It turns out Reddit threads aren’t just a valuable way to crowdsource advice from strangers, they’re also worth tens of millions of dollars to at least one AI company.
What happened: Reddit has cut a ~US$60 million licensing deal to sell access to the user-generated content from its platform to an unnamed AI company, per Bloomberg.
- Reddit told investors about the deal with an “unnamed large AI company” as part of its IPO pitch, as the platform aims to go public as soon as next month with at least a US$5 billion valuation.
Why it’s happening: With copyright court cases pending that could stop AI companies from scraping “free” data from the internet, major players like OpenAI are rushing to cut licensing deals with publishers and data providers.
- OpenAI has already licensed content from news publishers Axel Springer — the owner of Politico and Business Insider — and the Associated Press.
Why it matters: AI models are only as good as the data they’re trained on, which means having (legal) access to quality information sources could become a major differentiator between the ChatGPTs and Bards of the world.
- The foot race to lock up content rights will become even more consequential if AI companies start signing exclusive partnerships with publishers, effectively blocking competitors from accessing large amounts of data.
Zoom out: The push by deep-pocketed tech companies to secure high-quality data could also create a lucrative market for publishers and platforms with information and data to sell, creating a new line of revenue for companies like news publishers whose legacy business models may also be threatened by AI.—LA