Comment by dbalatero

I think this can't be understated. It also destroyed search. I listened to a podcast a few years ago with an early googler who talked about this very precipice in early google days. They did a lot of testing, and a lot of modeling of people's valuation of search. They figured that the average person got something like $50/yr of value out of search (I can't remember the exact number, I hope I'm not off by an order of magnitude). And that was the most they could ever realistically charge. Meanwhile, advertising for just Q4 was like 10 times the value. It meant that they knew that advertising on the platform was inevitable. They also acknowledged that it would lead to the very problem that Brin and Page wrote about in their seminal paper on search.

I see LLMs inevitably leading to the same place. There will undoubtedly be advertising baked into the models. It is too strong a financial incentive. I can only hope that an open source alternative will at least allow for a hobbled version to consume.

edit: I think this was the podcast https://freakonomics.com/podcast/is-google-getting-worse/

Social networks will have all of those effects without any effort by the platform itself because the person with more followers has more influence so the people on the platform will do all they can to get more.

I'm not excusing the platforms for bad algorithms. Rather, I believe it's naive to think that, but for the behavior of the platform itself that things would be great and rosy.

No, they won't. The fact that nearly every person in the world can mass communicate to nearly every other person in the world is the core issue. It is not platform design.

oh, I 100% agree with this. The way the social web was monetized is the root of a lot of evil. With AI, we have an opportunity to learn from the past. I think a lesson here is "don't wait to think critically about the societal consequences of the next Big Tech Thing's business model because you have doubts about its profitability or unit economics."

You're either overestimating the cost of inference or underestimating the cost of running a service like Facebook at that scale. Meta's cost of revenue (i.e. just running the service, not R&D, not marketing, not admin, none of that) was about $30B/year in 2024. In the leaked OpenAI financials from last year, their 2024 inference costs were 1/10th of that.

It won’t be ads. Social media target consumers, so advertising is dominant. We all love free services and don’t mind some attraction.

AI on the other hand target businesses and consumers alike. A bank using LLM won’t get ads. Using LLM will be cost of doing business. Do you know what they means to consumers? Price for ChatGPT will go down.

I see a real window this time to sell your soul.

ChatGPT also makes money via affiliate links. If you ask ChatGPT something like "what is the best airline approved cabin luggage you can buy?" you get affiliate links to Amazon and other sites. I use ChatGPT most of the time before I buy anything these days… From personal experience (I operated an app financed by affiliate links). I can tell you that this for sure generates a lot of money. My app was relatively tiny and I only got about 1% of the money I generated but that app pulled in about $50k per month.

Buying better things is one of my main use cases for GPT.

AWS is certainly super profitable, if the ecommerce business was standalone, would it really be such a cash-gusher?

The point I'm making is that, even in the extreme case where we cease all additional R&D on LLMs, what has been developed up until now has a great deal of utility and transformative power, and that utility can be delivered at scale for cheap. So, even if LLMs don't become an economic boon for the companies that enable them, the transformative effect they have and will continue to have on society is inevitable.

Edit: I believe that "LLMs transforming society is inevitable" is a much more defensible assertion than any assertion about the nature of that transformation and the resulting economic winners and losers.

This is perfect news for consumers and terrible news for investors. Which are you?

You’re not thinking evil enough. LLMs have the potential to be much more insidious about whatever it is they are shilling. Our dystopian future will feature plausibly deniable priming.

I can run an LLM on my RTX3090 that is at least as useful to me in my daily life as an AAA game that would otherwise justify the cost of the hardware. This is today, which I suspect is in the upper part of the Kuznets curve for AI inference tech. I don't see a future where LLMs are too expensive to run (at least for some subset of valuable use cases) as likely.

> LLMs can’t do ads without compromising the product.

Spoiler: they are still going to do ads, their hand will be forced.

Sooner or later, investors are going to demand returns on the massive investments, and turn off the money faucet. There'll be consolidation, wind-downs and ads everywhere.

Well, they haven't really tried yet.

The Meta app Threads had no ads for the first year, and it was wonderful. Now it does, and its attractiveness was only reduced by 1% at most. Meta is really good at knowing the balance for how much to degrade UX by having monetization. And the amount they put in is hyper profitable.

So let's see Gemini and GPT with 1% of response content being sponsored. I doubt we'll see a user exodus and if that's enough to sustain the business, we're all good.

I was chatting with Gemini about vacation ideas and could absolutely picture a world where if it lists some hotels I might like, the businesses that bought some LLM ad space could easily show up more often than others.

> LLMs can’t do ads without compromising the product.

It depends on what you mean by "compromise" here but they sure can inject ads.. like make the user wait 5 seconds, show an ad, then reply..

They can delay the response times and promote "premium" plans, etc

Lots of ways to monetize, I suppose the question is: will users tolerate it?

Based on what I've seen, the answer is yes, people will tolerate anything as long as it's "free".

To be fair, ads always compromise the product.

Social and search both compromised the product for ad revenue.

Consider the general research - in all, it doesn't eliminate people, but let's say it shakes out to speeding up developers 10% over all tasks. (That includes creating tickets, writing documentation, unblocking bugs, writing scripts, building proof of concepts, and more rote refactoring, but does not solve the harder problems or stop us from doing the hard work of software engineering that doesn't involve lines of code.)

That means that it's worth up to 10% of a developer's salary as a tool. And more importantly, smaller teams go faster, so it might be worth that full 10%.

Now, assume other domains end up similar - some less, some more. So, that's a large TAM.

Those that aren't willing to pay for it directly, can still use it for free, but will just have to tolerate product placement.

It very much does not assume that, only that some fraction will have become accustomed to using it to the point of not giving it up. In fact, they could probably remain profitable without a single new customer, given the number of subscribers they already have.

Literally nobody would talk to a robot that spits back ads at them

> especially if they can't pay trump to ban open source?

Huh? Do you mean for official government use?