- ChatGPT’s enormous global user base has created infrastructure demands that far exceed subscription revenue.
- OpenAI’s growing compute and energy spending is pushing the company to explore ads and new revenue models.
- OpenAI is reshaping its business model and strategy to maintain access to AI as its use continues to grow.
Running the world’s most widely used AI system is extremely expensive. ChatGPT’s popular “free” tier is anything but free for OpenAI, which has reshaped its business to keep pace with its own success.
ChatGPT is used by hundreds of millions of people, and each of their queries costs computing time, electricity, water and other resources scattered across data centers. This means that there is no “free” request on the recipient’s side. Servers must work tirelessly to meet and anticipate demand.
Even with multiple subscription tiers and enterprise agreements, the costs of maintaining global access to AI at this scale have ballooned to approximately $17 billion per year, levels that, by necessity, shape almost every one of OpenAI’s decisions.
A Washington Post One analysis has already calculated that the energy required to generate a single 100-word weekly AI email over the course of a year could amount to around 7.5 kilowatt hours. Multiply this example by hundreds of millions of weekly users and the numbers quickly explode. Much of what people do with ChatGPT seems lightweight at the interface level, but the backend operations require powerful chips feeding off large volumes of electricity.
To manage this scale, OpenAI has undergone several structural transformations led by CEO Sam Altman. Founded in 2015 as a nonprofit designed to manage safe and beneficial AI, the organization ultimately recognized that philanthropic funding alone could not support cutting-edge research.
In 2019, OpenAI adopted a capped profit model, leading to major support from Microsoft, which now owns about 27% of the company, as well as multibillion-dollar investments from SoftBank and Nvidia. OpenAI is now worth around $500 billion, with speculation that an IPO could happen as soon as the end of this year.
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Even with this support, OpenAI must continue to generate substantial revenue from its consumer and professional products. Subscription tiers make money, but $20 per month for ChatGPT Plus, $200 per month for ChatGPT Pro, and the Team and Enterprise tiers represent only a small portion of ChatGPT’s total usage. And API costs paid by companies per token have generated over $20 billion in annualized revenue by 2025.
But this is not enough to meet the demand for infrastructure. Hence the move to advertising in ChatGPT. Ads began showing for free users and those on the $8 per month ChatGPT Go tier. These ads are labeled and separated from chat responses, but their presence signals OpenAI’s need to diversify its revenue as compute expenses continue to skyrocket.
For everyday users, the introduction of ads raises questions about how the product might evolve. Free access may be limited over time, with more features placed behind subscription tiers. Ads could become more common for non-paying users. Companies that rely heavily on the API could see their prices change as they balance cost recovery and market competition.
The challenge OpenAI faces is not unique: the economics of generative AI differ from those of traditional consumer technology. When a social network grows, each additional user usually costs very little. Here, each new user can generate dozens or even hundreds of expensive calculations per day.
As AI becomes more and more integrated into everyday life, the cost of providing these capabilities will determine how companies design them. Users may see price changes, free access limits, or incentives to upgrade. ChatGPT’s evolution from a research project to a global phenomenon offers insight into how cutting-edge technology evolves from novelty to infrastructure. But we must remember that behind every intelligent answer and useful suggestion is a network of data centers that are humming, consuming energy and expensive, no matter what it says about free.
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