The key difference being that AI is a much, much more expensive product to deliver than anything else on the web. Even compared to streaming video content, AI is orders of magnitude higher in terms of its cost to deliver.

What this means is that providing AI on the model you're describing is impossible. You simply cannot pack in enough advertising to make ChatGPT profitable. You can't make enough from user data to be worth the operating costs.

AI fundamentally does not work as a "free" product. Users need to be willing to pony up serious amounts of money for it. OpenAI have straight up said that even their most expensive subscriber tier operates at a loss.

Maybe that would work, if you could sell it as a boutique product, something for only a very exclusive club of wealthy buyers. Only that model is also an immediate dead end, because the training costs to build a model are the same whether you make that model for 10 people or 10 billion, and those training costs are astronomical. To get any kind of return on investment these companies need to sell a very, very expensive product to a market that is far too narrow to support it.

There's no way to square this circle. Their bet was that AI would be so vital, so essential to every facet of our lives that everyone would be paying for it. They thought they had the new cellphone here; a $40/month subscription plan from almost every adult in the developed world. What they have instead is a product with zero path to profitability.

Youtube and search have ads as the main revenue source, not subscriptions. It's not a fair comparison.

Paying gives advantages on youtube, just the same as ChatGPT.

I'm patently against subscriptions but am currently paying for ChatGPT plus. I'm also that girl who's installed other models on some decently beefy machines and have compared/contrasted. While I also don't think AI is going to be everything to all people and that it has very specific applications, I'm literally the target audience and I've found ChatGPT to be superior in everything except math/complex problems/coding. That's what I've got Mixtral for. ^_^

I asked Claude for the data (hehe):

"YouTube is primarily an advertising-driven business model (73% ads vs 27% subscriptions), while ChatGPT operates as a subscription-first business (84% subscriptions vs 15% API/other revenue)."

See the difference?

Of course I do, but ChatGPT still has a free option. And the basis to compare paid subscriptions when there is also a free option stand IMO.
Without a good free option, how would it be only 5% who pay? It's exactly the same as with Youtube in that regard.

The free option is a form of advertising and allowing people to get to know the service. With Youtube the free option isn't really free, you pay by allowing advertising.
So by that comparison Youtube is actually the worse free option of the two. And despite that more people pay for ChatGPT.
So your argument that they are not the same, actually makes ChatGPT numbers even more impressive not less.

Sorry but you're completely missing the point. You can't compare 5% conversion rate of a subscription-first model and ad-first model. Youtube is optimizing their business around ads, they are definitely not doing everything they can to increase their conversion rate. ChatGPT on the other hand is aiming for as high conversion rate as possible. I don't know if 5% conversion rate is high or low for ChatGPT but comparing it with YT simply doesn't make sense.

they are definitely not doing everything they can to increase their conversion rate.

Oh you mean like prompting users to buy extra services all the time?
Yes they are actually doing exactly that.