💰️ Only 3% of us pay for AI

Hey folks,

The Velvet Sundown, a band that emerged on Spotify with over 550,000 monthly listeners in just a few weeks, has been revealed as an AI-generated project. Despite their rapid rise and two album releases, the band members Gabe, Lennie, Milo, and Orion do not exist in reality. Clues such as AI-generated images lacking human features and a non-existent online presence led to the discovery. Spotify has yet to take action and as AI-generated music continues to gain traction, the line between human artistry and machine creation becomes increasingly blurred.

Let’s dive in..

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🖥️ Only 3% of us are paying for AI

According to a recent report by Menlo Ventures, while approximately 1.8 billion people have used AI tools with a third engaging daily, only about 3% are paying for these services. This leaves a significant portion of the market untapped, presenting a challenge for AI companies that have invested heavily in infrastructure.

🤔 So, what’s actually new here?

• Massive User Base, Minimal Revenue: Despite widespread adoption, AI companies are seeing limited returns, with current revenues at $12 billion compared to a potential $432 billion if all users paid an average of $20 monthly.

• Potential Monetization Strategies: Menlo Ventures suggests features like assisted memory and transaction capabilities could make premium subscriptions more appealing. Additionally, affiliate fees and targeted advertisements could offer alternative revenue streams, leveraging AI's ability to provide highly specific user insights.

🧠 Use it like this

• For AI Companies: Explore diversified monetization strategies beyond subscriptions, such as integrating affiliate marketing and enhancing ad targeting through AI-driven user insights.

• For Marketers: Utilize AI's capacity for detailed user profiling to deliver more effective and personalized advertising campaigns, potentially increasing engagement and conversion rates.

🎯 Bottom Line

The current state of AI monetization reveals a significant disparity between usage and revenue. To bridge this gap, companies need to innovate in their monetization approaches, balancing user accessibility with sustainable business models.

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💳️ Bots Need To Pay First

Cloudflare is flipping the script on AI bots that scrape content for training, giving publishers the power to charge, block, or fine-tune access without writing a single line of code. Their new “Pay Per Crawl” marketplace is in private beta, and every new domain now stops AI crawlers by default. This could reshape content creators craving traffic and AI firms thirsty for data. Soon, your favorite blog might send bots a bill instead of a 404.

👈️ Background: Bots, Traffic, and Thin Margins

AI chatbots and large language models have conditioned users to get answers without ever clicking through to the source. That’s great for convenience, terrible for ad revenue and page views. Publishers have watched in frustration as traffic dips and server loads spike, all while AI firms pocket the downstream benefits of scraped content. Cloudflare’s CEO Matthew Prince calls this “unsustainable,” and their new toolkit is meant to rebalance the scales.

🕷️ Pay Per Crawl: Charging Bots Like Customers

Cloudflare’s private-beta “Pay Per Crawl” marketplace lets site owners set a per-crawl fee for each AI bot. Publishers choose to:

• Charge for access: AI firms pay micro-transactions per page scrape.

• Allow for free: Bots roam freely, forgoing payment.

• Block outright: No access unless the policy changes. This approach treats AI crawlers as paying customers or gate-crashing guests, your choice.

🛑 Default Bot Block: Starting with Control

Every new Cloudflare domain now blocks known AI crawlers out of the box. That default “deny, then permit” stance means publishers actively decide which bots to trust, rather than relying on robots.txt or opaque opt-outs. And existing customers can flick a one-click switch to enforce the same default across their sites.

🤑 Economic Implications: Monetization vs. Accessibility

If AI firms balk at micropayments, sites might stay locked down, driving bots to scrape the open web or pay higher costs elsewhere. Conversely, a steady trickle of payments could create a new revenue stream for lean publications, cushioning the blow of ad-skipping chatbots. The big question: will AI companies write checks or just click “block”?

🎯 Bottom Line. A Turning Point for Web Economics

Cloudflare’s bot-billing experiment could be the keystone in re-aligning incentives between creators and AI. By turning crawlers into customers and giving publishers the reins, this move may finally address the “free data” problem that’s plagued the web. Now, every AI bot that wants your killer content might need to swipe its card first.

📰 Like newsletters? Here are more our readers enjoy.

🐝 AI buzz bits

🤖 Amazon just hit a major milestone by deploying its one millionth robot and launched DeepFleet, a smart AI system that boosts robot efficiency by 10%, paving the way for faster deliveries and fresh opportunities for workers.

📧 Grammarly just scored a major win by acquiring AI email client Superhuman, aiming to supercharge productivity with smart email agents while integrating Superhuman’s tech for an even better user experience.

🚫 OpenAI is throwing shade at Robinhood's new 'OpenAI tokens', clarifying that these tokenized shares aren’t real equity in the company and they didn’t approve or endorse this questionable token sale. Buyer beware. 

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🤘 TGIF