Earlier quoted context omitted.
3) Buy all the RAM, increasing the barrier to entry to push back the tide a bit, in time for a juicy IPO.
4) Make it illegal to use anything but regulated models.
The unbearable cheapness of open weight models
121–130 of 195 posts
Re: The unbearable cheapness of open weight models
#122The giants knew this was coming, and soon 95% of AI tasks will be able to be done by open models (coding, research, cowork style work). So why pay a premium? Why use them at all? This leaves the labs with two options: 1) push the frontier in a way only massive scale can, and cash in on it (mythos level cyber security, recursive training, frontier science work). There’s big money for never before possible capabilities…
> Be apple where everyone else is Linux. Apple and Linux barely even compete in the same markets. Linux runs on the servers and embedded devices, Apple on the smartphones. Android is technically Linux but not in the "is a good analogy for open weight models" sense because Android is so deeply under the thumb of Google. The main place Linux and Apple actually compete is for PCs and laptops, and that's the market where…
Re: The unbearable cheapness of open weight models
#123Earlier quoted context omitted.
#1 isn't going to happen because we're actually data limited, not compute limited. You can throw all the compute in the world at bad data and it won't make a difference, but an undertrained model with perfect training data will absolutely slay. #2 isn't going to happen, because these labs have shown they have limited app/design sense, and they also lack the industry connections and domain wisdom to execute. The way t…
I don't think "data limited" is true anymore outside of very specialized cases (for instance: https://arxiv.org/abs/2510.01631 ). As weird as it sounds, training improves a lot with synthetic data. You do need business development to create those relationships. Saying they "have limited ___" mostly means they "haven't yet hired people who are good at ___". That's been changing already; the Claude app is steadily impr…
This study seems to show that there are places where synthetic data, especially related to common crawl.
> Pure synthetic data remains non-advantageous over CC; notably, models trained on pure rephrased synthetic data will underperform those trained on CC at larger models.
But the tradeoffs seem to be different at large scale.
> Overall, these model scaling results suggest synthetic data appears comparably less favorable for pre-training larger LMs relative to its utility in data scaling scenarios. Despite outperforming training on CC, larger models are not as tolerant to a higher ratio synthetic data as larger data budgets. This observation aligns with practices where synthetic data is effective for smaller LMs or specific pre-training phases, but less predominantly used for the largest models.
How I am reading it is there are places where it is useful:
> Notably, any mixture involving synthetic data, or pure synthetic data (except pure QA), is projected to achieve a lower irreducible loss than training only on CommonCrawl.
But it also seems that on textbook scale synthetic data, they did show model collapse vs rephrased data.
> These results contribute mixed evidence on “model collapse" during large-scale single-round (n=1) model training on synthetic data–training on rephrased synthetic data shows no degradation in performance in foreseeable scales whereas training on mixtures of textbook-style pure-generated synthetic data shows patterns predicted by “model collapse".
IMHO there are some very specific areas where we aren't "data limited", like math, but as your reference states "Our work demystifies synthetic data in pre-training, validates its conditional benefits, and offers practical guidance."
Note the cost of 30% of the total dataset being synthetic, where the model starts amplifying the generator's biases, leading to a permanent degradation in downstream zero-shot capability on unseen out-of-domain natural tasks.
My takeaway is there is nuance where synthetic data is an amplifier and where it is a problem, and in my mind that paper demonstrates it will not solve the data problem in general.
Re: The unbearable cheapness of open weight models
#124> What worries me about this is that Anthropic and OpenAI seem to have backed themselves into a corner of high costs. Can they reasonably decrease their prices by 20-50x to compete with DeepSeek or Xiaomi’s Mimo? They have high prices, not high costs. They will obviously keep prices as high as they can for as long as they can, while keeping demand up. Once demand starts to fall, so will the prices. > Are these models…
Money is made on the subset of inference that is charged at cost + margin via their APIs. API usage is so high because customers are still finding their feet, trying to understand how to measure the value they get from their spend, erring on the side of spend.
Yes, in a world of unmeasured value and tokenmaxxing, inference is profitable on SOTA models because all capacity is being consumed at all times, driving down marginal costs, but what about a world in which capacity isn’t constrained? There are still huge fixed costs.
Even the most optimistic leaks with the current high prices put the margin on API token inference at around 50%. How can SOTA models ever come close to competing on price? Price always matters. Offering the best model with the most brand recognition does not exempt OpenAI from the basic rules of business.
Historically, software has been such a successful business because the margins are incredible, 95%+ in many cases, driven by direct measurable value to customers that dwarfs the cost. A 50% margin at a time when your customers are falling over themselves to spend as much money as they can is not a good sign, it is a very bad sign, it leaves no room to ever achieve traditional technology margins, and inevitably leads to very weak margins.
Inference needs to become an order of magnitude cheaper than the value it delivers to ever have a chance of delivering on this wildly profitable vision. The cheap model providers have a much better chance of achieving that.
Outside of coding, almost every business case for AI doesn’t need above human intelligence, it doesn’t even need human intelligence, or half a human intelligence, a business can extract a lot of value from a machine that has a fraction of a human’s intelligence. Most human work does not use our intelligence, it is rote, a monkey could do it, and that’s where AI will be used most. Who is going to pay $10 per million tokens when they could pay $0.10 to get the same outcomes?
Re: The unbearable cheapness of open weight models
#125Re: The unbearable cheapness of open weight models
#126Earlier quoted context omitted.
> will put data centers in orbit. A pipe dream. Cheap access to space was once a pipe dream. Reusable boosters were once a pipe dream. A new player beating Boeing to the ISS was once a pipe dream. LEO constellations were once a pipe dream. Launching thousands of satellites was once a pipe dream. You should know that a) they are already running "AI" chips on their current sats. and b) they are already producing kW of…
> You can watch Scott Manley's video on it, where he does some rough calculations and explains the overall architecture. I'm currently writing a blog post, and there's one big thing everyone, including Scott Manley, missed. Once I realised it, I wondered what took me so long to spot this issue.
slightly related .. I saw a talk on DCs in space, and it said median Earth orbit had a latency of 500ms .. but back of envelope seems to be : 15,000km above Earth would have around 100ms latency, comparable to internet ping times.
Not an expert, feel free to weigh in.
Re: The unbearable cheapness of open weight models
#127I'd appreciate an explanation of what "open weight model" means. Is it a "weight model" that is open, or a model with open weights (so should be "open-weight model"), or is it weights that can be applied to a model? Are weights separable from a model? And if not, what is the point of saying "open-weight model" instead of just "open model?" To the newcomer, it's hard to determine what the components of an AI system ar…
That data includes not only the "weights" but also various files with required information, e.g. the tokenizer, the chat template, files that describe the structure of the "weights", e.g. number of layers, the number of "experts", routing information, etc. All this information may be distributed in many files (e.g. *.safetensors files with weights, *.json files etc.) or it may be aggregated in a single container file (with the .gguf extension).
You can see an example of the files included in a very simple open weights LLM here:
https://huggingface.co/google/gemma-4-12B-it/tree/main
Bigger LLMs have much more files, especially much more *.safetensors files, which contain the "weights". The "weights", i.e. matrices of numbers that are used in the computational algorithm that generates the output tokens, constitute the bulk of the data needed to run a model, i.e. from a few gigabytes to a couple of terabytes, which is why the term "open-weights" is used, but in fact by this term it is understood that all data needed for running inference is open.
For an open weights LLM, you do not have access to the data set used for training the model or to the algorithms that have been used during the training of that model.
You can still do some fine-tuning of the model, using your own training methods and your own additional training data. To facilitate this, several open weights models offer not only a model version that can be used for inference to implement a chat application or an agentic workflow, but also a "base" or "raw" version that is not suitable for being used directly for inference but which is suitable for you to do a post-training/fine-tuning, to create a model more appropriate for your particular needs.
An "open weights" model is sufficient for most of the potential LLM users, because training a model is something that requires expertise, expensive hardware and a lot of time, so few would be able to do it even when given access to the necessary data.
Re: The unbearable cheapness of open weight models
#128Earlier quoted context omitted.
A completely open model is one like the Allen Institute's Olmo model series: https://allenai.org/olmo The trained weights are open, the training software is open, and the data that goes into training the model is open. Not many models are fully open. An open weights model is one that has freely available trained weights, and maybe fine-tuning tools, but it lacks the original training data (and usually lacks the train…
So you can apply different weights to those "non-open" models? Also, I've read a bunch of descriptions of AI components, but none of them has said what the weights are applied to in the model. I guess that every model contains a dictionary of words and phrases, and the weights map relationships between them? All the descriptions simply talk about weights being applied to "input," but neglect to say what that input is…
https://www.3blue1brown.com/lessons/mini-llm/
To quote part of it, Training a model can be thought of as tuning the dials on a really big machine. The way that a language model behaves is entirely determined by these many different continuous values, usually called parameters or weights.
Longer and slightly more technical, "Intro to Large Language Models" by Andrej Karpathy:
Re: The unbearable cheapness of open weight models
#129Earlier quoted context omitted.
> It seems plainly clear to me that information and information processing is commodifying (for the first time in human history?). Without the age-old bottlenecks at the top of the value chain, capital will surely flow downwards, right? Isn't this the thing people have said about every new technology since the printing press? And it has been mostly true, but it has also been the case that the incumbents have fought h…
I don’t think that comparing LLM’s to the printing press (and radio, film, TV, etc) is an apt analogy, and I don’t think that people have said the same things about the two technologies; the prior technological changes in information dealt with distribution, while this one deals with processing and production. Recall the notion of a bottleneck, and this distinction will become clear. Those prior technological changes…
Computers and the internet did a lot to make production easier in addition to distribution. Anyone today can use a photo editor to superimpose text over an image in any font in seconds like it's child's play. That used to require knowledge of calligraphy. Film production used to require very expensive equipment that everyone now has built into their phone.
> Those prior technological changes never inverted a bottleneck, and this one does.
Before the printing press, copying books had to be done by hand. If you wanted a million copies of something made you had to be the church or a government. Today there are independent pundits who get a million impressions on their shitposts, and that's with consolidated platforms being largely against them.
We still have an entire edifice (copyright) which is structured around copying requiring a sufficiently centralized apparatus to serve as a useful chokepoint for imposing restrictions and collecting royalties, which is correspondingly under increasing distress as
Re: The unbearable cheapness of open weight models
#130Earlier quoted context omitted.
> Be apple where everyone else is Linux. Apple and Linux barely even compete in the same markets. Linux runs on the servers and embedded devices, Apple on the smartphones. Android is technically Linux but not in the "is a good analogy for open weight models" sense because Android is so deeply under the thumb of Google. The main place Linux and Apple actually compete is for PCs and laptops, and that's the market where…
youre missing the point entirely and opted to entertain your own framework