1. Advertising revenues challenged: AI redefines the advertising landscape
The free era of generative AI is fading away and companies are starting to charge users in droves, and there are three main reasons why this is worth delving into. One US AI expert offers the following insights:
Changing the advertising landscape
There are ample opportunities to place ads on search engine pages today, but it's difficult for advertisers to reach potential customers once users get answers directly through AI chatbots.
This situation is a new challenge for companies, who must rethink how to connect with users through the services offered by AI in order to maintain the effectiveness of their ads. In this shift, paid usage of AI becomes a natural choice to compensate for the declining advertising effectiveness.
2. Subscription services flourish: the AI industry moves toward new business models
With the rise of subscription services in the market, many AI products have followed this trend and invested in them. Subscription services like So-and-So Premium and So-and-So have been widely successful, and the CEO of So-and-So made it clear last year, "I think it's feasible to implement a subscription system for AI products and services."
From a user experience perspective
The prevalence of subscription services not only frees users from the interruption of advertisements, but also provides higher quality services and experiences. For the AI industry, obtaining stable revenue through the subscription system helps to improve product quality and technological innovation.
3. High operating costs: the inescapable challenge of paying for AI
The cost of operating generative AI is huge, with single GPUs costing thousands of dollars, and tech companies usually need to use this type of hardware on a large scale. So-and-so, the former head of hardware and equipment at So-and-so, has confessed that they had to charge users for an advanced version of So-and-so due to the high cost of operating generative AI.
Economic pressures on tech companies
While pursuing high R&D and high salaries, technology companies also face the instability of advertising revenue and high operating costs. In order to maintain stable profitability, they have to turn to the user-pay model, which is also an inevitable choice for the current transformation of the AI industry.
Summary and outlook
Taken together, we are approaching the era of 'paid AI', mainly because tech companies are facing slowing advertising revenues, economic pressures and high R&D costs. We've also seen many companies make massive layoffs recently, suggesting that they're actively looking for entirely new sources of profit.
These tech companies believe that implementing payments for new generative AI products is an effective way to generate new revenue. As long as the product performs well, it will be able to win the trust of users and successfully convince them that they are willing to pay for a quality service. The rise of this era of payment is not only a restructuring of corporate business models, but also a new push for AI technology and innovation.
