OpenAI’s ChatGPT has ushered in a new hype cycle around artificial intelligence and has cornered the media’s attention with mentions in nearly every article or news story on the subject.
But the bigger question is how is the company monetizing all the attention on an ongoing basis.
When the company took the tool public in March 2023 it was accessible free of charge for the initial two months of use.
This allowed the world to get in and try the tool out leading directly to the explosion of interest in AI and specifically generative AI.
But after that two-month free window, OpenAI charges $19.99 monthly for users to access the tool.
Now there are reports that subscriptions for the generative AI tool are starting to slow after a strong summer leading some to speculate on if the saturation model for the tool has already reached its peak.
But let’s not worry about that quite yet.
Subscriptions and mobile app downloads slowed in September after several months of explosive growth, with the company realizing $4.5 million per month.
But these figures ignore the main source of revenue for the company which are fees charged to companies that embed the tool in their own interface via APIs.
By comparison, one of the leading free AI apps for phones is AskAI, which reported over $6M in revenue via advertising revenue through the app.
But AskAI utilizes ChatGPT behind the scenes and pays OpenAI for the right to usage of the company’s generative AI model.
Let’s also not forget that Microsoft has invested $11 billion in OpenAI, for 49% ownership, and is happily throwing the model under every piece of software that Microsoft makes.
Reuters reports that OpenAI is expecting to realize $1 billion in revenue over a 12-month period, up from a total revenue of just $28 million in 2022.
OpenAI has a long runway to continue to develop improvements to ChatGPT, including the next round expected soon which will merge voice and image recognition to the model.