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LLMs are cheap

snellman.net

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Re: LLMs are cheap

#11

Post by famouswaffles »

Etheryte wrote: post #7

> OpenAI reportedly made a loss of $5B in 2024. They also reportedly have 500M MAUs. To reach break-even, they'd just need to monetize those free users for an average of $10/year, or $1/month. A $1 ARPU for a service like this would be pitifully low. This is a tangent to the rest of the article, but this "just" is doing more heavy lifting than Atlas holding up the skies. Taking a user from $0 to $1 is immeasurably ha…

It's doing some heavy lifting but not that much. Saas subscriptions are not the be-all and end-all of software monetization. He's saying they need to get $1 more on average, not convert all users to $1 subscribers. Doable.

Re: LLMs are cheap

#12

Post by TZubiri »

"Data from paid API queries will also typically not be used for training or tuning the models, so getting access to more data wouldn't explain it."

Source? Is this in the API ToS?

Re: LLMs are cheap

#13

Post by eptcyka »

Etheryte wrote: post #7

> OpenAI reportedly made a loss of $5B in 2024. They also reportedly have 500M MAUs. To reach break-even, they'd just need to monetize those free users for an average of $10/year, or $1/month. A $1 ARPU for a service like this would be pitifully low. This is a tangent to the rest of the article, but this "just" is doing more heavy lifting than Atlas holding up the skies. Taking a user from $0 to $1 is immeasurably ha…

500M MAU also implies that some are already paying. They need to extract 1$ more on average, not just get all of them to pay 1$ per month. This, I imagine is harder than assuming there are 500m users that pay nothing today.

Re: LLMs are cheap

#14

Post by TZubiri »

xxbondsxx wrote: post #5

You can't compare an API that is profitable (search) to an API that is likely a loss-leader to grab market share (hosted LLM cloud models). Sure there might not be any analysis that proves that they subsidized, but you also don't have any evidence that they are profitable. All the data points we have today show that companies are spending an insane amount of capex on gaining AI dominance without the revenue to achiev…

This is addressed in the article. Giving arguments for llms being profitable as APIs.

Re: LLMs are cheap

#16

Post by eptcyka »

holoduke wrote: post #8
Etheryte wrote: post #7

> OpenAI reportedly made a loss of $5B in 2024. They also reportedly have 500M MAUs. To reach break-even, they'd just need to monetize those free users for an average of $10/year, or $1/month. A $1 ARPU for a service like this would be pitifully low. This is a tangent to the rest of the article, but this "just" is doing more heavy lifting than Atlas holding up the skies. Taking a user from $0 to $1 is immeasurably ha…

There are more monetization ways than just a hard paying user. You can ask Google or Facebook. I dont think its super hard to get chatgpt to a. Profitable business. Its probably the most used service currently out there. And its use and effectiveness is immense.

I wonder how many more watts does producing an answer OpenAI use than answering a Google search query.

Re: LLMs are cheap

#17

Post by theOGognf »

Some anecdotal data, but we recently estimated the cost of running a LLM at $WORK by looking at power usage over a bursty period of requests from our internal users and it was on the order of $10s/mil tokens. And we arent a big place, nor were our servers at max load, so I can see the cost being much lower at scale

Re: LLMs are cheap

#18

Post by fsmv »

Etheryte wrote: post #7

> OpenAI reportedly made a loss of $5B in 2024. They also reportedly have 500M MAUs. To reach break-even, they'd just need to monetize those free users for an average of $10/year, or $1/month. A $1 ARPU for a service like this would be pitifully low. This is a tangent to the rest of the article, but this "just" is doing more heavy lifting than Atlas holding up the skies. Taking a user from $0 to $1 is immeasurably ha…

Another problem is once they're on the pro plan using better models the users are more expensive

Re: LLMs are cheap

#19

Post by deadbabe »

Given how addicted people are to using LLMs steep price hikes are almost certainly guaranteed at some point.

When this happens, what we will see is once again the rich and privileged will benefit from the use of LLMs while the poor have to just rely on their own brains. Consider how some students will have to grow up struggling through school without any LLMs while rich kids breeze their way through everything with their assistants.

Re: LLMs are cheap

#20

Post by paxys »

The entire comparison hinges on people only making simple factual searches ("what is the capital of USA") on both search engines and LLMs. I'm going to say that's far enough from the standard use case for both these sets of APIs to be entirely meaningless.

- If I'm using a search engine, I want to search the web. Yes these engines are increasingly providing answers rather than just search results, but that's a UI/product feature rather than an API one. If I'm paying Google $$ for access to their index, I'm interested in the index.

- If I'm using an LLM, it is for parsing large amounts of input data, image recognition, complex analysis, deep thinking/reasoning, coding. All of these result in significantly more token usage than a 2-line "the answer to your question is xyz" response.

The author is basically saying – a Honda Civic is cheap because it costs about the same per pound as Honeycrisp apples.

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