[simoncion]

> Profiting off of inference is not the hard part, it's frontier training that is prohibitively expensive.

And given that Anthropic does both, it must make up its training costs by selling inference. jp57 was pretty clearly talking about Anthropic's flat-rate plans, rather than the flat-rate plans of companies that get to skip the most expensive part of the process.

[applfanboysbgon]

I understand that very well, yes. The point I'm making is that I don't think Anthropic or OpenAI would have ever gotten significant traction if they didn't have flat-rate plans, because flat-rate plans themselves are not inherently predatory or part of the enshittification slope but actually extremely UX-friendly. Perhaps in another timeline, if their product was actually valuable enough to pay this price for, they could have simply provided a $50 plan as the standard level to provide enough margin to account for training costs as well. But as I see it DeepSeek is an existential threat to them, and they are now stuck between a rock and a hard place, because their product is devalued by its existence and if the frontier labs were to gate access with $50 plans they would get their lunch eaten even more quickly. It turns out there are downsides to burning inconceivably large stacks of other people's money.

[simoncion]

> The point I'm making is that I don't think Anthropic or OpenAI would have ever gotten significant traction if they didn't have flat-rate plans...

That seems likely. If people had to pay their share of the actual all-in cost of the service (rather than having it be subsidized by investors with extremely deep pockets and a small handful of corporate customers), very, very few regular people would use it.

The point that 'jp57' pretty explicitly made [0] is that flat-rate plans that don't cover the all-in cost of providing the plans tend to result in those plans getting worse and worse and worse, as economic realities assert themselves. If the flat-rate plans that you are aware of actually cover the cost of providing the service, then you're discussing an entirely different situation that's entirely inapplicable to the discussion about Anthropic's pricing and degrading level of service.

[0] ...which is one that's understood by people who have been in pretty much any industry for more than a few years...

[applfanboysbgon]

The crux of my argument is that there is a timeline where people would've paid the all-in cost of the service, with margin, as a flat-rate sub. The $20 rate was not sustainable when factoring in training costs but if not for DeepSeek they could have simply raised the prices rather than gestures broadly whatever the fuck is going on at Anthropic now, with a new PR fumble every three days. If the Chinese models didn't exist, people would've groaned but would likely still pay $40 or $50 for an LLM subscription.

You misdirected my quoted statement to assert a position I did not take. When I talk about flat-rate subs being a good UX, I am not talking about at a subsidized rate. My position is that people will pay more for a flat-rate sub than they are willing to through per-token billing. That is, a consumer who would only pay average $10/mo if they used the API will voluntarily pay $20/mo for a sub, because even though it's a worse value the latter is a tremendously more friendly user experience. When I say that flat-rate subs are necessary for traction, I mean that solely from a user experience perspective, not "subsidized usage is necessary for traction".

[skydhash]

There’s also the “prepaid” alternative. Especially if you’re skittish about budgets. You topup you account for $10, and when you overflow (maybe by setting an alert to around $8), you can add an extra 5$ to make it to the end without interruption.

[simoncion]

> You misdirected my quoted statement to assert a position I did not take.

Nope. You're reading way too much into what I'm saying, rather than reading the words I'm writing.

> When I say that flat-rate subs are necessary for traction, I mean that solely from a user experience perspective, not "subsidized usage is necessary for traction".

Sure. I never claimed that you said "subsidized usage is necessary for traction". It's "just" that your broader point is not relevant to the topic under discussion, which is Anthropic's financial situation. That's why I said

  If the flat-rate plans that you are aware of actually cover the cost of providing the service, then you're discussing an entirely different situation that's entirely inapplicable to the discussion about Anthropic's pricing and degrading level of service.

That situation doesn't describe what's going on with Anthropic and OpenAI, so subsidized usage absolutely is necessary for "traction" for them. Roughly no regular folks would pay the all-in cost for the service they provide.