AI: OpenAI/Axios craft new arrangement for local news. RTZ #602

AI: OpenAI/Axios craft new arrangement for local news. RTZ #602

As this AI Tech Wave gets craning into 2025, we keeping seeing new answers to the perennial question of how existing news services will get compensated by the LLM AI companies. This ‘Show me the Money’ tug-of-war has been a longstanding area of both business and legal tussles for some time now, covered several times here on AI: Reseat to Zero.

Today, we saw a new tweak in ‘win/win’ arrangements, where OpenAI ends up in a news creation agreement with a news organization.

Axios in ‘OpenAI to fund four new Axios Local newsrooms’ explains:

“OpenAI will underwrite the expansion of Axios to four cities of its choice as part of a broader content-sharing and technology deal, the firms said Wednesday.”

“Why it matters: It’s the first time OpenAI is funding newsrooms as a part of a publisher deal, although the idea isn’t novel.”

  • “Google struck a deal with McClatchy to fund the creation of three digital-only local newsrooms in 2019.”

What’s notable about both arrangements is that it addresses a long time concern over the last two decades, of online sites hollowing out the business model for local news, especially local newspapers.

“Zoom in: As part of the three-year deal, OpenAI will fund Axios’ expansion into Pittsburgh; Kansas City, Missouri; Boulder, Colorado; and Huntsville, Alabama, the companies said.”

  • “ChatGPT will use Axios journalism to answer user queries with attributed summaries, quotes and links to Axios stories. Axios can access OpenAI’s technology to build its own AI products, processes, and systems.”

And it potentially scales far beyond a handful of cities:

“Zoom out: Axios CEO Jim VandeHei believes AI will play a key role in helping the company scale its local footprint to 100 or more cities.”

  • “The technology won’t be used to report stories, “but to help build a system for creation, distribution, and monetization of our journalism,” he told employees in a memo co-authored by Axios chief operating officer Allison Murphy and editor-in-chief Aja Whitaker-Moore.”

“By the numbers: Axios currently publishes local newsletters authored by on-the-ground reporters in 30 U.S. cities — soon to be 34.”

  • “Those newsletters together passed the 2 million subscriber mark last year, executives told employees. The company expects five of its current local markets to be profitable this year.”

Note that Axios is a part of a larger media entity:

“Of note: Axios’ acquisition by Cox Enterprises in 2022 accelerated its expansion into local markets. Executives said the expansion “is a long-term project made possible by the unmatched enthusiasm for local journalism of Alex Taylor and the Cox Enterprises family.”

“The big picture: OpenAI has made deals with roughly 20 media organizations that span 160 news outlets and hundreds of content brands, it said.”

This development of course is independent of the ongoing litigation between traditional media and OpenAI, around ‘Fair Use’ and related issues:

  • “The New York Times sued OpenAI and Microsoft for copyright infringement in 2023. That case will likely set a historic legal precedent for copyright in the AI era, but could take years to resolve.”

Again, other tech companies have also been doing similar deals:

  • Meta struck a multiyear deal with Reuters last year. TollBit, a two-sided marketplace for publishers and AI companies, and Perplexity, a generative AI search engine, both announced news partners in 2024.”

  • “OpenAI’s minority owner, Microsoft, recently said it will pay news companies to feature their content in its Copilot AI assistant.”

“Go deeper: AI-fueled search drives media firms to new licensing deals

All these developments highlight that the perennial concerns of new technology negatively impacting existing industries and business models, are just a part of the story in tech waves. And that doesn’t even include creation of ‘Synthetic Content’ with AI, which I’ve discussed.

There generally are regenerations of new ventures, often accelerated by the new technologies.

This AI Tech Wave is no different in that context. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)





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