I havenât done the sums myself, but do we know for sure that they canât make money without being all that useful, so long as a lot of people interact with them everyday?
Is Facebook âusefulâ? Not THAT much. Do people pay for it? No, itâs free. Instagram is even less useful than Facebook which at least used to actually be good for organizing parties and pub nights. Does META make money? Yes. Does equally useless TikTok make money? I presume so, yes. I think tech companies are pretty expert in monetizing things that have no user fee, and arenât that helpful at work. Thereâs already a massive user base for Chat-GPT etc. Maybe they can monetize it even without it being THAT useful. Or maybe the sums just donât work out for that, Iâm not sure. But clearly the market thinks they will make money in expectation. Thatâs a boring reason for rejecting âitâs a bubbleâ claims and bubbles do happen, but beating the market in pricing shares genuinely is quite difficult I suspect.
Of course, there could also be a bubble even if SOME AI companies make a lot of money. Thatâs what happened with the Dot.com bubble.
This is an important point to consider. OpenAI is indeed exploring how to put ads on ChatGPT.
My main source of skepticism about this is that the marginal revenue from an online ad is extremely low, but thatâs fine because the marginal cost of serving a webpage or loading a photo in an app or whatever is also extremely low. I donât have a good sense of the actual numbers here, but since a GPT-5 query is considerably more expensive than serving a webpage, this could be a problem. (Also, thatâs just the marginal cost. OpenAI, like other companies, also has to amortize all its fixed costs over all its sales, whether theyâre ad sales or sales directly to consumers.)
Itâs been rumoured/âreported (not sure which) that OpenAI is planning to get ChatGPT to sell things to you directly. So, if you ask, âHey, ChatGPT, what is the healthiest type of soda?â, it will respond, âWhy, a nice refreshing CocaâColaÂŽ Zero Sugar of course!â This seems horrible. That would probably drive some people off the platform, but, who knows, it might be a net financial gain.
There are other âuselessâ ways companies like OpenAI could try to drive usage and try to monetize either via ads or paid subscriptions. Maybe if OpenAI leaned heavily into the whole AI âboyfriends/âgirlfriendsâ thing that would somehow pay off â Iâm skeptical, but weâve got to consider all the possibilities here.
I havenât done the sums myself, but do we know for sure that they canât make money without being all that useful, so long as a lot of people interact with them everyday?
Is Facebook âusefulâ? Not THAT much. Do people pay for it? No, itâs free. Instagram is even less useful than Facebook which at least used to actually be good for organizing parties and pub nights. Does META make money? Yes. Does equally useless TikTok make money? I presume so, yes. I think tech companies are pretty expert in monetizing things that have no user fee, and arenât that helpful at work. Thereâs already a massive user base for Chat-GPT etc. Maybe they can monetize it even without it being THAT useful. Or maybe the sums just donât work out for that, Iâm not sure. But clearly the market thinks they will make money in expectation. Thatâs a boring reason for rejecting âitâs a bubbleâ claims and bubbles do happen, but beating the market in pricing shares genuinely is quite difficult I suspect.
Of course, there could also be a bubble even if SOME AI companies make a lot of money. Thatâs what happened with the Dot.com bubble.
This is an important point to consider. OpenAI is indeed exploring how to put ads on ChatGPT.
My main source of skepticism about this is that the marginal revenue from an online ad is extremely low, but thatâs fine because the marginal cost of serving a webpage or loading a photo in an app or whatever is also extremely low. I donât have a good sense of the actual numbers here, but since a GPT-5 query is considerably more expensive than serving a webpage, this could be a problem. (Also, thatâs just the marginal cost. OpenAI, like other companies, also has to amortize all its fixed costs over all its sales, whether theyâre ad sales or sales directly to consumers.)
Itâs been rumoured/âreported (not sure which) that OpenAI is planning to get ChatGPT to sell things to you directly. So, if you ask, âHey, ChatGPT, what is the healthiest type of soda?â, it will respond, âWhy, a nice refreshing CocaâColaÂŽ Zero Sugar of course!â This seems horrible. That would probably drive some people off the platform, but, who knows, it might be a net financial gain.
There are other âuselessâ ways companies like OpenAI could try to drive usage and try to monetize either via ads or paid subscriptions. Maybe if OpenAI leaned heavily into the whole AI âboyfriends/âgirlfriendsâ thing that would somehow pay off â Iâm skeptical, but weâve got to consider all the possibilities here.