[bambax]

AI doesn't work like the rest of the tech industry. The cost of selling another license for a software program is approximately zero.

In the case of AI the marginal cost of the next token is not zero, and is in fact probably not going down much with volume, if at all.

So I'm not sure one can argue that scale will solve everything. It's very much like the old adage "we lose money on every sale, but make it up in volume".

No you don't.

[hackcasual]

It's wild to think how efficient Internet services were prior to AI. The most expensive thing would probably have been something like encoding video. Now you've a substantial portion of a rack dedicated to a user in the case of something like fable

[Ekaros]

Best analogue we have is probably video streaming. Or maybe more so live streaming. Unless subscription based and limited time events it seems those don't do well. Twitch has lost money for how long? And most smaller players seem propped up in other ways.

So if there is real cost involved things start to look lot worse and might not be overcome. OpenAI is unlikely to be exception for me.

[nl]

But video streaming can be very profitable! Youtube and Netflix are great examples.

[pqtyw]

But there is no indication they are losing money on tokens when R&D and other expenses are factored out? The margins on API are likely very high so the higher the volume the more likely they will be able to cover the other mostly fixed costs.

[bambax]

Maybe. We'll see.

Also, what are they calling "R&D" exactly? If it is training new models, which needs to be done almost constantly and means spending billions on energy and newer GPUs, then it's not really R&D, but rather operating costs.