There’s no business in tokens. Zero. The only business is selling compute and Anthropic rented all its compute.
Structurally they’re in a terrible position on what’s unfolding now with the completely collapse of model valuations. With truly “open” models gaining more and more momentum models are basically worth nothing and “token” prices are collapsing to the cost of compute. That doesn’t leave anything on the table for the Anthropic and Open AI’s of the world.
but Opus 5.5 is the best product ever made in the history of the world (yes I'm serious). There's gotta be some consideration for that.
It has zero network effects and barely any economies of scale. It's a good product without a moat which will get replaced by any company with their own compute and cheaper energy.
I think the only way out for Anthropic is to buy a few neoclouds as they go under, but even then it's a coin flip as to if they survive the next 3 years.
Or they partially crash and get bought by Oracle. The Sun route
The market is a cold beast and doesn’t care. If things hit the fan it will happily take ownership Opus 5.5 in bankruptcy court and slit everything else out on the street.
If people paid a profitable price for Opus 5.5 it would not be the best product in the world and would not be slotted into so many things where it's benefiting from ubiquity. That circle needs squaring. There will be an Opus 5.5 that's a 10th of the price in a few months.
I personally don't really believe the meme that Anthropic and OpenAI are charging less than the marginal cost (cost of inference on requests). Open weight models have surpassed the abilities of their closed weight models when such claims started, and the inference costs on said open weights models are provably not so high.
Where they quite reasonably might be making a loss is their marginal costs + amortised fixed costs (training).
I predict that eventually the training expenditure is going to slow down. At that point, the large commercial providers are likely hoping they can keep inference demand up, and recoup their investment.
The driver for the training is an arms race between providers and open weights labs. But several dynamics could play out:
* Models will be seen as good enough, with only fine-tuning required, for most use cases, and demand for expensive training of foundation models drops off, stopping the arms race. * Most of the participants cannot raise capital due to lack of market confidence in them, and there is a 'winner takes all' dynamic with the remaining provider, who can then raise costs.
I personally think the first end game is more likely than the second.
You are absolutely entitled to call it a meme but that is also their own internal reporting/panicked emails. Subscriptions are offered at a large subsidy with the benefit of more training data and adoption.
> I predict that eventually the training expenditure is going to slow down. At that point, the large commercial providers are likely hoping they can keep inference demand up, and recoup their investment.
The big labs can't do this that's their edge over open models. The stickiness is critical for them to keep up. They might try again but it's going to finish badly.
openai has a billion users. Ads and they know it.
The math doesn’t math here. There isn’t enough spent on online ads to dig them out of this hole.
Is that potential source of revenue? Maybe but folks are verbally very negative on AI ads.
Is that a viable business plan for Open AI? No.
What’s with the low quality posts?
Google search ads are highly converting because they are camouflaged.
OpenAI ads are nothing of the sort!
Google search ads used to also convert highly because they were well-targeted and positioned at the point of consumption.
If I'm searching for red widgets, it's a fairly strong indicator I'm way more likely than the average to want to BUY red widgets, so a well-placed ad for redwidgets-cheap.com didn't feel hostile.
Now when it's "I am clearly searching for red widgets but you want to railroad me into blue doohickeys because they're paying more per click", you're one step above a Taboola chumbox.
Google search ads are just highly optimised over now 26 years. There's no reason that OpenAI won't do the same. How successful they are going to be is not clear though.
No clue how it's low effort to point out ads. It's not my fault you and everyone here lacks the product creativity to see the reality that they WILL be embedded in the answers and you will not be able to tell it's an ad. This will result in a literally the best ad system the world has ever seen. They simply need to wait a few years for the general pop to be reliant on them (which if you work with kids surprise they believe everything it says) and then slowly shift this over. They will be the most valuable company in the world bar none.
Do I think it's dystopian and shitty? Yes. Doesn't mean it ain't gonna happen and doesn't mean it's not the right move for the business.
> surprise they believe everything it says
It's not just kids in my observation.
The equivalent model for chatgpt would be randomly getting replies that are generated from a prompt injected with advertiser copy and indicated by a small "sponsored reply" in the corner.
Honestly, having written that out... I'm not sure that's an outcome that's generally avoidable.
Their ads aren’t converting like search ads, more like social
Even social is charitable..
Google, I hear, is very very good at Ads