Extrapolating the curve for targetted consumer AI services- focus Arc Search

This evening one of the the big conversation pieces on Tech Twitter is Arc Search and their ‘Act II of the internet’ launch video:

“Our vision for Act II of Arc Internet pic.twitter.com/1RidKJVYUX” - Josh Miller February 1, 2024

Commenters are talking about what this means for Google and their ‘ten blue links’ but I think there are some lessons from history that might be worth considering here and some examples that may give us an idea of what to expect next.

What is Arc Search?

In summary it’s a service to take a natural language term and return results rather than links. The results might be variously a folder of reviews; a custom webpage giving you a tour guide entry on a topic collated from multiple sources; a recipes scrapbook; a selection of prefilled booking requests matching a restaurant requirement, etc. Looks great. Some of us have been doing something similar with ChatGPT for a while now - Yeah, “How do I (Thing)?” rather than “please give me links to pages describing things that sound like ‘how to do thing’”. The demo looks good and there’s an obvious market appeal. If this company isn’t successful then I’m sure some other company will be with some similar idea.

Why are people interested in talking about it?

Gergely Orosz @GergelyOrosz is concerned about what this means for writers of original content and recommends blocking it off from AI access where possible

“The same is true not just for the Arc bot, but any LLM.

Why would anyone writing stuff on the internet allow LLM bots to crawl your stuff? They will digest it; not give references; and definitely not provide traffic. If anything, they will take it away. https://t.co/N51b80eCgz” - Gergely Orosz, February 1, 2024

linking to his own tweet

“It’s now possible to block ChatGPT’s crawler on any website you control.

Added the block: it’s a no-brainer.

Why? ChatGPT cites no sources. It’s a one-way relationship where OpenAI takes what is published on the internet, and then doesn’t give a single reference or link back. ” - Gergely Orosz, August 8, 2023

Dare Obasanjo🐀 @Carnage4Life Talks about Google’s competitors ‘now see[ing] blood in the water’ but is sceptical how this new service could be moentised

“3. Multiple companies now see blood in the water when it comes to Google’s 10 blue links + ads model and are coming in for the kill.

4. No one has explained how websites make money if all we interact with is LLMs and chatbots that are summarizing their data.” - Dare Obasanjo, February 1, 2024

What are the examples of history?

This is a paradigm shift and the current landowners are afraid of losing their stake. People with an investment in the status quo are fearful for the future and sceptical that established players in the field will ‘allow’ this to happen. What does history show us?

“No force on earth can stop an idea whose time has come”

• Victor Hugo

In terms that a lot of people reading and writing about tech may be familiar with, this is a lot like the ‘Innovator’s Dilemma’- as summarised with a few examples below for those less familiar by ChatGPT (skip past the quote block if that puts you off)

The Innovator’s Dilemma, a concept introduced by Clayton M. Christensen, explains how successful companies can do everything “right” and still lose their market leadership, or even fail, as new, unexpected competitors rise and take over the market. There are several classic examples that illustrate this dilemma across different industries:

1. Kodak and Digital Photography: Kodak was a giant in the film photography industry but failed to adapt quickly to digital photography, despite inventing the first digital camera. Kodak’s reluctance to shift focus from film to digital allowed competitors like Canon and Nikon to dominate the new market.

2. Blockbuster and Streaming Video: Blockbuster was a leader in the video rental industry but failed to see the potential of streaming video and digital downloads. Netflix, originally a DVD-by-mail service, transitioned to streaming and fundamentally changed the way people access movies and TV shows, leading to Blockbuster’s decline.

3. Nokia and Smartphones: Nokia was once the world’s leading mobile phone manufacturer but failed to adapt to the smartphone revolution. Apple’s introduction of the iPhone and the rise of Android devices changed consumer expectations for mobile phones, and Nokia struggled to compete with these new, software-driven platforms.

4. Sears and E-commerce: Sears was a retail giant that failed to adapt effectively to the rise of e-commerce. Online retailers like Amazon capitalized on the digital transformation by offering wider selections, competitive pricing, and the convenience of home delivery, leading to Sears’ decline.

5. Borders and Digital Books: Borders, a major bookstore chain, did not adapt to the digital book trend and the rise of e-commerce as quickly as its competitor Barnes & Noble. Amazon’s Kindle and other e-readers transformed how people buy and read books, contributing to Borders’ eventual bankruptcy.

These examples illustrate how the Innovator’s Dilemma plays out: companies that fail to innovate or adapt to new technologies and changing market dynamics, even if they are performing well at the moment, can quickly find themselves displaced by more agile competitors.

We could of course be lazy and stop here with ‘Oh, the market will sort it out’ but the interesting question is ‘How do we answer the concerns raised by Dare and Gergely? How do we make this attractive and profitable for content creators?’. I don’t have all of the answers but I can point to some of those that didn’t. An obvious example here is Encyclopedia Britannica and how they failed to compete with Wikipedia. It wasn’t necessary for Britannica, (Or World Book, or Encarta or any of the others) to be dignified or persuaded of the new model with the internet, it happened anyway. Nowadays they have themselves become like the outdated set of encyclopedia volumes that everyone tried to get rid of. Something very similar is happening with newspapers at the moment - the entire declared circulation for all UK newspapers combined in January 2023 was less than that of the single most popular UK Newspaper (‘The Sun’) in January 2014. The rights or wrongs of the situation don’t come into it. It is surely naive to imagine holding back the tides to shore up an obsolete business model. We can look further back into history too - the reformation in Europe was fuelled in no small part by printing becoming available and literacy becoming worthwhile for people who were not just scholars and sponsors.

What lessons can we learn from this?

Encyclopaedias are still available but there is no money in them. The information you want is widely accessible. Reporting on current events is still available but nobody is looking at print media to get it. The idea that people might want an intermediary search engine service with adverts and to browse further pages with adverts to make a restaurant booking is absurd. Yes recipe farms and content writers may pull up the drawbridge in favour of the status quo now, but at some point the scales will tip and content creators will have to decide whether they want any traffic at all.

Are there any examples doing this today?

Well yes, although there is something of a taboo about it: Patreon and OnlyFans. “The Pornography Innovation Principle” has a dirty name but it holds steady- 2 examples (again via ChatGPT):

This principle suggests that the adult entertainment industry is often an early adopter and innovator of new technology and media formats, e.g.

1. VHS vs. Betamax: One of the most cited examples where the adult entertainment industry’s preference is believed to have influenced the outcome of the format war in the 1980s, favoring VHS due to its longer recording time and cheaper production costs.

2. Internet and Online Payment: The adult industry was among the first to monetize Internet content effectively, pioneering online payment systems, streaming video technologies, and subscription models that would later be adopted by mainstream media and e-commerce sites.

What would this look like for Google and our content creators?

Essentially there will be a lot of content available for free. The money will be in niche/premium/targeted/sponsored/subscription content. Disclosure I am a previous subscriber to Gergely Orosz’ newsletter and it’s top quality stuff but I simply could not keep up with the volume of it! He publishes twice(?) weekly for paid subscribers and once or twice a month for free ones. I don’t see such a stretch to the model I propose.

The old search engine model has peaked in my view. I can see a subscription model working for the sort of convenience that people enjoy with virtual assistants today. I can see a brighter future for YouTube than Google Search.

What I don’t see is the world turning its back on the paradigm shift in play here- I can give ChatGPT a link to a PDF of a manual for my exact thing and say ‘how do I…?’ or even (real world example) ask it ‘how do I turn down the timer alarm volume on an iPhone?’ for someone who is busy in the kitchen. That isn’t something that a Google search can effectively do. I see a bright future for Arc Search and its kind, and also frankly, for worthwhile content creators - look at (the small number of) successful YouTubers for example.