🚀 ChatGPT ... to the moon?
We heard today that OpenAI will launch a $20 a month tier for ChatGPT, its chatbot service. This premium service offering higher uptime and new features will only launch in the US. Other users will have more limited access to the system.
How much is this premium offering likely to make?
According to estimates from SimilarWeb, ChatGPT hit 100m active users in January. This represents the fastest growth of any Internet product, well ever, really. SimilarWeb further reckons that roughly 20% of visitors to ChatGPT are from the US.
SimilarWeb’s data for December suggests a 7 minute average duration for a visit. This compared healthily to Facebook, at 9.5 minutes and Wikipedia at nearly 4 minutes, but was far behind YouTube at 20 minutes or Google at more than 10.
December’s 266m visits came from around 13m visitors, suggesting about 20 visits per visitor per month. Again, this is impressive. Twitter’s website had 7bn visits in December, Reddit around 1.8bn. So how could this all translate to revenue?
Let’s start with some static estimates.
In January, 100m MAUs of which about 20% were American means about 20m American users. At different conversion rates, this converts to monthly revenues at the following levels:
To contextualise, typical freemium conversion rates are in the 2-5% range, although a recent OpenView report put it at around 6%. Exponential View’s conversion rate is in that range. Spotify’s is a whopping 46%.
A December estimate reckoned that ChatGPT cost about $3m per month to run, although volumes, but not costs, have probably increased by an order of magnitude since then.
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What about more dynamic estimates?
What if use of ChatGPT continued to climb by 10% per month and they opened paid for service to all users? That growth level is much lower than the service has seen so far. It is also well below fast growing consumer Internet services’ experience during their most rapid growth phases.
Let’s assume 10% per month, a rough doubling every seven months or so. That would take the service to 300m users by the end of the year (approximately). At similar conversion rates, this could put exit revenues for 2023 at:
Even in its wonky, shonky beta form with timeouts and failure messages, ChatGPT has become an essential part of my workflow. I’d be willing to pay for it.
I’d love the ability to fine tune ChatGPT more than I currently can. Although to caveat that, I’m not sure if that is just a “faster horse” fantasy on my part. I did some intellectual jamming with it last night and I got mentally tired before I reached the limit of ChatGPT’s ability to help me explore the ideas we were discussing. So I'm getting a lot out of it without any fine-tuning. (You can read how we use ChatGPT here.)
And because of that, I can see why it could become such a hugely appealing product for anyone involved in “knowledge production”. That spans a gamut from marketers to coders to sales people to people just running their daily lives.
Of course, cheaper “just good enough” services might also be waiting in the wings. To write a letter of complaint to the local city council you might not need an all-singing, all-dancing premium service, after all.
So there are competitive dynamics to consider as well. Competitors might serve less demanding users with lower cost (or even free) products. Apple, for example, might just bundle such capabilities within its products, rolled out as a software update for free. How many of us pay for Fantastical rather than just use the built-in iOS calendar software? Google could build more chat-like (or large-language model) features into its existing search applications, much as Neeva and You.com have done.
That competition could eat away at the rosy back-of-envelope calculations I’ve made above.
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Maybe I understand the tech incorrectly, but as far as I grasp it, OpenAI used their non-profit status to mine available data from across the internet. This data (i.e. content) was created by people, and those people would otherwise be compensated in some capacity for that content (ad revenue, subscription revenue, etc.)... Shouldn't there be a question of how OpenAI is going to compensate the original content creators whose work ChatGPT is mimicking and utilizing in its responses if they now are going to start monetizing that work?
Creative GenAI Innovator: Pioneered Retrieval-Augmented Generation, Partnered with Industry Leaders like OpenAI, AWS, MSFT and Google/Gemini, and Built Adaptive AI Systems to Turn Complex Data into Breakthrough Insights.
2yI will gladly pay $20 a month. Developing code is sometimes 10x faster, especially if I'm exploring different ways to solve problems. I can do "what if" scenarios with ease. I can also ask ChatGPT to add a testing harness, optimize for speed, etc. Even if I have to ask it five different ways before I get the code to do what I want, it's almost always faster. And that's today (Feb 2023). I expect that, over time, it will handle more complex scenarios - write whole libraries, help design architectures, optimize code in the cloud, etc.
Together, we can do it much better than on our own
2yAzeem Azhar Good insights there
CORRETOR CRECI 94.479-F/AGENTE NO AGRONEGÓCIO
2yAzeem AzharAuthor, sensational visionary!For me it is and would be like imagining a Brazilian Black Rock, acquiring 51% of companies from all possible segments, from then on Marketing that develops its aptitudes for profits, congratulations, we are also visionaries in the opportunities we create, modest triplings of resources to a period of 15 years, the instabilities we understand to be people's, the capitals exist, SUCCESS.
Corporate Sustainability/ESG Consultant, Professor Associado na FDC - Fundação Dom Cabral, Advisor Professor at FDC
2ySharing in Linkedin group "Shareholder Engagement on ESG" - linkedin.com/groups/3432928/