idea that competition would catch up so fast and they got caught with their pants down.
Yes, the quote was "Ads plus AI is sort of uniquely unsettling to me. I kind of think of ads as a last resort for us for a business model." (Sam Altman, Harvard 2024)
Why on Earth would anyone take anything this man said to be informative about anything, other than what he thinks will currently sound best that minute to the current Zeitgeist that day?
Just because he's a professional bullshitter doesn't mean he shouldn't be called out every time he waffles.
Safely aligning a powerful CEO is difficult.
He's already proven repeatedly that he'll break out of containment
Yep. Their other ventures fell through and don't exist anymore.
Ah, gotcha. Wasn't sure if I was misremembering. I am no longer confused.
I though openAI has plenty of investors/users?
Are they really that much in debt/trouble?
The difference between investors/users and new-investors/paying-users is so large and wide that I could both walk AND roll around on it.
What if they just forced everyone to pay $5 to use chatgpt? No free tier
(I have no MBA)
then every casual user would switch instantly to Gemini, or the most convenient alternative
You misunderstand. They are going to force everybody to pay $5, then force everybody to use chatgpt. 8 billion times 5 isn't much money, but the advertisers will surely pay a lot for that many captive eyeballs!
(I have no MBA either)
At this point why forcing people to use the service, if you can forcefully extract these eyeballs and then sell them directly to advertisers in large enough jars?
My jurisdiction just legalized sports betting (or something similar, I don't care all that much about what specifically got legalized), and there's been an immediate explosion in gambling ads across various media formats.
A very common refrain is "these ads are terrible, but I refuse to consider paying for any ad-free subscriptions."
This kills their sales funnel.
Most of OpenAI‘s users are using the free tier, and have little incentive to change that.
They lose billions a month
they raised a ton of money but they spend it almost as fast as they can raise it. in any case they need real revenue if they want to ipo
Each user costs them money
the investors want their money to make more money
They are simply spending more money than they are making, burning cash like crazy and they got investments to try and prop up their chest, but this tells me they are desperate
Right - one would assume that if they're on the verge of an ASI that will consume the entire economy, advertising is only a distraction.
Didn't they do sort of a 270-degree turn on this when they abandoned erotica chatbots?
If you believe literally anything Sam Altman says, you are a fool.
Altman lies.
I don't think they are weighing things that way anymore, so much leadership has departed
Advertising is every site's last resort - but it's the only damn thing that pays the bills
Except this time, the bills are little bit higher!
Totally not a bubble right.
Right?