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Comment by gwervc | Hacker News Reader

> A con like that wouldn't last very long.

That's not a problem. OpenAI need to get some cash from its product because the competition is intense from free models. Moreover, since they supposedly used most of the web content and pirated whatever else they could, improvements in training will likely be only incremental.

All the while, after the wow effect passed, more people start to realize the flaw in generative AI. So current hype, like all hype, as a limited shelf life and companies need to cash out now because it could be never.

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A con? It's not that $200 is a con, their whole existence is a con.

They're bleeding money and are desperately looking for a business model to survive. It's not going very well. Zitron[1] (among others) has outlined this.

> OpenAI's monthly revenue hit $300 million in August, and the company expects to make $3.7 billion in revenue this year (the company will, as mentioned, lose $5 billion anyway), yet the company says that it expects to make $11.6 billion in 2025 and $100 billion by 2029, a statement so egregious that I am surprised it's not some kind of financial crime to say it out loud. […] At present, OpenAI makes $225 million a month — $2.7 billion a year — by selling premium subscriptions to ChatGPT. To hit a revenue target of $11.6 billion in 2025, OpenAI would need to increase revenue from ChatGPT customers by 310%.[1]

Surprise surprise, they just raised the price.

[1] https://www.wheresyoured.at/oai-business/

They haven’t raised the price, they have added new models to the existing tier with better performance at the same price.

They have also added a new, even higher performance model which can leverage test time compute to scale performance if you want to pay for that GPU time. This is no different than AWS offering some larger ec2 instance tier with more resources and a higher price tag than existing tiers.

They're throwing products at the wall to see what sticks. They're trying to rapidly morph from a research company into a product company.

Models are becoming a commodity. It's game theory. Every second place company (eg. Meta) or nation (eg. China) is open sourcing its models to destroy value that might accrete to the competition. China alone has contributed a ton of SOTA and novel foundation models (eg. Hunyuan).

You're technically right. New models will likely be incremental upgrades at a hefty premium. But considering the money they're loosing, this pricing likely better reflects their costs.

They haven't raised the price yet but NYT has seen internal documents saying they do plan to.

https://www.nytimes.com/2024/09/27/technology/openai-chatgpt...

Roughly 10 million ChatGPT users pay the company a $20 monthly fee, according to the documents. OpenAI expects to raise that price by $2 by the end of the year, and will aggressively raise it to $44 over the next five years, the documents said.

We'll have to see if the first bump to $22 this year ends up happening.

> We'll have to see if the bump to $22 this year ends up happening.

I can't read the article. Any mention of the API pricing?

Reasoning through that from a customer perspective is interesting.

I'm hard pressed to identify any users to whom LLMs are providing enough value to justify $20/month, but not $44.

On the other hand, I can see a lot of people to whom it's not providing any value being unable to afford a higher price.

Guess we'll see which category most OpenAI users are in.

AI may be over hyped and it may have flaws (I think it is both)... but it may also be totally worth $200 / month to many people. My brother is getting way more value than that out of it for instance.

So the question is it worth $200/month and to how many people, not is it over hyped, or if it has flaws. And does that support the level of investment being placed into these tools.

> the competition is intense from free models

Models are about to become a commodity across the spectrum: LLMs [1], image generators [2], video generators [3], world model generators [4].

The thing that matters is product.

[1] Llama, QwQ, Mistral, ...

[2] Nobody talks about Dall-E anymore. It's Flux, Stable Diffusion, etc.

[3] HunYuan beats Sora, RunwayML, Kling, and Hailuo, and it's open source and compatible with ComfyUI workflows. Other companies are trying to open source their models with no sign of a business model: LTX, Genmo, Rhymes, et al.

[4] The research on world models is expansive and there are lots of open source models and weights in the space.

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