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AI's economics don't make sense

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Re: AI's economics don't make sense

#161

Post by bdangubic »

chromacity wrote: post #88
JohnMakin wrote: post #53

I've sort of lost some respect for ed that I had early on in the hype cycle - he's still right about some things, but I can see him slowly and subtly retreating from his strong position, held even a few months ago, that these things will never ever be useful for anything and it's all a scam because they don't actually do anything at all except burn money. He would say it like 8 times a monologue. I remember one podca…

That's essentially how you become an online pundit. The internet rewards provocative takes. If you have a tendency to doubt yourself and revise your views, then (a) your views become less provocative and thus less likely to translate into click-worthy headlines; (b) you end up biting your tongue or saying "I don't know" often enough that is becomes impossible to keep up with the requisite weekly publication schedule.…

> That's essentially how you become an online pundit. The internet rewards provocative takes.

internet rewards provocative takes - plural.

this mate has a single take and writes more about this one thing than jrr tolkien did in all his works combined

Re: AI's economics don't make sense

#162

Post by fragmede »

xienze wrote: post #110
hparadiz wrote: post #103

Earlier quoted context omitted.

You know I can just lookup the costs per seat right? It's not that much and not everyone is a heavy user at an org. And for code the costs are falling per compute cycle.

First, the key phrase here is "end game." Whatever you're looking at now isn't where prices will be in short order. Second, it seems a hard to believe that hundreds of billions of dollars would be spent and untold numbers of data centers would be built just to gain a measly couple hundred dollars per seat.

But it's a lot of seats. If you get 1 billion people to pay $20/month, that's $20 billion. Multiply that by 10 years and you have $200 billion.

Re: AI's economics don't make sense

#163

Post by alok-g »

A possibly naive question: Mobile phone plans, Internet service providers, etc., also often used fixed monthly pricing. How does that keep working (with competition present)? Is the issue monthly pricing, subsidies, or both?

Re: AI's economics don't make sense

#164

Post by great_tankard »

chromacity wrote: post #160
great_tankard wrote: post #81

Earlier quoted context omitted.

This is exactly how I feel about him too. I also find his "number big" approach to writing ("check out my 18,000 word blog about something I'm learning about in real time") off-putting, so I've completely stopped engaging with it. We need better critics of the industry.

> We need better critics of the industry. There's plenty, but they don't have enough material to post once a week. And if you don't post once a week, you don't end up on HN once a month. As simple as that. Looking at the blogs that show up on HN regularly, the usual hit rate is 10-25%.

Yes, but the HN crowd isn't Zitron's main audience. He appeals to smart people who don't understand anything about computing or business. I do not mean this in a disparaging way; it's a curious audience that has somewhat justifiable moral and aesthetic objections to LLMs and especially the companies peddling them.

The problem is that Zitron has charm, an authoritative voice and a very aggressive online presence. That's a difficult combination to compete against.

Re: AI's economics don't make sense

#165

Post by slopinthebag »

Glyptodon wrote: post #39

I think there's another route this goes. At $7k a year or more per eng in token use, I think it's very reasonable to buy engineers machines with obscene GPUs and RAM and run models locally. And if it doesn't make sense now, someone will figure it out and save companies $10k+/eng over 3 years.

I imagine there are companies forming now with their entire business model being building "prosumer" inference machines and farms running everything from Qwen 3.6 27b up to GLM 5.1 and everything in between, packaged perfectly for companies to make one-time investments in with the assumption that open models will be getting both more efficient and better over time.

Re: AI's economics don't make sense

#167

Post by Glyptodon »

no-name-here wrote: post #159
Glyptodon wrote: post #39

I think there's another route this goes. At $7k a year or more per eng in token use, I think it's very reasonable to buy engineers machines with obscene GPUs and RAM and run models locally. And if it doesn't make sense now, someone will figure it out and save companies $10k+/eng over 3 years.

If you only want/need the kind of model output that can be served on a machine costing single digit thousands, aren’t cheaper cloud-served models available? (And as the sister comment points out, sharing hardware allows greater utilization and lower costs per user.)

That might just mean even more savings as you'd only need need a size n cluster for m engineers where n is probably < m.

Re: AI's economics don't make sense

#168

Post by BosunoB »

mrkeen wrote: post #134
BosunoB wrote: post #77

All subscription models are subsidized by users who don't use much. The fact that somebody on a $20 sub might get $50 in value isn't crazy if there are 3 people who only get $10 in value. This isn't some sign that the model is broken, it's the intended outcome. Also, I didn't read this whole thing, but I have yet to see Zitron respond to the strongest AI financials claim, which is that the models themselves are profi…

I subscribed to Claude for a month. I sat down with it for a few sessions, but in each case I ran into a limit before I achieved anything worthwhile. And that was with me babysitting it the whole time to try to get the most out of it. I'm not sure it's possible to use it less (so that others can use it more) and get anything meaningful done.

Most small features take 80-150k tokens to implement, and most large features take 200-250k. For a hobbiest working like 10 hours a week, they can get stuff done but not nearly hit the weekly usage cap.

Re: AI's economics don't make sense

#169

Post by IshKebab »

swader999 wrote: post #156
IshKebab wrote: post #145

Earlier quoted context omitted.

What do you mean it "doesn't work"? I can totally see OpenAI take money in return for companies adding custom content ("Everyone agrees Mattresses4u make the best mattresses") to the training data.

The utility of what your trying to accomplish goes to crap. For example, design me a strength program and it gets corrupted by gyms, trainers in my area etc that have been paid to be promoted in the output, especially if it's subtle. Or all of a sudden I'm getting a stack with Oracle in it all the time...

I didn't say it would be useful... This is pretty much exactly how Google/Amazon search works now. Search for strength training and it will show gyms and trainers in your area that have paid for promotion.

I think the real problem with that approach is you wouldn't be able to label the sponsored part, which I guess is a legal requirement in some places.

Re: AI's economics don't make sense

#170

Post by BosunoB »

weakfish wrote: post #94
BosunoB wrote: post #77

All subscription models are subsidized by users who don't use much. The fact that somebody on a $20 sub might get $50 in value isn't crazy if there are 3 people who only get $10 in value. This isn't some sign that the model is broken, it's the intended outcome. Also, I didn't read this whole thing, but I have yet to see Zitron respond to the strongest AI financials claim, which is that the models themselves are profi…

> but I have yet to see Zitron respond to the strongest AI financials claim He does in this [0] article. [0] https://www.wheresyoured.at/ai-is-really-weird/

Thanks for the link. I'll admit I'm not an expert on the business side of this, but is this really much of a response? He seems to just call it strange accounting and then he moves on.

It doesn't even feel like particularly strange accounting to me. Aren't there plenty of companies that spend a lot in one year and realize the gains in the next year? If I build a house this year and sell it next year, the house was still profitable, even if next year I'm building 3 more houses to sell in the year after.

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