There’s also examples where this didn’t work. Moviepass for example.
Taxis were an established profitable business model and the uber subsidisation wasn’t anywhere near as much as AI subsidies.
Taxis were an established profitable business model and the uber subsidisation wasn’t anywhere near as much as AI subsidies.
You think developers won't/don't stretch subscriptions to the absolute limit? The AI subscription model is like the gym model except a large percentage of the customers work out 24/7/365.
The price these companies charge per token is irrelevant to a discussion about subscriptions. You're comparing two selling prices, when what matters is the actual cost. It's like those ads saying, “Normally $20 million, but today it's only $99!” for something that costs $10 to make.
Sure, they're losing money now. But the question is whether the tokens you use through your subscription will eventually cost them less to generate than you pay for that subscription. Their per-token selling price doesn't tell you that.
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Uber and Lyft were paying drivers $X but charging users way less than $X so they were literally burning investor money to get market share.
Why does this point come up over and over again, pretending that you can truly separate training and inference costs. Yes, they are separate things but the value OpenAI and Anthropic are presenting to the world is "we're the absolute best, no one else comes close." Well, to keep that up you can't just not train for extended periods of time. You have to keep that engine going non-stop when there's free Chinese models nipping at your heels. You can be profitable on "just inference" all you want but if training expenses dwarf that, you're not going to be profitable overall, and that's the bottom line.
So my conclusion is that it only works because the majority of users doen't fully utilize their allowance. Last month I used almost nothing of my Claude 20x plan (did use Codex though).