In this blog post we dive deep into everything ChatGPT, from its creation, usecases, founders, potential impact on the labor market, among other features.
What is ChatGPT
ChatGPT is a natural language processing algorithm based on the GPT-3 algorithms capable of performing conversional logic in a ask-response type of manner.
The ChatGPT chatbot is capable of holding normal conversations, writing code, answering questions iteratively, provide summary and translations from one language to another and admit mistakes when performed. These among other features are possible due to the massive amount of computational training which have gone into the Chatbot and general large language model.
Who made ChatGPT
The ChatGPT chatbot is the result of OpenAI’s research on natural large language models and training of such on huge amount of data available through the internet among other libraries. The chatGPT chatbot launched on November 30’th 2022 and have since been the fastest widespread technology to enter the broader public compared to similar technologies such as Airbnb, Netflix, Spotify, Facebook and Dropbox, see Figure 1.
This explosive growth rate is unprecedented as compared similar type of technologies such as Instagram. However one may argue that the type of engagement needed for Instagram is significantly different from the type of engagement that ChatGPT offers as you can easily hold conversations, translations and similarly however the content creation part is different in the sense that on Instagram one utilizes user created content as a self fulfilling way of quickly bootstrapping users while the conversations one would have with ChatGPT is personalized and hardly replicable or shareable in general.
What data have ChatGPT been trained on?
The data which ChatGPT have been trained on goes back into the year 2021 with a cutoff date undisclosed to the general public by the founding OpenAI team. The databasis behind the natural language model which ChatGPT is based on, GPT-3.5, consists of a massive amount of text data downloaded from the internet including articles, books, reviews and other type of text based data which can be researched online through the internet.
Language barriers are broken down
The content of the internet is diverse and broad with languages ranging from all places on the world. This allows ChatGPT to easily recognize individual patterns within each major language such as English, French, Spanish and Portugese. This way enables ChatGPT’s pattern recognition methodologies to easily translate between languages in a way much more efficient than similar types of translators.
The translation mechanisms which ChatGPT facilitates creates a tremendous value creation as usual translations are made from human to human contact this way of translating written material allows for freeing up human resources such that more people can be involved in the creation of humanities most refined activities such as innovation and research, creation of art and new technologies.
Exceeding user expectations
When using the ChatGPT bot it quickly exceeds user expectations as users go into the experience thinking that they will quickly run out of ideas or get bored talking to a computer. This is not the case however as users continuously experience surprisingly engaging content from talking with the natural language processing unit. Customers of the NLP chatbot ChatGPT thus experience a better than expected user experience using the designed chatbot. This ensures commitment of time resources towards the chatbot from external people as the knowledge of the ChatGPT solution becomes widespread throughout the world in general.
The innovative solution have thus created a massive burst of popularity among the general public and quickly ChatGPT is on everyone’s lips. The increased traffic towards the original webpage is hard to monetize for the researchers and creators of ChatGPT. They have an interest in monetizing the internet traffic as more people are using output which they themselves have created and invested a lot of time and money into developing.
Monetization strategies for ChatGPT
Unlike regular internet traffic which is easily monetizable through the use of ads, affiliate marketing and subscriber paid content. When which monetization strategy to utilize different pros and cons exists for each choice. Lets outline some of the most common types of strategies with pros and cons. Disclaimer; the following pros and cons list have been generated by a natural language processing model and have afterwards been factchecked through a human reader.
Advertising: One of the most common ways to monetize internet traffic is through advertising. This involves displaying ads on websites or in mobile apps, and earning revenue based on the number of clicks, impressions, or other metrics.
- Pros: Advertising can be very lucrative, particularly for websites or apps with a large audience. It is a well-established model that is easy to implement, and there are many advertising networks and platforms that can help connect publishers with advertisers.
- Cons: Some users may find ads intrusive or annoying, and ad-blockers can reduce revenue for publishers. Additionally, the revenue earned from advertising can be unpredictable, and can be affected by factors such as ad-blocking, changes in advertiser demand, or changes to ad platforms.
Affiliate marketing: Affiliate marketing involves promoting products or services on a website or social media platform, and earning a commission on sales that result from clicks or other actions taken by users.
- Pros: Affiliate marketing can be an effective way to earn revenue without the need to create or sell products or services directly. It can also be a good fit for websites or social media accounts that focus on a particular niche or topic, as it allows for targeted promotion of relevant products or services.
- Cons: Affiliate marketing can be highly competitive, and success may depend on factors such as the quality of the products being promoted, the size and engagement of the audience, and the strength of the competition. Additionally, some users may be skeptical of affiliate marketing and may be less likely to click on links or make purchases.
Subscription based: Here you monetize internet traffic through subscriptions. This involves charging users a recurring fee in exchange for access to content or services.
- Pros: Subscription-based models can provide a stable and predictable source of revenue, and can be particularly effective for content or services that have a loyal following. They can also be used to build long-term relationships with customers, as subscribers are more likely to be engaged and invested in the content or service.
- Cons: Subscription-based models can be challenging to implement, particularly for new or unproven products or services. They may also require ongoing investment in content or features to keep subscribers engaged.
Overall, the choice of monetization strategy will depend on a variety of factors, including the nature of the website or app, the audience, and the goals of the publisher. It’s important to consider the pros and cons of each strategy before deciding which one to pursue.
Related read: Creating a blog post
The difficulties in choosing the right monetization strategy is therefore not as straight forward as one would envisage. This being said it seems that the OpenAI team have decided upon the subscription based monetization suggestion with the invention of the ChatGPT+ subscription providing end-users with end access and prioritized turbo use of the ChatGPT bot even during peak hours which are specifically demanding timeslots where users could expect reduced answer time for the ChatGPT to answer.
Keeping the innovation kernel burning
At ChatGPT, the company is continuously working to improve their algorithm and update their systems to keep up with the latest advancements in Natural Language Processing (NLP) methodologies. They are also working on expanding their knowledge base by adding more information to their database, which will only lead to better and more accurate responses to every user’s inquiries.
How much money does ChatGPT make
The valuation of ChatGPT is difficult to manifest exactly as currently the increased traffic of the webpages and surrounding talk in society is hard to accurately predict or set a monetary value upon. The valuation of OpenAI is similarly difficult to accurately predict as the company currently has only produced openly available software solutions thus customers and users of the software don’t pay for their utilization straight away meaning that they the conceptual value of the company is designed based on whoever want to pay more for the service.
lacking revenue streams
Currently ChatGPT therefore doesn’t create any revenue meaning that the entire investment space is utilized for supporting the research and development of ChatGPT and thus no revenue comes out for the initial investment as of yet.
Valuation of the company: OpenAI
For valuation purposes the recent investments of Microsoft into ChatGPT, although no exact amounts have been disclosed to the public, the order of magnitude for the ChatGPT investment runs up into billions of dollars, meaning that the valuation of OpenAI compares to that of recent small-mid cap stocks listed on the NYSE.
This means that although no revenue is currently generated by ChatGPT and no exact disclosure have been made by Microsoft into the exact amount of money being poured into ChatGPT and especially the backend of ChatGPT for further development of NLP-models.
Thus with an expected valuation bigger than a billion dollars, this speaks for itself meaning that certainly the work performed by OpenAI is valuable and especially the ChatGPT model is valuable to the general public although no general value have been specifically set on the model.
Projected revenue for the year 2023
With the advent of the subscription based service the projected revenue forecast of the ChatGPT model is calculated through use of projected future discounted cash flow models. The current revenue forecast for the year 2023 is expected to be 1 billion according to OpenAI themselves, source While OpenAI expect the revenues for 2024 to be significantly larger in the order of multiple billions.