GPT-4o mini is $0.15/1M input tokens, $0.60/1M output tokens. In comparison, Claude Haiku is $0.25/1M input tokens, $1.25/1M output tokens. There's no way this price-race-to-the-bottom is sustainable.
To earn appreciable revenue at this price, an LLM company needs to be regularly generating multiple internets worth of text.
On the one hand, generating multiple internets of text seems outlandish.
But on the other hand, we're now approaching the point where you can start building LLMs into software without fretting about cost. Now that you can buy ~30 pages for a penny (instead of a dollar) you can really start to throw it into websites, games, search bars, natural language interfaces etc. without every user costing you much.
But small models are not the endgame for these AI companies, as truly general intelligence is a market worth trillions.
What this ~98% cost drop over 2 years hints at is that when AGI does arrive, it might not be horribly expensive.