Some of us already do. I shell out $20 a month each for Google\u2019s Gemini and for Perplexity Pro. It\u2019s money well spent. Both are excellent research tools that guide me to crucial information in places I\u2019d never have thought to look. Whatever these companies charge, I\u2019ll pay (within reason).<\/p>\n
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And eventually I\u2019ll have to come up with a few dollars more per month. It\u2019s just a matter of time.<\/p>\n
\u201cThis is not a sustainable price in the business models of these companies,\u201d warned Koen Pauwels, professor of marketing at Northeastern University\u2019s D\u2019Amore McKim School of Business. <\/p>\n
How unsustainable? OpenAI\u2019s chief executive Sam Altman said his company alone is committed to spending $1.4 trillion on data centers over the next eight years. That works out to $175 billion per year. <\/p>\n
The other AI giants are investing similar sums. Amazon, Google\u2019s parent company Alphabet, Microsoft, Meta, and Oracle plan 2026 capital expenditures of $600 billion <\/a>among them. The financial research firm CreditSights estimates that 75 percent of this money, $450 billion, is earmarked for AI upgrades.<\/p>\n But of the hundreds of millions worldwide who use the chatbots, only a smidgen of them pay anything. OpenAI, for instance, says it expects $25 billion in revenue this year, mostly from $20 subscriptions, though the company is rapidly ramping up its offerings for corporations and governments. <\/p>\n Industry analysts estimate that around 5 percent of consumers who use chatbots are paying for them, and the companies would love to sign up more. So they\u2019d rather not raise prices just yet \u2014 just as video streamers waited till most of the US was hooked before tightening the screws.<\/p>\n For now, we\u2019ll see the companies tighten their belts \u2014 and ours \u2014 by cutting back on features. <\/p>\n It\u2019s already happening. The free version of Perplexity, for instance searches on older, less sophisticated AI models by default, rather than automatically choosing the model best suited to give a comprehensive answer. The free ChatGPT gives you limited access to an advanced AI model, but downshifts to a lesser version if you ask too many questions. Chatbots are also limiting access to reasoning or \u201cdeep thinking\u201d models, the kind that can chew through complicated questions like how to invest your retirement money. Free accounts will let you run just a few such searches, or none at all.<\/p>\n All these cutbacks reduce the computing time and electric current needed to find an answer. That means lower costs for the AI companies. The great majority of users won\u2019t notice the difference, but those of us who demand more comprehensive responses must reach for our wallets.<\/p>\n And even subscribers will sometimes get less. OpenAI last month announced the shutdown of Sora, the AI movie generator that stunned users when it was launched less than two years ago. Available only to paying customers, Sora\u2019s monstrous appetite for computing power still made it a massive money pit.<\/p>\n But cost-cutting isn\u2019t enough. AI companies must also increase their revenues. It\u2019s especially critical for OpenAI. While Google and Microsoft are immensely profitable companies that can afford losing bets on AI, OpenAI is working without a net. It must make AI pay, or else.<\/p>\n The company\u2019s latest gambits include a new cut-rate subscription it pioneered in India. ChatGPT Go costs just $8 a month and offers unlimited chat, a more advanced AI model and expanded access to image generation tools. <\/p>\n But the big opportunity is advertising. OpenAI began inserting ads into its free service earlier this year and will add them to paid Go accounts as well. The company is taking its time, trying to avoid offending users with unwanted sales pitches. But the potential payoff is irresistible \u2014 as much as $100 billion a year<\/a> by 2030, according to a recent report in Axios. <\/p>\n The other pure AI company, Anthropic, has said it wants no part of advertising. The company is expected to bring in $30 billion this year, more than OpenAI, and it spends a lot less on data centers. In addition, Anthropic derives most of its revenue from corporate and government clients, and can afford to hold back on consumer ads. But if OpenAI\u2019s ad business meets expectations, I predict a change of heart.<\/p>\n And once we consumers have made our peace with ad-supported AI, I expect to see those monthly subscription prices start to rise as well. Just like Netflix.<\/p>\n Hiawatha Bray can be reached at hiawatha.bray@globe.com<\/a>. Follow him @GlobeTechLab<\/a>.<\/p>\n