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Tokenomics: Why making AI pay is tricky

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Why This Matters

As AI becomes more integrated into business operations, managing token-based costs presents significant challenges for companies, especially as usage scales. The unpredictability of AI output and expenses could impact profitability and operational control, prompting companies to rethink their AI strategies and cost management approaches. This evolving landscape underscores the need for more precise AI implementation and monitoring to ensure sustainable growth and value realization in the tech industry.

Key Takeaways

Will Venters, Associate Professor of Digital Innovation and Information Systems at the London School of Economics, said companies can be caught out as they experiment with or implement AI internally, as staff burn through tokens.

"People are finding it really hard to manage that cost… it's a non-deterministic output, so it's a non-deterministic value," he said.

Companies are finding ways to work around this.

Oliver King-Smith, founder of engineering software firm smartR AI, says smaller organizations can "can fly under the radar and use [flat fee] personal accounts which I am sure the big vendors don't like."

But, he says, "This has to end at some point in time, because the big guys are taking a bath on those accounts."

Once the big AI platforms start facing pressure from shareholders to show a profit, he predicts: "They will start clamping down."

King-Smith says companies should also think more carefully about what AI models to use.

Companies also needed to be much more precise with their prompts, says Rob Steele, CFO at UK accounting software firm iplicit.

"You wouldn't send someone in your family out to get the weekly shop without any kind of detailed instructions as to what you expect in that shopping basket, right?"

The situation can become difficult to control when companies build AI into a product that could be rolled out to thousands of users, Venters points out.

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