By now, it’s clear that the only way the tech industry can justify the cost of AI is if it replaces vast swaths of the human workforce with machines that run 24/7.
The bad news is that this situation has created a world-historic financial market that, by some metrics, is looking worse than the run-up to the Great Depression. The good news is that this future of an AI takeover is looking increasingly unlikely, at least at the industry’s current pace, a fact which is now dawning on some of the biggest rubes and dupes in the corporate world.
According to a new survey from “Big Four” accounting firm KPMG, a significant number of corporate executives are reeling from sticker shock over new usage-based AI pricing schemes. Though enterprises could once count on AI companies to subsidize the price of large language models via flat-rate contracts, that’s no longer a given, as the rising cost of computational power forces the entire tech sector into a defensive posture.
“Nah, I don’t need to know about or understand the basics of an infrastructure that I’ll be using to replace my workforce. Don’t know about data centers and the “ram problem” whatever tf that is, because it’ll be cheap as hell. But real talk? WHY THE FUCK IS NETFLIX RAISING THEIR FUCKING PRICES AGAIN! I remember when it was $10 for all you could watch! Crazy work!”
And all of this happens in a starting phase where exactly none of the AI companies are generating profit and they are all still fighting for market shares via heavily discounts.
If costs are far too high to justify replacing workers right now, just imagine the costs once the established market increases costs to levels that actually generate profits for them; ones able to make back the insane investments.
They think that Moores law will make the tech so efficient in such a short time that it won’t matter. This is because they don’t understand that Moores law is effectively dead and stopped being a true thing less than 10 years.
@MicroWave Boss: ‘What a fantastic day! Tollbooth co have announced the worker replacement tollbooth that can replace workers, and they’re rentimg into people at far less than it costs to run! What a fantastic deal, I shall never have to deal with troublesome workers expecting to be paid more each year!’
Boss 1 year later: 'What? Tollbooth co have announced a massive price hike?! This is an outrage! How dare they demand more money after I let them infiltrate every aspect of my business?! Oh what a terrible day, who could have seen this coming? Why did nobody warn me, except the workers I fired then had to re-hire to check the tollbooth was working?
Particularly hilarious because most of these fuckwits are trying to do the the exact same thing to their customers - Increase customer base with undervalued product, then jack up prices to profit on a “captive” user base. Les Surprise when it happens to them first.
I have to love it when lots of people just mindlessly doing what they think “everyone else” is doing is called “leadership”. Sorry, that’s called behaving like a herd animal.
FFS, you could replace a lot of the asshats in corporate boardrooms and on mahogany row with bash scripts and not even use AI and probably save a metric shit-ton of money, but that would give up the whole game, I guess. Imagine spreading that wealth to all of the people actually doing all the thinking and the goddamned work, even in spite of really shitty management.
I’d love to see some “KPIs” applied to the douchebags that do all this kind of stuff, while trying to stack-rank all of their employees and monitor all their communication with AI and so on…
OMFG. AI costs money to use, and you cannot remove the human points of accountability in a workflow. People who can’t understand these basic concepts shouldn’t be in charge of anything.
Wait until the rugpull happens and prices 10x.
I guess our taxes are going to subsidize 10X more to make up for it. The Ruling class learned that their workers hate skin colors and forein accents more than they like fair pay and treatment.
If the AI companies are smart, they’ll have lock-in contracts with exorbitant exit clauses.
A common cause of this kind of problem is lots of people simply default to whatever the “best” model is and throw every problem at it. The best model can handle those problems, sure, because it’s the best model. But it’s also the most expensive model.
A better strategy is a multi-model agent that breaks tasks down into smaller sub-tasks and then uses the minimal model that can manage each of those tasks. The high-level program architecture can be figured out by Fable 5 or whatever, but then each of the functions and classes can be written by a cheap local model like one of the Qwens, for example. An AI that’s been told to find correlations in a large corpus of documents could make use of a smaller model to analyze each of the documents to filter out the ones least likely to be useful and only actually “read” the most promising ones. And so forth.
This is something that’s an area of very active development. The harness is going to be just as important as the model, if not moreso.
Gee…
Who would have guessed that the techbros would start charging a shit ton more money once they had captured market share…
I’m honestly surprised how long it took, I figured the second companies fired humans for AI, they’d jack up the rates
All the brilliant people jacking each other off and sitting on each others boards probably didn’t have time between all the self-congratulatory bullshit about their collective “leadership” to even read the executive summary of the thesis around enshittification, I guess.
I think that hasn’t even happened yet, the companies just assumed it would be cheaper
Then you disagree with both the article, the survey it references, and reality…
As usage-based pricing models become more common, many organizations are still building the capabilities required to forecast, monitor, and manage AI spending effectively,” the report authors write. Translation: one third of execs had no plan for how to actually use AI productively, a fact which is becoming increasingly clear now that the meter is running.
The finding underscores what many workers forced to use AI tools on the job have come to suspect: that an alarming number of corporate leaders treat AI as a plug-and-play solution for lowering overheard without understanding the how of it all, a kind of magical thinking entirely divorced from practical reality.
They drove adoption with flat fees, pay $X and get all you can slop for a month
Now it’s token based, that kid you hired to be good at computers now eats $1k a day on AI to produce work a human needs to redo anyways.
It was treated as a flat monthly expense which made it cheaper than humans.
So companies pivoted to AI and fired humans.
Now they charge by usage and AI is more expensive than humans.
How the actual fuck do you not think that’s happened yet?
I think this is the kpmg report? https://kpmg.com/xx/en/our-insights/ai-and-technology/ai-pulse.html
Which paints an extremely rosy picture of AI compared to this futurism article. I’m in no way a fan of AI, but I dunno if this kind of cherry-picking helps…
how do you agree to the payment scheme and accept the work and then gauff at the bill. this is some serious idiotocracy type of shit.
Ah yes, corporations. Very well known for paying their bills.
It sounds like companies started using these systems with flat rate billing ($10000/mo.) and later the ai companies moved clients to usage based billing ($10/1k tokens).
