What are the implications of the first big publisher deal with ChatGPT owners OpenAI?
- Who is likely to follow suit?
- What does this mean for smaller and niche publishers?
- Will media entrepreneurs now avoid the open web?
The rumours had been swirling for weeks, but it still came as a shock last week when Axel Springer announced details of a landmark content licensing deal with ChatGPT’s owners, OpenAI.
The financial details have not been disclosed, but it is understood that the Microsoft-backed tech company will pay Axel Springer a one-off fee plus an annual sum for a licence to enable the AI bot to access its content. The agreement is reportedly worth tens of millions of euros a year.
The AI platform will use editorial content from Axel Springer’s sites, which include global brands Business Insider and Politico, as well as DACH region market leaders Bild and Die Welt, to answer users’ questions.
The OpenAI answers will include links to Axel Springer’s websites, enabling consumers to access the source material.
Mathias Döpfner, chief executive of Axel Springer, said the deal was “the first of its kind”. He added: “We want to explore the opportunities of AI-empowered journalism — to bring quality, societal relevance and the business model of journalism to the next level.”
Brad Lightcap, chief operating officer of OpenAI, said the company was “deeply committed to working with publishers and creators around the world and ensuring they benefit from advanced AI technology and new revenue models”.
Ironically, the news came a couple of days after Sports Illustrated’s CEO, Ross Levinsohn, was fired after the company was exposed for publishing articles written by fake authors with AI-generated headshots and biographies.
The first deal of many?
There was arguably an inevitability about the deal. Media groups had already come together to explore legal ways to restrict AI bots’ access to their content. Companies like CNN, Reuters, The Washington Post, Bloomberg, The New York Times and its sports site The Athletic have taken steps to wall their content off from AI bots.
There is precedent for the deal, with the Associated Press and American Journalism Project (AJP) having agreed content fees with Open AI.
Media companies are adamant that they won’t get taken for a ride in the way they feel the tech companies running social platforms exploited them in the last decade. Juan Señor, president of Innovation Media Consulting’s mantra, “We missed the search train and the mobile train. Let’s not miss this train,” seems to be echoing around publishing executive offices across the globe. “AI is a threat as it kills search revenue and the CPM model. It also threatens subscription models. It is, however, a great opportunity as it can generate vast amounts of revenue for us,” Señor predicted.
The Axel Springer deal raises a series of questions for media companies.
Firstly, will other media companies follow suit? Given the size of the deal and its wide-ranging nature, other large media corporations will likely be tempted to agree to similar arrangements. It has been suggested, for example, that the major reason for media companies walling off their content was that it put them in a stronger position to negotiate.
The income will be a welcome compensation and may plug some of the holes left by the decline in advertising revenue.
What next for smaller and niche publishers?
Large companies with their teams of lawyers and substantial content libraries are in a strong position to negotiate with the tech companies, but where does it leave smaller media companies?
There are some positive signs in that the first deal with OpenAI was with the American Journalism Project (AJP), which represents smaller and local non-profit news brands in the United States. Yet smaller, individual media companies may find themselves at the back of the queue attempting to agree similar deals. Collective bargaining might be the only way forward.
There are questions, too, about how the deal might impact the future of media startups. If more customers use ChatGPT and its Google rival Bard to access content, entrepreneurs may have to protect their content by shutting it off from the bots – or simply allow the bots to access it. Neither is an ideal solution and will likely inhibit potential growth.
For smaller media companies and entrepreneurs, the deal might again underline that they are better off keeping their content from the open web and owning the relationship with their readers. The email newsletter and podcast favoured by so many of today’s b2b startups look more attractive than ever.
The first AI news channel
The day before the Axel Springer deal was announced, media executives were already digesting a glimpse of how AI might impact the future of news with the launch of content from Channel 1 AI. The startup, which had promised an AI-powered newsroom, showed what it was capable of with a video featuring a new programme fronted by AI-generated anchors. It was developed with content that had been automatically created from a number of media sources and even used AI to generate images and videos to represent stories. It can offer instant multi-language soundtracks.
The startup, which so far hasn’t taken any money in funding, is quick to stress the role of humans in key areas like fact-checking and content sourcing. Yet it is clear the integration of the technology has massively slashed the cost of generating a new channel.
So, will Channel 1 AI go on to rival CNN, NBC, BBC and other global news brands?
Well, the content is of a good standard, though many commentators found the delivery and presentation a tad jarring. “It makes me yearn for human anchors with their screw-ups and rude hand gestures,” suggested one media commentator.
Channel 1 AI might be able to rationalise how it produces content, but its first-mover advantage won’t last long. It will soon be up against other better-funded entities from legacy media and startups that will imitate its template and address some of its foibles.
Media companies have been experimenting with generative AI in earnest for over a year. It would be incredible if companies did not create similar concepts they may now take from the labs to the mainstream.
The key issue is credibility. Channel 1 AI has done a reasonable job of convincing the media that its content is legitimate and has come from kosher sources. A series of mistakes or misfires could damage that credibility in an instant.
All about reputation…
Mainstream media companies are keen to see how they can rationalise their output and enhance efficiencies. Yet reputation management concerns mean that they continue to tread slowly and warily. Channel 1 AI might have the AI-generated news field to itself for a while, but it will probably have no shortage of rivals within a couple of years.
Perhaps the sad thing about the rise of generative AI is that it could have delivered fantastic opportunities for scale innovators like BuzzFeed and Vice Media. Take generative AI away from serious news, and it can excel at providing viral content, quizzes and more. There are little fears about it damaging company credibility, too.
It might be too late for these brands to capitalise on the technology. Still, there is clearly an opening for new brands to emerge, ones that may be able to take advantage of the efficacy of the technology to deliver scaled content at significantly lower cost bases than their high-profile predecessors.
