ugjkaAI Bubble: Nobody will pay for unsubsidised AI | Ed Zitron
NaibofTabrCory Doctorow made a very specific point about this on This Week in Tech 1074, in the context of comparing the growth of the Internet with the current AI market:
The web lost money for a long time. And it’s true, they did, but they had good unit economics, right? Every user of the web made the web less unprofitable. Every use of the web made the web less unprofitable. And every generation of the web made the web more profitable. Contrast this with AI, where every time they sign up a user, they lose more money. Every time the user uses their account, they lose even more money.
And every generation of AI accelerates the rate at which they are losing money.
I think it sums up how unsustainable this is very nicely.
paraphrand“But the cost per token keeps going down!” The AI proponents scream.
Why are they wrong?
The cost is not actually going down. The price is going down, because these companies are need new revenue and new customers and new waves of hype to prop up their failing business model. The cost is at best staying level if you want to be very selective and generous, and is inevitably going up. And it’s going to go up much, much faster in the near future.
Sure, Nvidia may put out some newer chips that are technically somewhat more efficient from time to time, but the old cards are still running, they’ve already been purchased and they still have to pay for themselves, and there is no evidence they have (or ever will) and the new ones are even more expensive than that, and they’ll have to pay for themselves too. And at the same time energy is getting more expensive, training costs are getting more expensive, and demand on both sides is increasing which is only going to push those costs even higher.
There is zero possibility any of this makes economic sense. The entire economic output of the world decided to jump on the FOMO bandwagon, that doesn’t mean the wagon is actually going anywhere.