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.
Why are they losing money for every user? Because it’s free? If so, isn’t that how the web operated for its free websites and at slme point pushed for ads to cover their expenses?
The problem is how much computation is required to handle every user request.
When the Internet was starting out, most websites weren’t much more than text, maybe some low-resolution pictures. Even in the '90s, serving that content to users was computationally cheap. A company’s web server could just be a desktop in the basement.
AI models are expensive to train and expensive to operate. Just maintaining the environmental needs for the massive data centers is a significant cost. Charging users for access is not nearly enough to cover the expenses, by orders of magnitude, and they’re already in massive debt.
Forgot about the compute side of things, you’re right