Axe to Grind?
Five reasons why the Axel Springer & OpenAI partnership is a REALLY big deal
Context - Two days ago, 13th December 2023, Axel Springer & OpenAI announced a collaboration that will ‘deepen the beneficial use of AI in journalism.’
Who are Axel Springer? Multinational media organisation (products include newspapers, magazines, online portals and affiliate marketing). 40 countries. 18,000 employees. Notable media brands include BILD, WELT, INSIDER, POLITICO.
Who are OpenAI? Small startup based out of San Francisco. CEO recently left for a four day ‘holiday’ between Nov 17-21.
First deal of its kind in Publishing
The Times have reported this as ‘first of its kind deal by a mainstream publisher.’ Perhaps the key distinction with this July deal is real-time vs archive content.
The latest deal means that any ChatGPT user can ask a question and it will be able to deliver summaries of news being carried by Axel Springer media brands and also provide a digital link. This will be a ‘breaking news’ type experience available in Q1 2024.
A very brief history lesson. In July 2023 some major players in publishing were forming an anti-AI coalition; Axel Springer was one of them. Their gripe - Large Language Model developers like OpenAI using their data to train the models.
At exactly the same time, OpenAI were cosying up to the journalism industry with cold hard cash. Positioning themselves as the responsible face of Generative AI.
So we have a frenemies situation going on here.
The intricacies of this delicate relationship are very well captured here.
2. Business Model Disruption
It is notable that the joint press release describes this as ‘creating new financial opportunities that support a sustainable future for journalism’ and OpenAI describe it as taking ‘the business model of journalism to the next level.’ This is not a run-of-the-mill, slow news day, just another corporate partnership type of news item. So why is that?
Currently the free version of ChatGPT (3.5) doesn’t have Internet access, which is confusing as there have been various claims over the last few months that it does. We can assume this will be the case in Q1 2024 when this new ‘breaking news’ proposition is launched. This provides Axel-Springer with an addressable market of 180 million users (2.2% of humanity) and will be given ‘favourable position’ when the chatbot returns search results. Crucially, the user will be ‘teased’ with behind-the-Paywall news content which will be enticing. Noting that, through Bard and Bing web browsers, many users have been using AI-powered search in 2023.
So the ‘next level’ business model of journalism appears to be a revenue share of any new customers Axel-Springer sign up. Customer acquisition in online news is challenging in the current economic environment. Germany, for example, has 94% Internet penetration but only 11% willing to pay for online news.
3. Future of News & Search
Much has been made of how and when Google will respond to the blindingly obvious disruption LLM-driven chatbots hooked up to the Internet present to how we search for and discover news and information. This has been playing out over the last decade and publishers are keen not to ‘repeat the mistakes of the Social Media era.’
This partnership is seen as a response to the growing concerns about the fair use of copyrighted material for training AI models and the impact of generative AI on traditional news publishers.
In September Meta made a strategic shift away from news.
When it comes to search more broadly, Google (with SGE) are experimenting with different advertising formats (‘You May Also Like’). This becomes a UX and embedded behaviours question for the typical user. The browser they use, the sources they trust, how they search, how they buy, how this changes by device, how this changes at work vs home. The common denominator is attention for eyeballs.
For news, this all comes down to who creates it, the underlying technology that surfaces it and how much we are willing to pay for it.
4. Attribution
A positive aspect of this innovation is that ‘answers to user queries will include attribution and links to the full articles for transparency and further information.’
This will give every journalist on the planet a warm fuzzy feeling at a time when, despite reassurances from some, clear examples of job replacement are emerging. So this innovation (in the form of links to the full articles) gives the journalist access to new viewers and a stamp of authenticity. A Kitemark if you will. This is ever so important in a world of hallucinations and deepfakes. Trust in AI is at a crucial point in history.
Imagine you ask ChatGPT to recommend a bottle of Malbec, without attribution 'the machine doesn’t drink any wine or swirl any wine or smell any wine.’
To help you think a little deeper about this, I asked GPT-4 about the news today. How would you think about the authenticity of the source if you didn’t have the option of the clickable link at the end (shown as ”)?
5. This is just the Start
This is much, much bigger than just news. In a world where the chat interface of OpenAI is a portal to our innermost thoughts. It is also a portal to our wallets and Axel-Springer are first in the queue. This feels like the start of something monumental. It isn’t overly dramatic to compare this to October 23rd 2000, the day Google AdWords was born. Why?
Who might be interested in a ‘favourable position’ of the search results? Essentially any business attempting to sell a product or service online. Perhaps the skiing influencer, Mikaela Shriffin, looking to grow her community? Might she pay more to promote her various channels to higher value ChatGPT Plus customers? Wouldn’t Julia Mancuso want in on the action also? Those Akova products won’t sell themselves.
Expect to see a not-so-orderly queue forming just outside of St. James Park tube station when we all return to work in January.
Note - opinions expressed are solely my own.