If it costs more to produce a result than a customer is willing to pay, then the company will either be unprofitable (sell at a loss) or just close up shop. The cost for running LLMs is much higher than what customers are likely to want to pay, and that has nothing to do with competition from other LLM companies, it's a result of high cost of cutting-edge hardware, infrastructure, and the massive amount of electricity it consumes - so much electricity that tech companies are now building power plants to power them (which are very expensive to build). It's a massive cost, and all for the hope that people will continue to accept AI slop.
According to the data in the post, the cost of running the model for open AI in 2024 was 2B and if we strip out all training/research costs they had a loss of about 1B, peanuts. They can raise a little bit the standard subscription prices and turn profitable.
The bulk of the cost was model training and research(~4B). They are forced to train new models and improve existing one because of the market and competition.
leptons|5 months ago
vb-8448|5 months ago
The bulk of the cost was model training and research(~4B). They are forced to train new models and improve existing one because of the market and competition.