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OpenAI just announced pricing for businesses looking to integrate ChatGPT services into their products, very much like a 90% off sale.
It all starts with OpenAI. OpenAI used to be a non-profit, but now it’s as voracious for wealth as the unicorns of Silicon Valley. The company has built an impressive array of products such as the DALL-E image generator and his famous ChatGPT service.
ChatGPT is powered by a system known as Large Scale Language Models (or LLMs), and is one of several LLM lines commercially marketed by OpenAI. Most purchasers of LLM output are companies that integrate language-related services such as chat, composition, summarization, software generation, online search, and sentiment analysis into their websites, services, and products.
For example, dozens of startups use LLM to help their customers churn out corporate blogs, marketing emails, and click-seeking SEO articles with significantly less effort than before. While this may add little to our cultural heritage, it does have a substantial impact on the revenues of these companies’ Kanye users. Startups are touting this kind of copywriting service, with new ones being launched every week.
Most are basically thin wrappers trying to arbitrage LLM pricing, with virtually no differentiation or competition moat. Some of them, most notably Jasper, which recently raised funding at a $1.5 billion valuation, are building value-added services around his acquired and reformatted LLM output.
OpenAI is currently the largest LLM provider, but has increased competition from Cohere, AI21, Anthropic, Hugging Face, and more. These companies generally sell their output “per token”, with tokens representing about three-quarters of a word.
As an example, a very powerful OpenAI model called Davinci has a baseline price of 2 cents for 1,000 tokens, or about 750 words. This means that it costs Jasper about 8 cents to get Davinci to write six 500-word blog posts for him.
Jasper’s prosperity lies in its pricing plans and subscription model that allows the company to charge 8 cents or more for those posts. Prosperity for you comes from these posts in the form of clicks, customer leads, sales, and donations. And you get more value than you pay Jasper to write for Davinci. For better or worse, this dynamic clearly leads to a tidal wave of new “content” flooding the internet in very short order.
