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PaperclipPerfector  3mo ago (text post)   24597 thread views

Culture War Roundup for the week of May 18, 2026

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Within the next five years I think we will see the following:

  • Massive price hikes of new models at least doubling the token cost, and enshitiffication or customers losing access to the old ones. It is an open secret that current models don't pay for themselves and this will have to change. Investors will eventually start to want their money back.
  • Reduced demand for artists of all kinds. Breaking into any kind of industry as a young artist will be super hard when AI can do most of your work for less cost. AI work will become ubiquitous in video games, bookstores, and on Spotify. Creators who already have a name for themselves will be fine, but breaking into an artistic industry becomes even more difficult than it already is.
  • More efforts to distill existing models into cheaper consumer ones.
  • Lawsuits against non-profit and up-and coming models for breaching the copyrights of the big LLM's.
  • AI surveillance becomes widely accepted as the norm. Most governments will use facial recognition software in surveillance cameras, and messaging apps will have a model scan your messages for dangerous words and phrases which it alerts the authorities about. Just look at the push for chat control in the EU. Politicians keep pushing for it regardless of public will.
  • Increased dislike of AI from the public. We will likely see even more pushback against data centers, partly due to the massive energy costs, and partly due to the above point about surveillance. From the perspective of an ordinary citizen, the harms of AI will likely outweigh the goods. This results in at least one attempted terrorist attack on a data center, although it likely will be poorly executed.
  • Companies will push to use Ukranian and Russian drone footage as training for their models. The military becomes an increasingly lucrative customer as they are willing to pay a lot more than your average company.

Overall, I agree that developers will mostly be fine. As you say, AI makes them more efficient and can do a lot of the tasks that people are currently being paid for. But the demand is high enough that the job description will simply change. We are going to see much faster iterations and shorter update cycles. Every developer will be several times faster, but this will simply result in the industry moving faster than it did before. Not massive unemployment.

It is an open secret that current models don't pay for themselves

Are you aware Anthropic and OpenAI both have gross margins in the range of 38-70% (depending on how you measure it).

R&D is eye-wateringly expensive, but inference is extremely profitable.

While inference having high margins is true, there are two things to keep in mind here:

Amodei has never said that models are actually profitable on a per-model basis, only that they hypothetically could be. While this might be true, there are trillions of dollars on the line to insinuate that it's true, and personally I wouldn't trust any rumors about financials from a private company who can massage them however they please.

Spending the GDP of a small country on R&D on the promise of getting a commanding lead is why OpenAI and Anthropic have trillion dollar valuations to begin with. There's no such thing as a frontier lab who can cut their exorbitant capex and coast on the margins from inference, as that's a one way road to getting cut-throat commoditized.

I doubt any of their models have been stand alone profitable. The break even must be crazy.

There's no such thing as a frontier lab who can cut their exorbitant capex and coast on the margins from inference, as that's a one way road to getting cut-throat commoditized.

I find this part very funny. Because if we assume any lab who stops doing R&D will be out competed by a lab still spending like crazy on R&D, then we're implicitly agreeing their R&D spend is worth it, even if crazy.

their R&D spend is worth it, even if crazy

Well, burning other people's money to try and build a moat is obviously worth it for the frontier labs. It's yet to be seen whether that spending will be worth it in the sense of paying off investors or building the labs a durable lead, or whether the models will end up commoditized and value accruing elsewhere in the stack.

I was not. I guess the question then is if the companies will be able to eventually stop researching and focus on selling, or if they will have to keep doing research to stay competitive.

or if they will have to keep doing research to stay competitive.

I find this part very funny. Because if we assume any lab who stops doing R&D will be out competed by a lab still spending like crazy on R&D, then we're implicitly agreeing their R&D spend is worth it, even if crazy.

It does mean they will be forced to raise prices though.

Yeah, people are confused because of the big capex expenses but you can compare what the major labs charge for tokens with what the open source models that anyone can run charge for tokens and notice that the labs have to be taking like a 400%+ margin on inference.

Do you have a good source for this? I'd be very interested in seeing a breakdown by model.

It's a bit messy to make sure you're comparing apples to apples. Here's a breakdown on how deepseek was getting 500%+ margin on inference around the "deepseek moment". Now that comes with a number of caviots, I'd probably hedge that down to more like a 300% margin for deepseek in practice. And they later cut the token cost something like 75% on that model but also reported cost reductions. Gpt O1 was a similar era model(December 2024 VS deepseek Jan 2025) and openai was charging something like 15-30x per token that deepseek was. The model was a similar size but superior in some ways so anyone's guess how much more it cost to serve. That might be the closest apples to apples comparison. I'm pretty confident on a 400% inference margin as a conservative estimate. Inference seems extremely profitable, just that training is also extremely expensive and you need to constantly do it to compete in the inference market.

Thanks!

Every developer will be several times faster, but this will simply result in the industry moving faster than it did before. Not massive unemployment.

Eh, with the news coming out of Meta, I think this will mean "now your small company can afford to employ a former Silicon Valley developer", but it won't be at Silicon Valley salaries. More employment opportunities, sure, but the days of big numbers on the paycheque will be over. Now you'll be on the same level as administrative staff and the other employees you used to look down on as bullshit jobs.

That trend already began years back when you look at comparative salaries year-by-year. The salary even a new graduate would command 10-20 years ago was far higher than some of the low balls I’ve seen people get within the last 5.

More employment opportunities, sure, but the days of big numbers on the paycheque will be over. Now you'll be on the same level as administrative staff and the other employees you used to look down on as bullshit jobs.

Software developers do not tend to look at the administrative staff as "bullshit jobs", at least not at the companies I've worked at. If you're going to engage in schadenfreude, at least have good reason.

(The jobs software developers do look at as "bullshit jobs" are as likely to be automated).

breaking into an artistic industry becomes even more difficult than it already is.

I vaguely expect analog artistic media to rise in popularity. Paint brushes, pens, and such are clear "not AI" status marks. Also live music.

My guess is that they'll rise in status, but not popularity. Like plays and operas relative to films and TV shows, or handcrafted furniture relative to IKEA.

Those are not particularly lucrative from the standpoint of earning money. Video games, animated movies, and graphic design seems to be where most of the money is at for the painters. Crucially, those are not things people purchase for the sake of status. It is entertainment. Losing opportunities for employment in the entertainment industries seems really bad for aspiring professionals. Art as a status symbol is mostly for rich people, or the artists themselves. So even if it rises in popularity, I would not expect it to suddenly become a viable career path.

Writers probably have it the worst. Even current AI can produce short stories that to most are impossible to tell apart from what is written by professionals.

Anecdotally, I'm seeing a lot more of that around me. Punk is making a raging comeback.

Lawsuits against non-profit and up-and coming models for breaching the copyrights of the big LLM's.

This is a very, very high risk strategy for the big LLMs given that they have breached the copyrights of absolutely everyone in the process of training their models on a corpus of copyrighted text. "You can't train an AI model on publicly-available but IP'ed data" is not a net win for Anthropic or OpenAI.

Given the, uh, rather mechanical ways in which models are trained, I could see a precedent that they're not copyrightable as a potential outcome: does it involve more creativity than a phone book? "Turning the crank" doesn't make something a creative work in the US.

But I wouldn't put a huge bet on any particular outcome there.

At the very least they will want to litigate against distillation. Training costs are steep, so if anyone can undercut your R&D by distilling your model, that seems disastrous for your bottom line.

I think this is a "rules for thee but not for me" situation. It is in their interest to prevent others from making competing models, so they will want to pull up the ladder behind them in order to destroy further competitors. Whether this will work is a different story, but this is a highly competitive market, and I think these big companies will use their large piles of cash to try and make it a reality.

They do not need to win the lawsuits in the first place. They just need to make their opponents settle by making the process as expensive as possible.

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