People Inc forges AI licensing deal with Microsoft as Google traffic drops | TechCrunch
News Summary
People Inc., a major U.S. media publisher (part of IAC), announced an AI content licensing deal with Microsoft, becoming a launch partner in Microsoft's pay-per-use publisher content marketplace. This marks People Inc.'s second AI agreement, following an earlier deal with OpenAI last year. CEO Neil Vogel lauded Microsoft's commitment to paying for content. The announcement coincided with IAC's Q3 earnings, where People Inc. revealed a significant drop in its traffic from Google Search, falling from 54% two years ago to 24% last quarter, attributed to Google Search's AI Overviews. People Inc. has been vocal about AI companies ingesting content without payment, labeling Google a "bad actor." In response, People Inc. has utilized Cloudflare technology to block AI crawlers, a strategy Vogel credits with being "very effective" in bringing "almost everyone to the negotiating table." For the quarter, People Inc.'s digital revenue grew 9% to $269 million, driven by performance marketing (38% growth) and licensing (24% growth).
Background
The rapid advancement of artificial intelligence, particularly large language models (LLMs), has created an immense demand for vast amounts of high-quality content for training and operation. Publishers and content creators face a dual challenge: their content is being scraped and utilized by AI companies, often without compensation, while AI-generated summaries and answers directly cannibalize their website traffic and advertising revenue. Major tech companies, including Microsoft and Google, are aggressively integrating generative AI into their core products, such as Microsoft's Copilot and Google's AI Overviews, aiming for dominance in the AI race. This has compelled publishers to seek new business models and technological solutions to protect their intellectual property and revenue streams. In this context, web infrastructure providers like Cloudflare have become increasingly crucial, offering tools that help website owners manage and control access to their content, including AI crawlers, thereby providing publishers with new leverage in negotiations with big tech.
In-Depth AI Insights
1. What are the broader implications of People Inc.'s strategy using Cloudflare to block AI crawlers and secure content deals for the power dynamics between content creators and big tech in the AI era? - People Inc.'s success demonstrates that technical measures to restrict AI's free access to content can effectively compel AI companies to negotiate and establish payment mechanisms. - This could provide a replicable blueprint for other content creators, leading to a more widespread adoption of a "pay-for-content" model, rather than the "free access" model initially envisioned by AI developers. - This strategy underscores the inherent scarcity and value of content, especially as trustworthy, high-quality information becomes the core fuel for AI models. 2. How does the significant impact of Google's AI Overviews on People Inc.'s traffic challenge traditional paradigms of content distribution and business models in the age of AI? - Google's AI Overviews, by providing direct answers in search results, bypass the user's need to click through to the original website, fundamentally disrupting the traditional "click-and-ad" media business model. - If this model becomes prevalent, it will force all publishers and content providers reliant on search engine traffic to rethink their value proposition and monetization strategies, potentially making paywalls or direct licensing deals more common. - This could also exacerbate content providers' dependency on single distribution channels (like Google), as they might have to choose between being "AI-summarized" and being entirely overlooked, unless they can effectively implement blocking strategies like People Inc.'s. 3. How will the differing approaches of Microsoft and Google to AI content licensing impact the development and competitive landscape of the generative AI ecosystem? - Microsoft's proactive approach to securing paid licensing deals with publishers and establishing a "pay-per-use" content marketplace could give it an edge in acquiring high-quality, authorized content, thereby enhancing the reliability and authority of its AI products (e.g., Copilot). - In contrast, Google, facing significant traffic impact from its AI Overviews and being labeled a "bad actor," might encounter greater trust deficits and legal risks, potentially forcing it to adjust its strategy or pay higher licensing fees. - This differentiated strategy will shape the "content supply chain" for generative AI. Microsoft may attract more premium content partners due to its perceived "more compliant and content-respectful" image, while Google, if it fails to adequately address content compensation, could find itself at a disadvantage in terms of content quality and compliance, affecting its AI products' long-term competitiveness.