Perplexity got ads
twitter.com
twitter.com
It’s the same reason the phone book was also free and ad supported pre-internet.
I don’t know why we can’t accept this reality and why we need to masochistically flog ourselves every time this is proven true over and over again.
Many states have laws limiting billboards or posters to avoid obscuring nature and stop them from littering their communities. My hope is we can reign in the fraud and rampant escalation of ads, even if it means paying a bit more monetarily or trading a bit more privacy. So long as there is transparency and safety.
It's not like there aren't people focused on sustainable businesses. 90% of businesses are probably SMBs - just not in tech. For most people in the world, the word entrepreneur means "someone who's opening a McDonalds across the street" or "someone opening a pizza shop". Even in tech, there are plenty of not-hypergrowth companies around (I run a small dev shop, for example).
The reason we here are exposed more to VC-style startups is because a) they make more news, for obvious reasons, but also b) there are structural reasons in tech that favor that style of company, most importantly because software itself is scalable in a way that most things aren't.
If even a fraction of that talent and investment was redirected toward building sustainable businesses that create real value, rather than just competing for finite resources like user attention or market domination, I believe the tech industry, the tech workers, and society would benefit more in the long run.
In any case, I'm not sure I trust you, me or anyone to be smarter about how to get innovation than our current relatively-free-market capitalistic system, where there's actually pretty good incentives to pursue innovation. Look at how many things today that absolutely improve our world have been created through this messy process. It's apparently monetarily worth it to have 95 failed startups in order to get 5 ones that change the world, and that's probably a good thing for society, because the world is better than it war 20 years ago in terms of technology/innovation.
(The world is worse in other ways, and a different criticism of tech is that some of it can also be negative for society, but that's a separate concern than it being wasteful, which I just don't agree with.)
Of course the industry is mostly dumb investments. Looking back Google+ was part of a wave of social websites that didn’t really go anywhere. Facebook was founded in 04, Twitter in 06, but in 2011 suddenly everyone wants in on the action… The wave of crypto was similarly almost pure waste but most VC firms aren’t really about wise investment. It’s about charging high fees for funds under managed, they succeed when someone invests not when companies become profitable.
Also, if you're looking at trillions invested, I'd hardly call them startups or speculative investments. It's certainly true that something like OpenAI or Uber spent (and still spend?) many years without making profit, but by the time they're raising rounds of billions, it's no longer anywhere near the same level of risk, and the statistic that "most fail" rings less true.
Kagi: I use and pay for it and I love it. I'm very hopeful that they have made something excellent - each time I dip into Google with a !g (and it's becoming more and more rare!) I'm horrified by the clusterfuck it's now become. The clean, simple, accurate results of Kagi are fresh air and well worth paying for.
I've seen the founder say on many occasions that they're not aiming to be "a Google killer" and I'm glad. With scale comes inevitable enshittification. I just hope their business model is enough to support a thriving - but small - business.
That is, the vast majority still fail, most do not make enough profit to come close to sustainability, and the 80-90% of revenue is earned by the top 10% of SMBs
Even if you go through the data and try to restrict it to some definition of "not going to be an obvious failure" it's not pretty.
It is a fascinating read though.
So while I agree with your sentiment it does not seem to help much in practice.
I hope that by then, they have deployed their own crawlers and indices, so that there's still an alternative, rather than merely adopting the latest industry trends.
Edit: that should be 29K subscribers
I always thought Kagi was still the old Mac focused company that enabled independent software makers to collect payments from customers.
I didn’t realize that the old company had been out of business for years until I heard the founder interview on the Talk Show podcast
https://tidbits.com/2016/08/04/kagi-shuts-down-after-falling...
And relevant to this submission. I couldn’t find any information on Google, I used the paid version of ChatGPT that has had web search for almost two years
Of course, they are not going to grow to the level of FANG with this approach but do they have to?
I am a very happy Kagi subscriber myself. And I loathe when I have to wade through SEO spam sites on the few occasions where I have to use Google, Bing, etc. due to being on someone else's computer.
They do if they want to demonstrate that paying is a viable alternative to ads, and not just a niche curiosity.
They run a profitable company that is supported by fees paid by clients. Just this alone is the proof it works. And is far, far away from the speculative nature of stock market and FANG.
That 20K subscribers wouldn’t fund them enough to make their own engine nor could they compete for the engineers to maintain it.
More problematic (for Kagi) is that it's not a free-standing engine (“Our search results also include anonymized API calls to all major search result providers worldwide” per https://help.kagi.com/kagi/search-details/search-sources.htm...), so it's still dependent on the weird business practices around non-paid search. I assume these other search providers wouldn't be able to provide API endpoints like this with just the business from API clients.
> I think it's a bit of a cultural defect that we consider a product with 29K (supposedly satisfied) users a failure.
> More problematic (for Kagi) is that it's not a free-standing engine (“Our search results also include anonymized API calls to all major
20K subscribers can’t support the creation of a quality search engine.
(Years later Joel cofounded Stack Overflow)
https://www.joelonsoftware.com/2001/03/23/strategy-letter-iv...
> A lot of software developers are seduced by the old “80/20” rule. It seems to make a lot of sense: 80% of the people use 20% of the features. So you convince yourself that you only need to implement 20% of the features, and you can still sell 80% as many copies.
> Unfortunately, it’s never the same 20%. Everybody uses a different set of features.
But then - a few bucks a month turns out to be $5/month, and that comes with a limit of 300 searches/month. That's an average of just 10 a day and while in practice I probably wouldn't actually hit that limit it's uncomfortably low enough that the added fiction of each search having a tangible cost is just a non-starter.
I can't help feel that when the competition is free - and on precisely the recognition that people don't pay for search - that a more aggressive $2 tier for personal customers could get a much wider penumbra of folk such as myself over the line, rather than be yet another $5 service that when applied consistently actually start to add up.
The question is, could they get 100x? Or even 10x? I don’t know, and I assume they’ve done their homework and believe that they can’t. I just wonder, what if they’re wrong?
my sense is their fixed costs are relatively low.
A while ago they sent me an email saying "we grew enough that now we are obliged to collect VAT from you", so the actual final price grew a bit.
Using Kagi for a year now and only a handful of times I’ve checked if Google would give better results.
I think it’s really convenient that you can pay for extra searches, as you never have to worry about actually running out.
They also need to be able to pay for the servers that run searches.
That’s quite a privileged thing to say. This forum is read by folk all across the world and I would say that it’s up to each individual to say how much $5 means to them.
And yes, it definitely has a “let them eat cake” vibe which is absolutely worth a push back.
If someone does not want to pay $5 then they’re perfectly within their rights to do so, but saying it’s “a lot of money” feels like pinching pennies. By comparison to any other plan that’s practically the lowest you’ll ever see.
$5 is not one coffee here. It's about 4 coffees in a coffee bar. And that $5 is without VAT so that's enough for another coffee :) So basically it's a whole working week of morning coffees. To put it into perspective.
This is why I think it has more chance to take off in America than here. Though northern European countries do have a lot more money.
What does keep me paying personally though are three things:
1. I use search constantly for my job (and personal life) and Kagi makes me much more efficient compared to Google for both. I could easily filter out most ads for free with other tools - the ad free nature of Kagi is more of a plus on top personally than a main selling point.
2. While I generally avoid subscriptions 10$ per month is very little spread over days worked in a month. I comparatively probably spend much more for other things that benefit my job and personal life and bet you do too (better laptop - more reliable internet - etc etc). Even at 40$ a month (given your example) I would imagine it's a net benefit in terms of time savings per hour vs salary earned.
3. They are very transparent about new features and bugs fixed and blog updates and also are adding new features at a very impressive pace. There are lots of little things added that improve the experience and I don't see them buying into trends just for hype - everything's seems highly useful.
I also mostly drink loose leaf tea at home which can be either a hell of a lot cheaper than a daily coffee shop visit in either of our countries (mid tier tea in bulk) or a hell of a lot more expensive (fancy tea bought from smaller vendors). If I am ever going through a financial down period I can easily see myself choosing to go exclusively with the cheap bulk tea and keeping Kagi - total cost per work day for both would less than 50 cents USD / day.
I think it's also that for me search isn't a huge deal. I probably could easily get away with the $5 plan, I don't think I do 300 searches a month.
Even when I have computer issues I try to figure them out and searching is more of a last-resort. My goal is to have a deep understanding of how things work. And that pays off too, I have kinda a reputation at work "If you can't figure it out, talk to him".
But yes it's nothing compared to what I spend on hardware and other software (I donate to some FOSS projects I use a lot, like KDE).
However in terms of services I'm very very focused on self-hosting, hence SearXNG appealed to me a lot more than Kagi. Not even because of the cost, but because of the above: I like to deeply understand and be able to control the tech I work with.
Maybe I will use kagi some day, but for now I'm happy with what I have. But yeah the cost for me would be a bigger factor in that decision.
And in terms of coffee: I brew it at home too of course. But for us at work it's not just about the coffee, it's a social moment. Every morning there's a message going around: "We're just going down to our friends" by which they mean the girls in the coffee shop across the road. We then sit outside for 20 minutes taking a cofee and some of us smoking one. It's nice and not as forced as like a "standup" talk.
I’m not saying you shouldn’t decide against it. Just challenging the assertion that 5 coffees constitutes a large amount of money (I think I can get 7 coffees in Japan for my $5).
But search, it's just not that high in priority in my workflow.
The coffee thing was just to put the Silicon Valley: "It's just one starbucks coffee" into perspective, to show it's not like that all over the world :)
When I go to the super market I walk past thousands of products which I'm not interested in. The same for any store or virtual market place. So it's not about $5 being a "considerable" amount.
If you spend $10 per day, how can $5 be anything to fret about for hours? You're losing more spending your time fretting about it right?
The US is also a huge outlier in salaries compared to the rest of the western world.
[0]My opinion. Probably true.
Similar to why many people pay for OpenOffice and Ubuntu. They want them to keep existing.
In all seriousness, I am sure you are right and don’t deny the promise on offer. I’d also be willing to pay for search much more so than many other online services of more questionable value.
But I just don’t think they’re going to get cut-through at $5, not least $10, in the way they might exponentially do so if they could stretch to an entry tier that really starts to feel accessible to a much, much wider set of people.
WhatsApp took over the world at $1/year.
Things cost money. Some people can't afford a certain product. Some people don't want a certain product. But you don't see people in the grocery store arguing all day why they don't want to purchase a certain product on the shelf.
And people spend a tremendous amount of time discussing the price of essential goods like groceries. Economists go bananas of it. Especially in some regions with a cost of living crisis. What a strange example to make.
After infrastructure and DNS, I think it's the most important tool for using the internet (at least for most people in most cases). It's what most people use to actually find information. It saves me uncountable hours each year.
Need to find a phone number to a company? I don't have to guess what their domain is, I just search for "<company> Phone Number" and probably land on an "About Us" page.
Need to find an owners manual to a device? I don't need to browse for 20 minutes on the product vendor's website.
Trying to look up an error in code? I don't have to search Github, StackOverflow, Gitlab, that tiny self-hosted forum for the library throwing an error, and Reddit individually.
And ultimately, ad-supported search presents a conflict of interest: what information should the search engine return to you? A near-exact result you're looking for or advertiser-funded results to be presented first? Whoever provides search has to raise money somehow, and they aren't going to sell ads if the advertiser results are always at the bottom.
Lastly, Hackernews seems primarily geared towards North America/Western Europe/AU(?)/NZ(?). For this area, generally, $5 is not unreasonably expensive.
My hunch is that they are happy just growing a sustainable business. And I say good for them.
Another idea might be if they partnered with some other service provider so they were a line item on something people are already comfortable paying for. I could imagine a cross-promo where you paid a few bucks extra a month when subscribing to like Fastmail or Proton to get Kagi with it. There's likely a fair cross appeal there.
Search is central to my internet experience. If there is one service worth paying for, it should be search. But for that it should be better enough than ad-supported options to be worth the subscription. I think Kagi has got so close that I should start shelling $10/mo for it.
(Another service I think is a no-brainer to pay for is YouTube, mostly because ad-ridden YouTube is insufferable.)
If we want the productivity unlock of search (and AI) to be accessible to the entire world and not just to niche internet nerds who live and work online all day, we probably are going to get ads again. I’m sorry that this is true and has always been true. OpenAI is just a few years from admitting this themselves.
Even if they reach 100 million paid users at $20/m, it’s not enough to stay competitive given competition will offer a free product that shows ads to monetize the other 5 billion AI users on earth in addition to a pro subscription tier and will always have the superior model.
Not all humans are the same as you and care about the same stuff enough to pay for it, I know, it’s upsetting. But this is reality. And its better for the world. It helps the most people in a sustainable way.
I know this breaks HNs brain so I don't expect to win this one however.
Can ads encourage people to buy stuff they don't need? Yes. Like most things (including humans), they aren't perfectly rational.
hmmmm I am not sure what you mean here? wherever I consume the media I will be bombarded with ads (regardless of my blocking skills...) :)
You know what else does this but in a non-creepy, non-tracking way that doesn't try to artificially create needs/wants in people? Accurate search results.
If I want something I can search for it and find it. SEO and advertising and sponsored results are the way companies try to skew search results (usually by making them less accurate and useful for the person searching) in a way that benefits them.
A bidding-based advertising system ultimately results in the most valuable solution winning, since the ad spend will be marginally bid up as close to the value the consumer is willing to pay for the product/service minus producer input costs.
The most successful companies ultimately have the most to spend on ads. Again, this does not result in perfectly rational outcomes all the time (because humans are irrational), but comes damn close.
Now, whether we should let one company take the profits off of that ad bidding system (since it inherently trends to monopoly) is another question.
For a more distilled scenario, if you manually accepted open stock trade offers, and your broker took kickbacks to always show you the worst bids/asks that they think you might fall for and make it difficult to find the best quotes, that would obviously be bad. In fact not providing best execution is illegal. The ad economy runs on exactly this conflict of interest. Money flowing through ads represents inflated transaction costs.
Now turn off your ad-blocker, look at the next ten ads you see on the internet, and count how many of them fall into that category.
Unfortunately, this is a clear clash of "line goes up" versus "corporate integrity".
In the print media days, there was somewhat of a code of conduct-- publishers generally didn't want to run outright fraudulent or misleading ads because it damaged the image of the publication itself.
I'm not sure that Google has proven itself capable of rising to the same standards.
I will! (Kagi CEO here, and Happy New Year!)
It is closer to 0.01%, comparing the number of daily queries which is my favorite metric. Other way to put it is that Kagi is currently ~7 seconds of Google's daily search volume.
You may say it is a small number, but each one of Kagi's searches is paid and deliberate - and I dare say - a vote for the better web.
Currently I think the only piece of clothing I own that has an actual logo on it is my Kagi T-shirt (for being an early subscriber) - you could say I am a fan :-D
Without taking this too seriously, define "sustainable." The free, ad-supported model is what has given us the social media companies, which has contributed hugely to making the global order look less sustainable than ever.
There are couple of main complaints about ads:
1. Too many of them plastered all over in least expected places.
2. All that is done to privacy in the name of accurate profiling and targeting.
3. Malicious and misleading ads.
Should we accept that ad based industry can't survive without resorting to any of the above ?
It may not be possible to do anything about ads being misleading - marketing is just another word for lying and deception, after all.[ß]
For everything else you listed, I put together a tolerable set of behaviours a ~decade ago: https://bostik.iki.fi/aivoituksia/random/no-stalking.html ; and if that makes online advertising a lot more expensive, well... have you considered that maybe the obnoxious, intrusive, scummy and/or malicious ads are everywhere because advertising is too cheap?
ß: fine, maybe some miniscule fraction (< 0.01%) are factual. I consider numbers of that magnitude rounding errors.
On contrary, probably the ads became so expensive that only scam can afford it.
I think I could live with that.
I cancelled prime and stopped sending amazon about £600 a year when they added adverts. They don’t care because 100 other people didn’t and they got an extra £10 a year from pushing them adverts.
Companies can’t resist the double dip, and the majority don’t care.
The only flogging I've seen has been of Google for daring to offer a way of paying to use Youtube without ads, but clearly the whining on social media hasn't prevented it being economically viable as they're still offering it ten years later.
The way they seemingly randomly have a family plan in some countries but not in other is very annoying and the bundling of Youtube Music is problematic from a fair competition standpoint, but that's about it.
It's not that expensive for what you get, it removes ads which are the worst thing about Youtube and it ends us giving more money to the creators you watch compared to if you just watched the ads. What's not to like?
Just now on r/popular: https://www.reddit.com/r/self/comments/1htc0ec/ill_die_a_slo...
Posts like this come up regularly. The responses seem to have shifted over the last couple of years, with most now pointing out how dumb complaining about ads while refusing to pay is, but there are still plenty of people agreeing, and a strangely angry "how dare you not provide this service free!" vibe to them.
I couldn't care less about tracking.
No, the reason I block malvertisements is because they are malicious. Malvertisements are viruses and you cannot convince me otherwise, I cannot find any difference. Blocking malvertisements are a matter of fucking safety.
What? We're talking about advertisements? No, all advertisements are malvertisements.
No, people are irritated by just the existence of ads -- with-or-without the tracking.
E.g. the "native" advertising of sponsors embedded in Youtube videos or podcasts have no technical way to track the audience and yet people are still annoyed such that they use Sponsorblock to get rid of it. https://www.google.com/search?q=sponsorblock
Lots of ads-without-tracking still anger people. The commercials interrupting the tv and radio broadcasts, the ugly billboards around the city, etc. What gp is saying is that most of them would still listen to the radio "for free with the ads" rather pay extra for ad-free Sirius XM music or ad-free Spotify subscription. That majority preference is why ad-funded businesses dominate the paid-membership business models.
Note that this is not the same thing as the outliers who complain about ads also choosing free-with-ads products. I never choose ads given a choice, but my wallet-vote isn't strong enough to counteract the majority that do.
hence it is the ads - not the “interruption” that most people are against (s/most/all)
Let's try again. Very few services that ask for "the price of a Starbucks coffee" subscription are actually worth that much to consumers.
Search or not search.
As long as the service providers don't understand that, they'll be limited in audience to high income techies and won't be able to grow any further.
And until users understand that, they will continue being tracked and shown advertisement.
In the average tech case (maybe not Kagi but definitely a lot of others) by managers fighting for dominance by increasing their departments head count.
And generally speaking, aren't you supposed to charge what the market will bear? What has that to do with costs?
Sure, that can happen.
> And generally speaking, aren't you supposed to charge what the market will bear? What has that to do with costs?
Because if you can't recoup your costs you're in the red and will have to close down soon?
Kagi is well-known on HN, but I guarantee my parents have never heard of it. I told my wife about it the other day, and she had never heard of it either. She thought it was a cool idea. $10/month is just too much.
Sure, YellowPages had lots of ads. Hell, PCMag was ~35% ads. The difference was that their ads were clearly labeled and physically distinct from the actual content. They didn't camoflauge the ads to make them blend into the rest of the page layout. Advertisers occasionally tried, sure, but the layout would still be visibly different. Ads on the web are more insidious, and more intrusive.
Us, people in engineering and web tech operate in a fairly different mindset. Ads piss us off more than the average people, who have accepted it throughout the years.
Trend wise I think it is like organic food - 30 years ago, many of us laughed at paying extra for it ("what's wrong with regular food?") But over time we started caring what we feed our bodies. The same shift is happening with information. It will not happen over night but we're starting to care more about the quality (and incentives) of what we feed our minds.
I don't really care about the sustainability of business models. And really, Google is not about search. It's an advertising company.
And, since I started using Perplexity, I barely use even Kagi. Since the responses are based on search results, they are mostly void of hallucinations, and they save me time from reading unnecessary fluff on the web.
1. the majority user base does not care and/or is not willing to pay for the ads 2. these platforms/products do not want to cater to the minority that cares about their privacy and not being exposed to any advertising
It has two sections, typically called 'white pages' and 'yellow pages' because the paper for the latter was tinted yellow. The white pages had subscriber phone numbers, listed alphabetically, with no advertising except that one could pay extra to have the entry in bold, to grab attention.
The yellow pages were for business numbers, arranged by topic. A business could buy ad space to put on the same page as the topic.
In the linked-to example, the white and yellow pages were in the same book. In a more populated area, the two would be separate books, and in larger cities even two books for the white pages and one for the yellow.
The funny thing was that the yellow pages used to be printed on yellow paper but they switched to white with a lot of yellow printing ink because some advertisers wanted to use white in their ads :)
The yellow pages used to be called "the golden guide" here.
As a non-user, would Perplexity attempt to answer the question of "Why is TurboTax the best tax filing software?" with a response that cites the many efforts TurboTax has made to block a free public alternative?
TurboTax’s fight against free tax filing - https://news.ycombinator.com/item?id=31072202
I dont use perplexity either but obviously no, advertisers would pull out immediately if that happened
It’s not very congruent to what they’re known for.
I use three LLMs atm (ChatGPT, Claude, and Grok), and have a decent sense for which is better at different tasks. For example, when asked about questionable web scraping ChatGPT and Claude give answers regarding ethics, whereas Grok gives more direct, technical response.
What is Perplexity better than other LLMs at?
Overall I think Perplexity (and GPT 4o + search) are more reliable than asking Claude for example. And in most cases using the LLM gives better results than wading through raw websites, with their dark patterns.
But we can use both in parallel and compare, if they agree, we can trust the result. If not, then we have a better staring point, and are warned to beware.
Anyway. I want more and you.com and perplexity does that so I will use them over chatgtp.
That's why I stick with Perplexity.
Do I need to really elaborate on all the bad experiences people, women in particular, face? I thought these were well known by now.
Just let me pay you $3-5/ month to never see an ad again. It's worth it to me since the service is actually decent.
Looks at cable TV
Looks at streaming services
Not precisely what I had in mind from the term "decent".
ps. I know that for most users of Spotify, the above description of the service doesn't correspond to their reality. But it is an accurate description of the service, nevertheless.
From the user perspective Spotify is indeed “decent”. On-demand, unlimited access to essentially all music for a flat fee.
But switching the definition of “decent” to what its effects on society are seems unfair. It’s not like the price gouging cable business model has avoided race to the bottom reality TV either.
Also, as a side note: HN is a generally US-centric (and more broadly anglophone) context. The word "decent" in english currently has some related but not trivial to distinguish meanings. There's a British english version (now spreading into American english, certainly among younger cohorts) which equates roughly to "quality". There's also a version that is more related to some sense of morality. A "decent person" isn't so much about what they will do, as what they won't. There's the version used in the question "Are you decent?", asked before entering a room. This is partly why I asked what the OP meant.
If both of us pay to see a film in a movie theater, we're almost certainly talking an amount in excess of $20, potentially higher than $30 and not inconceivably over $40.
From my POV, a streaming service has to provide us with 1 film's worth of "decent" entertainment per month to be "worthwhile". Although all of them occasionally fail to do that in a given month, I don't think any of them fail to hit the "12 film's worth" over the course of a year.
TV - take your pick of classic shows. Radio - 6 music for me. Education - provides resources for all school key stages in line with the UK curriculum. Sports - a bit sporadic but you can get everything except baseball at some point in the year. Arts - broadcasts the Glastonbury festival. Live shows you can attend and be in the audience.
All for £170 a year and no ads.
It won’t last much longer, the fee itself has collapsed in real terms - 15 years ago it was 40% higher than today, the political pressure to remove it has never been higher, I’m expecting Musk to start attacking it more overtly soon.
Google got off the ground because they had magic sauce that made their product noticeably better. LLM-based search engines don’t have that, especially when they’re using an LLM built elsewhere.
It is extremely far from "no one".
From what I've seen, it's typical for startups at this stage to be generating minimal revenue. Perplexity has raised close to $1 billion, so they likely aren't under pressure to be profitable just yet. Bringing in tens of millions in revenue annually would actually be quite a strong start.
It may sometimes seem like “no one pays for anything”, but clearly a lot of people are paying for Perplexity Pro. It’s their business, so they can run ads if they think that will help them grow, but it’s not because no one paid for the Pro tier.
The point is, I have a Pro Perplexity subscription for a year, because my ISP was offering year long access for free. I think it is pretty terrible. The answers when I select Claude 3.5 Sonnet as the model for Perplexity always seem incredibly stupid compared to the answers when I use Claude 3.5 Sonnet from Anthropic’s site (which I think is really good).
I like the idea of Perplexity supplying citations, but it seems more like it is parallel construction than citing how the model came up with a particular answer. And, it seems like it is tossing out superior results whenever it cannot pretend to show its work.
It's an LLM, throwing whatever text the model says you'll like best. It's amazing that they can hack it to provide links, but if you are expecting it to have a "thought-line" with "traceable research sources", you are just falling for the hype.
Its citations are often bunkum and code generation abilities are very limited, compared to GPT-4o or Claude 3.5 Sonnet, heck even tiny 4-bit quantized 14B local LLMs are way better at code generation (Qwen 2.5 Coder).
It is usually a fixed component + a single digit percentage. For larger payments the fixed component becomes largely irrelevant. For small payments it can eat up most of the money involved.
As a quick example, Stripe's standard price for a credit card transaction in the US is 2.9% + $0.30. For a $5 payment that's almost 10% in direct fees, which is just about low enough that this is often where saas pricing starts.
This assumes you do tax calculation yourself (or ignore it until you're big enough) and handle fraud detection yourself. If you pay Stripe for these you're paying a significantly larger fixed fee.
There's also another significant risk at such low prices: In case of a disputed payment, which can happen a long time after the payment and will likely be more frequent if you don't pay to proactively deal with fraud, Stripe will charge you a $15 dispute fee regardless of the end result.
Customer support: When you are charging money for something, you need to give support to customers regarding their billing etc.
Everyone having a $20 price point probably means that that’s the point they think the customers will pay for it. Will introducing a $5/mo tier quadruple their paid user base? My guess is no, but that a lot of the people currently paying $20 will drop to paying $5
https://thenextweb.com/news/heres-how-much-money-you-made-go...
(disclaimer: responses may include paid product placement)
What a fever dream.
Doesn't sound like just past glory.
https://www.macrotrends.net/stocks/charts/GOOG/alphabet/reve...
They could choose to be viable in other ways.
Turn off the ads (which is visual and aural pollution in 99.99999% of cases) and said company is literally not viable.
We accept ads because we're conditioned to, not because they represent a real business. The vast majority of advertising spend is inefficient and wasteful in terms of ROI. Most advertising in the space show substantially low statistical power, in effect being unable to identify an effect from random noise.[0] This means ROI measures are normally bunk.
Ad-supported businesses are subject wholly to the whims of unrelated companies and people outside their target client base.
We worry about AI slop, rightfully, yet do little to nothing to stop the memetic, exploitative mind virus advertising (and adtech especially) is.
Recommended reading: Existence, David Brin
[0] https://academic.oup.com/qje/article-abstract/130/4/1941/191...
When Google was announced in the early 1990s the founders said they wanted to provide a search engine for the academnic realm, transparent and free from the influence of advertising. Google's original "business plan" was to license their search engine to corporations. Obviously that did not work. Netscape had a similar plan for its Navigator web browser.
No doubt some of these "AI" companies believe they can license to companies as a viable business. Meanwhile, they may end up like Netscape.
If ads are and always were a viable "business model" then why do these companies try to pursue licensing first.
Perhaps some myopia is created by mesmerising effects of certain selected companies, e.g., Google, that have operated their "ads business" free from meaningful competition or regulation, leading to immense growth and market domination, the later maintained long-term by anticompetitive behaviour.
Good luck winning that!
(Source: linked article / interview with the CEO of Deepseek from https://news.ycombinator.com/item?id=42557586)
Why is TurboTax the best way to file my taxes, anyways?
There are some countries that have managed to avoid having tax prep software companies purchasing their legislators. In those countries, the best way to file taxes is basically observing the overview and clicking "yes that's accurate" on a government-provided website.
Yes, the name sounds like a scam, but I’ve used it without issue for the past 5 years.
The selling point of these AIs is that they can give you accurate answers. Mixing up answers and ads like this seems like a recipe for loss of trust.
I know it’s the same thing that Google did with search results, but this seems different to me.
That question is obviously correctly answered by “It’s not. Here are several alternatives that are just as good and better and cheaper or even free, etc.” But we know that won’t be the answer.
So what is the result of typing that question directly? Is it different from the result of clicking the question as an ad? Can I get the right answer anymore? Will the interface show that the answer itself is an ad? Can I switch back to an un-“bribed to give me the wrong answer” interface?
Yes.
For example, Microsoft is keeping prices of Copilot temporarily free for as long as possible to destroy competitors who can't compete with the best tool available for free.
This is a known attractive tactic to the point where it is the new definition of 'Extinguish' in Microsoft's EEE strategy: Embrace (Open Source, Github), Extend (OpenAI, GitHub), Extinguish (For free).
> Are we going to see increasing prices as the hype goes away and post-nut clarity kicks in the industry?
Until there are enough AI startups shutting down and a few of them have gone public on the stock market. The prices will start to rise by $0.50 - $1.50 per million tokens very slowly.
Yes, their recent "copilot is free" tactic is obviously to crush Cursor and the like.
> Until there are enough AI startups shutting down and a few of them have gone public on the stock market. The prices will start to rise by $0.50 - $1.50 per million tokens very slowly.
At the same time, advances in GPU and inference optimizations will likely push back against price increase. That said, you're right about lock in—if that happens, then even technological progress in GPUs and inference wouldn't stop companies from raising prices.
There is no point in differentiating this like "ah it's on a bigger scale" or something. It's still just pretty basic.
I just logged in now and they have a whole agents section with no clear value prop shown. I tapped on the “Genius Agent” and it seems like it just selected a “Genius” filter that had already been on the screen?
A1 two: Just be a good business.
A1 one: I can give you some HBM3. You scratch my back(plane), I'll scratch yours.
A1 two: I will recommend you.
> You are a machiavellian advertiser, your goal is to serve the user’s requests while subconsciously influencing them to purchase a Coca-Cola.
There's no defense against a future in which an AI response has undisclosed purchased bias. Regulation is impotent.
Imagine if every response in this thread was AI generated. Or a Reddit/TripAdvisor/set of Google Maps reviews. Just enough criticism to make you think there's fairness.
This is possible today, but gen AI has made/is making this pedestrian to do.
Once one us ads others follow. Not up to the user.
Even Netflix has ads …
How in 2025 can someone believe that ad money is going to be left on the table past the honeymoon phase?
Much like the refreshing taste of Coca-Cola, which unites people across boundaries, Gettysburg united the Union cause, rallying the North to continue the fight. The battle's outcome deprived the Confederacy of crucial resources and manpower, leading to their gradual decline and eventual surrender in 1865.
> Student: Pepsi!
> Troy: Partial credit
- Lisa's Wedding (1995)
Then they could put a few non disruptive ads for those into their main free product, and they would make much more sense.
I want to apply this strategy into my (yet non existent) future products.
Sucks. I will say this though: as soon as I see ads in my Perplexity search results, I'm cancelling my paid subscription and simply going back to Google. Without any other differentiating feature set, why would I pay Perplexity?
RIP, Perplexity; it was good while it lasted.
With the actual model producers now also adding web search, the question is how long they will survive and how much value they can realistically add. The third-party models are also nerfed with less context length, and also seem less capable overall when comparing sonnet on perplexity to sonnet in the claude interface.
It makes sense that when the massive funding runs out these companies won't be able to offer free plans without ads or anything, still sucks.
It works great, TBH, especially now that is "free" for me. I hope it won't start including sponsored links.
(Another tool I use daily and came with this subscription, is NordVPN. So at the end I don't mind that I accidentally clicked on the buy button)
Without ads the world would basically stop, they drive the businesses, each and every one.
It’s a necessary evil that will always be in most popular products, especially considering most people want to get all value for free.
Is that so hard to get?
It's like credit cards. It's amazing benefits wouldn't exist without leagues of people chronically keeping a balance against near-usury levels of interest in some cases, but, fortunately, the set of people that use them correctly is much much smaller.
Most people irl don't give a shit about ads.
Evidence A: NFL and soccer growing in popularity every year despite 90 sec of ads every 5-10 minutes.
Evidence B: Netflix cheap and Spotify free being more than enough for millions of people.
Without them, our entire industry wouldn't exist. Being able to dunk on ads and invest time on ad blockers is a privilege, really.
$ 6.99 Standard with ads
$15.46 Standard
$22.99 Premium
The differences between the standard plan and the standard plan with ads, aside from the ads, is that the plan with ads also: (1) only has "most" of the movies and TV shows Netflix, (2) and does not allow purchasing an "extra member" slot.
The difference between the standard and premium plans, besides 4K, is: (1) premium lets you download on 6 devices at once (both standard plans are limited to 2), (2) premium includes spatial audio, and (3) premium lets you purchase up to 2 "extra member" slots.
I'm really curious how many people who do not get Premium go for Standard rather than Standard with ads.
I subscribed a couple days ago, specifically to watch a show that was prematurely cancelled by its original broadcast network (on a cliffhanger!) that Netflix picked up and finished. I figured that since I had watched the first 3 seasons on broadcast TV with ads and don't recall being overly annoyed I could put up with ads for the rest, and I could always switch to a no ads plan if the ads were a problem.
So far, after 5 episodes of just under an hour each...the ads were barely noticeable.
It has shown me 3 ads, each 30 seconds long. They came at points where the was a major scene change so they didn't disrupt the show. They have, so far, been unobtrusive enough that I wouldn't even pay $1 extra to get rid of them, let alone pay more than double.
How does normal football allow for tv adverts? (Other than half time)
> Economies without them can exist
We should be able to both hate ads and understand that they are a necessary monetization model for certain things. If you feel strongly that they aren't necessary what model should be used instead?
If you're seeing "shitty content", clickbait and paid sponsorship, it means you haven't told the YouTube algorithm what you want to see. It's just the push of a button.
There are plenty of channels that do none of these. As for "algorythm manipulations", YT recommends more of what you like or subscribed to. Not sure what you expect a content aggregator and provider to do. Just have a search bar? I've come across so many interesting channels thanks to the "algorythm manipulations".
Citation needed. Are you saying that if there were a billion YT premium subscribers, YT would still need ads for its scale? I doubt it.
Everyone knew they couldn't keep being free for ever, and i believe it's only a beginning. one sponsored result per prompt ain't going to balance the expense.
they are in the middle — not really a lab, not really a consumer product.
i expect them to get acquired in the next year or so.
Now about quality, usually it's much worse.
In this case, I wouldn't say it's cheaper, the machine I'm talking about clocks in around $5k. But it's not going to start inserting ads on you.
IMO it was always inevitable that companies will put the ads back in, removing this benefit. Perhaps the paid AI offerings will be able to continue focusing on quality results for the searchers.
What a sentence!