How Will the News Corp-OpenAI Deal Affect Ad Revenues?

In this post:

  • OpenAI and News Corp recently signed a content licensing deal, which will provide access to content for AI model training.
  • The deal is worth $250 million, but it is unknown how it will affect ad revenue from digital advertising.
  • OpenAI has closed similar deals with other publishers after getting sued by the New York Times and other newspapers.

OpenAI and News Corp recently announced a partnership deal that will allow OpenAI to access News Corp content. The deal will add News Corp’s content to OpenAI’s expanding contractual content wallet.

According to a post from OpenAI, the partnership permits OpenAI to display content from News Corp mastheads in response to user queries. In other words, OpenAI can train its models on News Corp content, and ChatGPT can produce answers based on the publications’ content.

Also Read: Can Copyright Law Destroy ChatGPT? Insights From the New York Times Lawsuit

The Deal Benefits Both Firms

According to the Wall Street Journal, News Corp will pocket $250 million with the new partnership over the next five years. It is unclear whether OpenAI will have access to the editorial content. Another question is whether News Corp will allow instant access to fresh content or whether there will be a time-lapse before OpenAI can access it.

How Will the News Corp-OpenAI Deal Affect Ad Revenues?
Wall Street Journal Print Edition. Source: Wall Street Journal.

OpenAI will get access to the content from New Corp-owned publishing outlets, including The Wall Street Journal, The New York Post, Market Watch, The Australian, Barron’s, and a few more.

The CEO of New Corp, Robert Thomson, said: 

“We are delighted to have found principled partners in Sam Altman and his trusty, talented team who understand the commercial and social significance of journalists and journalism.”

Thomson also said that the agreement will set new standards for value in the digital age. OpenAI will have access to new and archived content to use in its ChatGPT responses and model enhancement, which possibly means Model training. OpenAI CEO Sam Altman said, “Our partnership with News Corp is a proud moment for journalism and technology.”

AI Models Can Gain Credibility

Dr Rob Nicholls, a senior research analyst at the University of Sydney, notes that the deal will benefit both OpenAI and News Corp. Nicholls said that the partnership has the potential to impact both businesses, reported Bandt. He highlighted that:

“The effect of the deal is that funds flow to News Corp without any additional costs to that business. It also resolves a potential copyright infringement lawsuit.”

Dr Nicholls said that the deal will solidify OpenAI’s credibility. This is because its answers will be based on journalists’ content, which is obviously better than the ones scraped from social media. OpenAI will also be in a unique position because smaller startups won’t be able to match the deal due to many factors.

OpenAI also said that News Corp will “share Journalistic expertise” to help ensure that OpenAI presents the highest journalism standards across its offerings. Neither company has disclosed any details about how the process will work.

Deal Presents an Alternative to Ad Revenue Streams

According to tech observers, such content licensing deals usually allow ChatGPT to scrape content to train its AI models to produce better responses. Publishers get compensation for the use of their copyrighted content. A few weeks ago, OpenAI signed a similar deal with the Financial Times. At the start of 2024, OpenAI closed a similar deal with Axel Springer, the parent company of Business Insider and Politico.

Also Read: Reddit May Sue AI Firms if Business Conversations Fail

Some publishing houses have taken a different approach, like The New York Times and a group of eight newspapers, which sued OpenAI and its heaviest backer, Microsoft, for using their content to train their AI systems.

Reddit announced its $60 million deal with OpenAI a week ago. Reddit said the deal will also help it integrate AI features with OpenAI’s large language models to develop applications.

How Will the News Corp-OpenAI Deal Affect Ad Revenues?
Reddit homepage. Source: Reddit.

According to analysts, these deals represent a significant shift in content monetization. Publishers are leveraging the opportunities that the new tech offers as they drift away from traditional digital advertising.

Adam Krass, Chief Digital Officer at UM Australia, said,

“The ineffectiveness of traditional click-based attribution, … further complicates revenue generation in a cookie-less world. This has led to a search for more reliable metrics and methods that can better capture the real value provided by content creators,”

Analysts say that these content licensing deals are pioneering a new revenue in which creators are directly compensated for their content. Others have a different opinion. They think that such deals may eventually reduce advertising revenue for publishers. They expect users to be getting answers on AI platforms. However, it is still too early to observe the impact of these deals.

Cryptopolitan reporting by Aamir Sheikh

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Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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