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Talk about taking control of the narrative. OpenAI’s announcements today that it would start testing ads in ChatGPT, and that it would also introduce an $8 a month tier of service called ChatGPT Go in the U.S., gives the AI company something positive to talk to investors about as it tries to raise a gargantuan amount of money (up to $100 billion at a valuation of $750 billion at last report). That will be a change after months of chatter about how Google was catching up to OpenAI on various fronts, both technologically and with partners such as Apple. Even better, OpenAI’s two initiatives should start to beef up its top line, offering a way to trim the bottom-line losses at some point this century. Offering ads also ensures OpenAI doesn't leave that market wide open to Google, which has already taken steps to sell ads in its AI chatbot.
The idea of ads in ChatGPT has long been in the cards—the vast majority of the chatbot’s nearly 900 million weekly active users don’t subscribe to ChatGPT's paying tiers, which makes selling ads the obvious way for the company to make real money. As we’ve reported, OpenAI has projected it will generate revenue totalling $110 billion through 2030 off the cheapskates who don’t pay, a number that presumably includes shopping-related revenue as well as ads. But let’s not get ahead of ourselves. Ad businesses tend to take a long time to build up. Netflix is the most recent example of that. It introduced ads on one tier of its service in late 2022, and its 2026 ad revenue in the U.S.—where most of the world’s ad dollars come from—is projected to be only $3.26 billion, according to an eMarketer report earlier this week. That’s not a lot: Meta’s ad revenue last quarter was $50 billion.
ChatGPT should be able to ramp up its ad business faster than Netflix, however. The streaming giant hasn’t disclosed how many of its 300 million–plus global subscribers are on the tier with ads, but it’s likely a minority, as that is the newest tier, and it’s a good bet many subscribers don’t want to see ads. Advertisers are likely to see ChatGPT as more like Google Search, a giant audience. My colleague Sri Muppidi’s reporting shows that OpenAI is projecting around $2 billion in revenue from “new products” this year, which includes ads or commerce-related revenue, rising to more than $10 billion in 2027. (For more on OpenAI’s planning for ads, see this story we published last month.)
OpenAI is following Netflix in adopting a tiered approach, so that people who use the free version of ChatGPT or the new $8 a month version will see ads, while those who opt for the pricier versions—starting at $20 a month and jumping sharply from there—won’t. Given how ads have taken over Google Search, as well as Amazon’s shopping search site, over time ChatGPT users might decide to upgrade to get away from ads. OpenAI claimed in its announcement today that “the best ads are useful, entertaining and help people discover new products and services.” Only someone in the ad business could write that. Very few consumers like ads. OpenAI likely won’t care too much, though, how it makes money from users, as long as it gets something from them.
Unthinking Machines
Another AI company that needs to change the narrative is Thinking Machines Lab, the startup launched by former OpenAI chief technology officer Mira Murati, which has been bleeding staffers over the past few days. As we’ve reported, Thinking Machines only had about 40 staffers to begin with, and this week it has lost at least five, who have mostly gone back to OpenAI, from whence they came.
We’ve reported that Thinking Machines—also known as TML—was in talks at the end of last year to raise new money at a valuation of at least $50 billion. To change the narrative, Murati could try to rush out a funding announcement, although you have to wonder what investor would want to commit to putting new money into a company that looks so unstable. Don’t be surprised to see more news about TML this weekend!
In Other News
• DoorDash Chief Revenue Officer Lee Brown is departing, just a few months after joining, DoorDash confirmed.
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