ChatGPT’s Technology and Business Model

Two of a Three Part Series

We have This blog post was written by DougL. Edits provided by friends. AI was not used to write or edit it. Browser-based technology with generative AI and ChatGPT was used to fact check.

My previous blog (here), compared cloud computing versus AI technology business models.

Today, we’ll solely examine ChatGPT’s technology and business model in deference to its place as the most exciting generative AI.

Produced by OpenAI, ChatGPT is capable of performing various language-related tasks like text generation, chatbots, highly accurate language, summarization, and voice and video generation. It also possesses advanced programming language capabilities.

One ChatGPT function, InstructGPT, offers a supervised learning method model that includes a human-in-the-loop. According to OpenAI, InstructGPT maximizes the truthfulness and reliability of the conversational interface, thereby “aligning language models to follow instructions.”

OpenAI offers basic ChatGPT free to all users, although a premium version with additional capabilities costs $20 per month. 

Microsoft is investing $10 billion in OpenAI, with plans to make ChatGPT a central feature of the Bing search engine..

Here are some of ChatGPT’s business models which OpenAI and others use to go-to-market (GTM):

• Licensing: OpenAI licenses ChatGPT to third-party developers, businesses, and researchers who use it to build and power their own applications and services. The licensing fee is be based on a per-user or per-usage model. Additionally, OpenAI plans to offer a freemium version of ChatGPT as part of their GTM. Users will have limited free access to the language model, with access to more advanced features or higher usage levels available for a fee.

• Subscription Sales: Customers pay a recurring fee for access to the language model and application programming interfaces (APIs). This will work well for businesses that need continuous access to the language model and APIs operationally.

• Customized Solutions: OpenAI offers customized ChatGPT solutions to businesses or organizations that require a language model with specific features or capabilities. This will include creating a new version of the language model with additional training data, or tailoring the existing model to client needs.

• Advertising: OpenAI will eventually sell advertising or offer sponsored messages in its ChatGPT interface. This represents a clear threat to Google’s search engine business. Witness Samsung announcing that they will replace Google search with the AI-powered Bing on future smartphones. The Samsung ChatGPT will be advertising-based. (One estimate is that swap alone will cost Google $2-3 billion)

• API Access: ChatGPT offers APIs that enable developers to integrate its language model into their applications. Pricing is based on the number of API calls or the level of usage.

OpenAI will partner with other companies or organizations to create joint products or services. For example, ChatGPT will partner with a chatbot platform to offer more sophisticated and intelligent chatbot solutions.

ChatGPT has the potential to offer a variety of business models depending on the needs of its customers and the market demand for AI language models. ChatGPT’s capability to generate revenue through various methods bodes well for OpenAI and may lead the AI industry to emulate its approach.

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