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AI's economics don't make sense

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Re: AI's economics don't make sense

#81

Post by great_tankard »

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…

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.

Re: AI's economics don't make sense

#82

Post by CodingJeebus »

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…

> which is that the models themselves are profitable on a life-cycle basis, even if the companies are not profitable on an annual basis due to capital expenditure.

Until they file an S1 to go public and show the world the books, take everything they say with a grain of salt. The amount of financial engineering going on in this space is astounding, and I'll believe it when I see an objective 3rd party release an audit confirming this claim.

Re: AI's economics don't make sense

#83

Post by meheleventyone »

swader999 wrote: post #46
milesvp wrote: post #19

Reading this piece, I'm reminded of a podcast I heard some years ago where they were interviewing an early google marketing employee who was talking about the economics of google search. They said they'd done some surveys and concluded that they determined that the average user would get something like $20/year of value, and so that was the most they could realistically charge for search. Meanwhile, they could make s…

The output won't be read by humans (and increasingly this is the case in my own use) so I don't see how that works. If the output itself will be directed by the highest bidder, that doesn't work. Or if the output influences the agent's direction, that doesn't work either.

They could make it work like rewarded video ads in mobile games. Block progress until you watch the ad. Then as dutiful engineers people can consume ads to support the business and avoid being laid off.

More seriously for software engineering it’ll just cost a lot.

Re: AI's economics don't make sense

#84

Post by CSSer »

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…

Weird, especially since a lot of us have similar opinions. Was he saying that from the start and since shifted focus to it or is it completely new? The conversation about cost isn't exactly a new one.

Re: AI's economics don't make sense

#85

Post by CodingJeebus »

JohnMakin wrote: post #80
tuveson wrote: post #76

Earlier quoted context omitted.

I’m remember when CrowdStrike caused that huge outage, he basically blamed Windows / Microsoft for it. I kind of stopped taking him seriously after that. I more-or-less agree with his point of view, but he seems more interested in selling outrage rather than journalism.

I agree. Early on, it felt more like journalism, then I think he blew up and found something that works. If you challenge him on this, he will call you insecure or jealous, which I also find obnoxious[0]. I also find it highly ironic that all the ads on his podcast, at least on apple, are selling AI related products. [0] - https://www.reddit.com/r/BetterOffline/comments/1p5zv33/why_...

FWIW, iHeart Radio probably manages his ad runs. He likely has no say over which ads get run on his show, and as I understand, the podcast advertising market has slowed tremendously in 2026. Podcasting platforms can't be as picky as they used to be.

Re: AI's economics don't make sense

#86

Post by _aavaa_ »

1attice wrote: post #52
ameliaquining wrote: post #32

As it happens, published just this morning is an article from Kelsey Piper that explains in some detail what's wrong with Zitron's takes: https://www.theargumentmag.com/p/ais-biggest-critic-has-lost...

I read that and I found it unconvincing. KP is correct that EZ is, by now, emotionally and perhaps ideologically fixated on AI's approaching reckoning, but that's KP psychologizing about Ed's inner states, which is neither fruitful nor relevant to consider when confronting a reasoned argument (or, in Ed's case, several.) EZ might have incautiously and incorrectly called the peak several times, but his newsletter is n…

> His argument(s) have evolved over time, but what of it? That just shows he's not the dogmatist the author wants him to be. Discourse evolves, get over it.

I disagree. It really reads as conclusion is fixed argument change as they are disproven.

Re: AI's economics don't make sense

#87

Post by zozbot234 »

CodingJeebus wrote: post #79
hparadiz wrote: post #61

Earlier quoted context omitted.

The economics is spending a few hundred bucks on software for an IC you're already paying over ten grand a month in order to make them more productive. How are supposedly smart industry experts not seeing this obvious fact? Are these guys actually experts?

It's a few hundred bucks per month for now, but that's not going to last. At some point, the industry is going to pivot towards tracking token-based productivity because it's not going to be cheap forever unless FOSS models catch up.

FOSS models have effectively caught up wrt. scale, see e.g. the latest DeepSeek V4 series - but they still require major hardware resources (hundreds of gigabytes of RAM for a very lean deployment targeting single- or few-users inference) to run at acceptable throughput.

Re: AI's economics don't make sense

#88

Post by chromacity »

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.

Which is to say, it's easy to scapegoat this guy, but I think his approach is not any different from other "opinion piece" bloggers that we all tend to reshare.

Re: AI's economics don't make sense

#89

Post by chankstein38 »

Before subscribing to Claude, I put $15 into my account so I could use it from Cline in VS Code. After less than a few hours I was out of money. This was basically just to get a simple project setup and a few 1000~ line (AI generated) code files edited. I have heard Cline is less ideal with token management but regardless, these services can easily cost us hundreds or thousands of dollars a month billed on usage. ($15x4hoursx2 for a work day = $30, $30x25 = $750). And that is assuming my very light usage here could even apply to a larger code base. My guess would be if I hooked it up to an enterprise project it'd skyrocket easily to $60+/day.
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