alt Hacker NewsThat's what people widely claimed about Uber: it was toast once the investor subsidies stopped. Now it's quite profitable.
People will pay more. Claude Opus 4.5 is worth more than $20 per month, as is Gemini 3 Pro. These services keep getting better. Another three years of improvement, why shouldn't that command $30 or $40 instead?
$20 is ~$10 in the year 2000 per the BLS inflation calculator (or $1.25 when priced in gold). Nobody would have thought that was expensive for such utility. These are inexpensive tools at present.
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I think you're ignoring that most users of AI currently aren't paying anything, nor would they. I believe the value of a Facebook user was $70 per year in 2023, for the US and Canada. Assuming that the AI companies could make twice that from ads, that's still only $10 - $12 per month, and even less in the rest of the world. Obviously there's going to be some business users as well, so they can cover some of the cost, but would also be responsible for a larger portion of the running cost.
The question should be how many free users can the AI companies convert.
The cost of an Uber has also gone way up, and they basically have a monopoly in many areas.
At its worst, Uber had a net margin of -~60%. The AI labs are all running at least negative triple digit net margins, some running negative quadruple digit net margins. This is why AGI has been "forecasted" to death by the labs, because investors need the promise of infinite automation to stomach the losses.
Anyway, in this instance, what you received for $20 in 2025 will run you somewhere in the range of $60-$90 in 2027/2028. In the interim, you will likely see that $30-$40 of service gets you what cost $20 in 2025. The most likely avenue for this will be reduction in subscription user limits, and for API customers premiumization through substitution. The latter being a situation where what would be the next Claude Sonnet model is now sold as Claude Opus, for example.
The only way the math works for the consumer is if the user base has become dependent on the service instead of remaining in a conventional cost/benefit relationship.