AI Programs Are Raking In Profit, but Who Is Reaping the Rewards?

Lon Harris
Lon Harris is a contributor to dot.LA. His work has also appeared on ScreenJunkies, RottenTomatoes and Inside Streaming.
AI Programs Are Raking In Profit, but Who Is Reaping the Rewards?
Evan Xie

One perhaps under-scrutinized aspect of the AI revolution concerns how these various applications are trained. “ChatGPT learned about language by reading the internet” is the casual, tossed-off, shorthand version of the explanation. But the specific content that’s fed into these apps goes a long way in determining what kinds of outputs they ultimately generate. So if an AI application is only as good as the content that’s fed into it, would it then be fair to say that the creators and owners of that content deserve compensation?


This isn’t a purely academic or rhetorical question, but a pressing real-world issue that will soon require an answer. On Tuesday, news aggregation website Reddit announced plans to begin charging companies for access to its API, an early indication that it hopes to earn money in exchange for providing training materials to companies like OpenAI.

Reddit’s data is particularly appealing to OpenAI and other designers of so-called Large Language Models (LLMs). Unlike Google search results, Wikipedia pages, or other vast collections of writing and information, Reddit threads are already made up of real human beings engaged in conversations. They’re naturally going to be helpful in designing a chatbot that mimics real human speech and strives to create authentic interactions.

Additionally, Reddit content is constantly refreshed by its own users. They add headlines the moment news stories are posted and conversation threads get consistently refreshed with new commentary and real-time updates. This also helps LLMs and other AI systems to produce better, more accurate results. Both Google’s Bard and OpenAI’s ChatGPT were partly trained on Reddit data. In fact, ChatGPT cites Reddit as one of the primary sources for its training information.

It’s fair and accurate to say that Stable Diffusion and Midjourney produce original artwork, sure, and ChatGPT and Google’s Bard compose their own prose from scratch. But they’re only able to complete these tasks after scanning thousands of original drawings and millions of original sentences written by humans. In some ways, this is less “Artificial Intelligence” and more “Extensively Mashed-Up and Remixed Human Intelligence.” But that makes for a less appealing acronym.

From the perspective of an independent site like Reddit, or an image hosting service like Shutterstock, AI applications represent not just a way to squeeze additional financial value out of their pre-existing content libraries. Over time, these applications could emerge as potential rivals. ChatGPT could certainly one day power its own version of Reddit, scraping the web for fascinating news stories, writing attention-grabbing headlines, and posting them in forums to encourage reactions and discourse. OpenAI’s DALL-E is already used as an illustrator for web content. Obviously, a sufficiently advanced image generation tool could replace a stock photo library. So by charging up-front for their data, Reddit is also preparing early for a future in which its human users square off against automated rivals.

That said, Reddit’s not alone in their concern about being scraped, and efforts to potentially do something about it. Elon Musk has threatened to sue Microsoft over the use of his Twitter data. In January, Getty Images filed a lawsuit against Stable Diffusion creators Stability AI, alleging that the company “unlawfully copied and processed millions of images protected by copyright” in order to train their AI systems. Researchers from the University of Chicago have introduced Glaze, a beta application that adds imperceptible “perturbations” to artwork, thus preventing AI applications from scraping them and learning to copy that artist’s style and aesthetic.

According to emails obtained by the Financial Times, Universal Music Group – one of the industry’s largest labels – has asked streaming services like Spotify and Apple Music to limit AI access to their content, in an effort to prevent apps from scraping their songs and artists. This of course is no longer purely academic either. That “Heart On My Sleeve” AI-generated song that appears to feature both Drake and The Weeknd was only possible to create because the app had trained on Drake and Weeknd songs. As well, a number of tools and tutorials to stop ChatGPT from scraping your content have been released on the web.

From a legal perspective, issues around AI remain largely unresolved, including who can copyright the results of a human working with a generative AI application. Training adds yet another level of complexity to this question. Even if we one day establish that a person can copyright a piece of art that they created with help from an AI application… what if that AI application trained on work produced by a different human? Does the original artist whose creation was used to develop the software also own a piece of the final result? How are they compensated, if at all?

A Forbes editorial from February, written by a legal expert in AI, warns that generative AI is “rife with potential ethnical and legal conundrums,” particularly when it comes to plagiarism and copyright infringement. Perhaps, over time, these issues will simply be worked out by judges and juries to everyone’s mutual benefit. But it’s also possible this could present a genuine roadblock for either artists and creators or the future of AI development. If AI companies are allowed to scrape whatever they please without compensation, and build the next generation of internet applications without input from humans, that leaves a lot of individual artists, writers, and creators out in the cold.

Conversely, if AI companies are not allowed to use anyone’s work to train their system without payment, we could be looking at the end of the lightning-fast development we’ve come to expect from the entire field. As we’ve seen repeatedly, AI applications are only as good as the library of content on which they’re trained. This is why China, with its internet pockmarked by banned content and censorship, has yet to create a true ChatGPT rival.

🤠Musk Picks Texas and 🔥Tinder AI Picks Your Profile Pictures
Image Source: Tinder

🔦 Spotlight

Tinder is altering dating profile creation with its new AI-powered Photo Selector feature, designed to help users choose their most appealing dating profile pictures. This innovative tool employs facial recognition technology to curate a set of up to 10 photos from the user's device, streamlining the often time-consuming process of profile setup. To use the feature, users simply take a selfie within the Tinder app and grant access to their camera roll. The AI then analyzes the photos based on factors like lighting and composition, drawing from Tinder's research on what makes an effective profile picture.

The selection process occurs entirely on the user's device, ensuring privacy and data security. Tinder doesn't collect or store any biometric data or photos beyond those chosen for the profile, and the facial recognition data is deleted once the user exits the feature. This new tool addresses a common pain point for users, as Tinder's research shows that young singles typically spend about 25 to 33 minutes selecting a profile picture. By automating this process, Tinder aims to reduce profile creation time and allow users to focus more on making meaningful connections.

In wholly unrelated news, Elon Musk has announced plans to relocate the headquarters of X (formerly Twitter) and SpaceX from California to Texas. SpaceX will move from Hawthorne to Starbase, while X will shift from San Francisco to Austin. Musk cited concerns about aggressive drug users near X's current headquarters and a new California law regarding gender identity notification in schools as reasons for the move. This decision follows Musk's previous relocation of Tesla's headquarters to Texas in 2021.

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  • Penguin Random House agreed to acquire comic book publisher Boom! Studios from backers like Walt Disney Co. - learn more

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Top LA Accelerators that Entrepreneurs Should Know About

Los Angeles, has a thriving startup ecosystem with numerous accelerators, incubators, and programs designed to support and nurture new businesses. These programs provide a range of services, including funding, mentorship, workspace, networking opportunities, and strategic guidance to help entrepreneurs develop their ideas and scale their companies.


Techstars Los Angeles

Techstars is a global outfit with a chapter in Los Angeles that opened in 2017. It prioritizes local companies but will fund some firms based outside of LA.

Location: Culver City

Type of Funding: Pre-seed, early stage

Focus: Industry Agnostic

Notable Past Companies: StokedPlastic, Zeno Power


Grid110

Grid110 offers no-cost, no-equity programs for entrepreneurs in Los Angeles, including a 12-week Residency accelerator for early-stage startups, an Idea to Launch Bootcamp for pre-launch entrepreneurs, and specialized programs like the PledgeLA Founders Fund and Friends & Family program, all aimed at providing essential skills, resources, and support to help founders develop and grow their businesses.

Location: DTLA

Type of Funding: Seed, early stage

Focus: Industry Agnostic

Notable Past Companies: Casetify, Flavors From Afar


Idealab

Idealab is a renowned startup studio and incubator based in Pasadena, California. Founded in 1996 by entrepreneur Bill Gross, Idealab has a long history of nurturing innovative technology companies, with over 150 startups launched and 45 successful IPOs and acquisitions, including notable successes like Coinbase and Tenor.

Location: Pasadena

Type of Funding: Stage agnostic

Focus: Industry Agnostic, AI/Robotics, Consumer, Clean Energy

Notable Past Companies: Lumin, Coinbase, Tenor


Plug In South LA

Plug In South LA is a tech accelerator program focused on supporting and empowering Black and Latinx entrepreneurs in the Los Angeles area. The 12-week intensive program provides early-stage founders with mentorship, workshops, strategic guidance, potential pilot partnerships, grant funding, and networking opportunities to help them scale their businesses and secure investment.

Location: Los Angeles

Type of Funding: Pre-seed, seed

Focus: Industry Agnostic, Connection to South LA and related communities

Notable Past Companies: ChargerHelp, Peadbo


Cedars-Sinai Accelerator

The Cedars-Sinai Accelerator is a three-month program based in Los Angeles that provides healthcare startups with $100,000 in funding, mentorship from over 300 leading clinicians and executives, and access to Cedars-Sinai's clinical expertise and resources. The program aims to transform healthcare quality, efficiency, and care delivery by helping entrepreneurs bring their innovative technology products to market, offering participants dedicated office space, exposure to a broad network of healthcare entrepreneurs and investors, and the opportunity to pitch their companies at a Demo Day.

Location: West Hollywood

Type of Funding: Seed, early stage, convertible note

Focus: Healthcare, Device, Life Sciences

Notable Past Companies: Regard, Hawthorne Effect


MedTech Innovator

MedTech Innovator is the world's largest accelerator for medical technology companies, based in Los Angeles, offering a four-month program that provides selected startups with unparalleled access to industry leaders, investors, and resources without taking equity. The accelerator culminates in showcase events and competitions where participating companies can win substantial non-dilutive funding, with the program having a strong track record of helping startups secure FDA approvals and significant follow-on funding.

Location: Westwood

Type of Funding: Seed, early stage

Focus: Health Care, Health Diagnostics, Medical Device

Notable Past Companies: Zeto, Genetesis


KidsX

The KidsX Accelerator in Los Angeles is a 10-week program that supports early-stage digital health companies focused on pediatric care, providing mentorship, resources, and access to a network of children's hospitals to help startups validate product-market fit and scale their solutions. The accelerator uses a reverse pitch model, where participating hospitals identify focus areas and work closely with selected startups to develop and pilot digital health solutions that address specific pediatric needs.

Location: East Hollywood

Type of Funding: Pre-seed, seed, early stage

Focus: Pediatric Health Care Innovation

Notable Past Companies: Smileyscope, Zocalo Health


Disney Accelerator

Disney Accelerator is a startup accelerator that provides early-stage companies in the consumer media, entertainment and technology sectors with mentorship, guidance, and investment from Disney executives. The program, now in its 10th year, aims to foster collaborations and partnerships between innovative technology companies and The Walt Disney Company to help them accelerate their growth and bring new experiences to Disney audiences.

Location: Burbank

Type of Funding: Growth stage

Focus: Technology and entertainment

Notable Past Companies: Epic Games, BRIT + CO, CAMP


Techstars Space Accelerator

Techstars Space Accelerator is a startup accelerator program focused on advancing the next generation of space technology companies. The three-month mentorship-driven program brings together founders from across the globe to work on big ideas in aerospace, including rapid launch services, precision-based imaging, operating systems for complex robotics, in-space servicing, and thermal protection.

Location: Los Angeles

Type of Funding: Growth stage

Focus: Aerospace

Notable Past Companies: Pixxel, Morpheus Space



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🚁 One Step Closer to Air Taxis in LA
Image Source: Joby Aviation

🔦 Spotlight

Joby Aviation, a pioneering electric air taxi company, has achieved a significant milestone by successfully flying a hydrogen-electric aircraft demonstrator for 523 miles with only water as a byproduct. This groundbreaking flight showcases the potential for emissions-free regional travel using vertical take-off and landing (eVTOL) aircraft, eliminating the need for traditional runways. The company's innovative approach combines its existing battery-electric air taxi technology with hydrogen fuel cells, paving the way for longer-range, environmentally friendly air travel.

For LA residents, this development holds exciting implications for future transportation options. Joby's technology could potentially enable direct flights from LA to destinations like San Francisco or San Diego without the need to visit conventional airports, offering a cleaner and more convenient alternative to current travel methods. The company's progress in both battery-electric and hydrogen-electric aircraft positions it at the forefront of next-generation aviation, promising to revolutionize urban and regional mobility.

Notably, Joby Aviation has already made strides in Southern California by securing an agreement with John Wayne Airport earlier this year to install the region's first electric air taxi charger. This strategic move sets the stage for LA to be among the initial markets where Joby will launch its electric air taxi service. With plans to commence commercial operations as early as 2025 using its battery-electric air taxi, LA residents may soon have access to a fast, quiet, and environmentally friendly mode of transportation that could significantly reduce travel times and traffic congestion in the region. In the not too distant future, LA might find itself in an identity crisis without traffic and excess smog 🤞🤞.


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