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Comment by drob518 | Hacker News Reader

Of course it is. How could it be anything different? Clearly, that’s how these companies make money.

it's a very handwavey way to "explain" anything. Yes, they make money. But they have competition. And if someone runs out of tokens and switches to deepseek or just goes for a friggin hike in the woods, that does not benefit them. If they get a public image of a ripoff that burns all shit on trivial tasks, that does not do them good either. So there is a limit to this "companies make money" thing.

Sure, fair enough. Clearly, if they increase costs by too much, people will go to their competitors, but those competitors also make money selling tokens, so the whole industry is incentivized to inflate token consumption up to the point of driving people to the competition. And nobody is incentivized to reduce token count.

In fact, the one model with great price/performance is Deepseek v4 Flash and I suspect that they are subsidizing it deeply to get access to everyone’s prompts for training. We may find that they raise prices on the next version (v5) after they’ve mined the user data.

Any AI service that people (and to some extent companies) can afford to pay for today is being heavily subsidized. Will that last forever? I really don't know how those economics work, but I know that bubbles do burst having lived through the dot com burst in 2000. And I know this current one is going to hurt if/when it bursts.

On the issue of the bubble, I’m right there with you, 100%. I’m not sure that “subsidized” is the right word for Anthropic’s or OpenAI’s pricing, though. I’d say it’s forward-priced. Supposedly, they have claimed that inference by itself is profitable; it’s the ongoing training that is not. I don’t know what nuances apply to that, however.

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