OpenAI is paying Axel Springer for its content

Shot (8th December):

Axel Springer is shutting down the news outlet Upday, the German publishing giant said on Friday, in plans to revive the brand as a "trend news generator" driven by artificial intelligence.

Bit of a shocker. At its peak, Update employed 150 people, and its app regularly appeared in the top UK news app lists published by Press Gazette.

Chaser (13th December):

News-publishing giant Axel Springer has inked a multiyear licensing deal with AI pioneer OpenAI, a significant milestone as media companies push for compensation for the use of their content in AI tools. Under the agreement, OpenAI will pay to use content from Axel Springer publications, which include Politico and Business Insider in the U.S. and European properties Bild and Welt, to populate answers in ChatGPT and train its artificial-intelligence tools.

And…suddenly all becomes clear. The publisher is making a huge strategy shift, centred on AI. And, in a show of remarkable sense, this deal isn't about creating content cheaply. It's about finding new ways of getting it in front of audiences. And that's interesting.

Training and tools

This is a two-way deal.

OpenAI will be able to train its models on both current and archive content from the publisher. And that will lead to preferential treatment in ChatGPT results:

When ChatGPT uses information from Axel Springer publications to answer a user’s query, it will include links to the original sources of the information below the answer, the companies said in a joint statement. The new format, which would generate an answer in the form of a summary, is set to debut in the coming months. The aim is to ensure that those websites get credit, compensation and web traffic.  

But equally important, Axel Springer gets to use OpenAI's tools to improve its own products:

Axel Springer will also be able to use OpenAI’s technology to improve its own products, the publisher said. 

And that's where we connect back to the Upday story. It's clear that the publisher no longer sees traditional news aggregation apps as a major part of its future. But something new, and much more AI-infused, is equally clearly on the agenda.

Consolidating power for big publishers

This could be good news for big publishers, who will be able to carve out similar deals — and it's notable that the deal is non-exclusive. Axel Springer can forge similar deals with other AI companies. But will smaller publishers be in a position to make deals like this?

Or will they be left with the uncomfortable choice of either blocking the AIs from training on their content, and forgo any potential traffic from it, or allow training, but not reap any direct financial reward?

But, beyond the business aspect of this deal, it also makes it clear that OpenAI is gunning for a chunk of Google's search business with ChatGPT. Buckle up. Rough ride ahead folks…