Do labs actually make any money on these subscriptions? It seems like the average user is using far more than 20$ of requests (going by the price for API requests which surely can’t have a massive margin?).
Obviously they must gain something or they wouldn’t do it, but it seems likely the benefits are more intangible, gaining market share, generating hype and attracting API users etc. These benefits seem like they may arise from free usage as well.
Yeah, all things like this follow a power distribution—a few users use it A TON and both median and average are far smaller than you’d think. Assuming they throttle the biggest users in some way, they’re making some money on paid use. But it’s probably irrelevant to their overall strategy and profitability.
I’d guess the biggest value for them is in showing growth and “willingness to pay” for this, more than the actual money collected.
Do labs actually make any money on these subscriptions? It seems like the average user is using far more than 20$ of requests (going by the price for API requests which surely can’t have a massive margin?).
Obviously they must gain something or they wouldn’t do it, but it seems likely the benefits are more intangible, gaining market share, generating hype and attracting API users etc. These benefits seem like they may arise from free usage as well.
I’m skeptical. I bet the average user is actually using far less than $20 per month.
(Both the median user and the average usage are probably <$20 per month IMO.)
Keep in mind that the typical user is pretty different from the typical power user as with all products.
This might change some with more long-context usage which burns way more money per second.
(Also, I think API might have a massive margin, I’m unsure.)
[no actual direct knowledge]
Yeah, all things like this follow a power distribution—a few users use it A TON and both median and average are far smaller than you’d think. Assuming they throttle the biggest users in some way, they’re making some money on paid use. But it’s probably irrelevant to their overall strategy and profitability.
I’d guess the biggest value for them is in showing growth and “willingness to pay” for this, more than the actual money collected.