Ask HN: Is the freemium model the future for AI-platforms? | Hacker News Reader

Ask HN: Is the freemium model the future for AI-platforms?

6 points__010000106 comments

Due to the associated costs of integrating LLMs into products, many services rely on free trials that convert into monthly subscription plans. Does it make sense to introduce something in-between?

For example, after having used the Cursor IDE, I'm still hesitant to pay for a subscription. If Cursor offered a freemium model supported by ads, e.g., in the chat tab, I would gladly tolerate them to use the service for free.

Function calling agents are only getting smarted and can be configured to determine the relevant moments to serve ads during interactions, using high-level contextual + demographic information. Also, ads would be showcased separately from the LLM's response, with clear messaging to as why they were shown.

Does this approach make sense? Could it make freemium models sustainable without much disruption to the user experience?

The visuals on my website is the only way to fully articulate this idea. Feedback would be much appreciated.

https://promptly-mvp-589d2.web.app/

Nah it's unsustainable, right now it only works because of the hype. AI doesn't generate nearly enough value to be worth what it's being sold for. And it costs even more to run.

What will ads even do in that context? At the very least you need to get your users to accept that all of their data WILL be used for analytics and sold to 500 different companies. And it might not even be enough to pay for the cloud costs

Even if ads alone aren't able to offset infrastructure costs, they could still alleviate some of the financial burden. They'll be shown conversationally (examples showcased on website), instead of taking up physical space like banner ads or videos.

Also, you're right, user acceptance is important. After speaking with many users, it seems they're willing to make the tradeoff as long as ads are clearly separate from original LLM outputs, not overly targeted, infrequent, and accompanied by a clear reason for being shown. Also, only high-level contextual information + demographic data are shared. These requirements are definitely achievable.

Do you see a future where conversational ads can exist within AI-powered apps?

Advertisements have helped finance the web for decades. AI could be no different.

What type of advertisers would want to advertise next to an AI chat window? How often would ads show? Would the users still enjoy using the platform if you showed enough ads to offset the cost of running the service?

Lot of questions that all boil down to "it depends." None of the big players want to dilute their product with ads (yet). But I definitely think some will be willing.

I believe so too.

My own discussions with advertisers have revealed a growing interest around the concept of conversational-based targeting (see website) and advertising. But, many are still skeptic and require additional CTR and ROI data, which is not possible since there's nothing like this on the market yet.

Ads shown would be dependent on the partner platform. For example, a platform like Cursor could deploy a simple agent dedicated to monitoring the conversation thread for ad invocation and display. This agent would be instructed to display only a limited number of them per conversation (e.g., 2 ads), based on a high-level summary + demographic information. The ad package returned would provide the text-ad itself, url link, and other necessary information. Finally, Cursor would showcase this ad within the chat tab itself, let's say after the LLM's response.

Also, after speaking with many users, it seems there's a willingness to make the tradeoff as long as ads are clearly separate from original LLM outputs, not overly targeted, infrequent, and accompanied by a clear reason for being shown. Also, only high-level contextual information + demographic data are shared. These requirements are definitely achievable.

Finally, pricing can only really be sorted if we have willing partners on both sides.

As of now, convincing advertisers and developers has proven to be difficult. It feels as if I'm speaking alien sometimes. I thank you for seeing the vision.

Are you looking to validate a market idea? If so, are you thinking of more of a consumer use case? You mentioned Cursor, so it sound like you're maybe thinking more enterprise, but embedded ads are basically not a thing in the enterprise. Most solutions offer freemium mostly as a loss-leader, but this isn't AI specific IMO.

You're right, embedded ads don’t work in enterprise, and freemium often serves as a loss-leader there. We're looking to validate the market, possibly for consumer use cases, while testing if freemium can drive early adoption or loyalty. Do you think it has potential in consumer AI, or is premium-only the better approach?

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