Is Perplexity’s Revenue-Sharing Model a Solution to Media’s A.I. Dilemma?

In a step towards redefining the synergy between A.I. and journalism, Perplexity AI, an A.I.-powered search engine, recently launched its Publishers’ Program—a revenue-sharing model aimed at integrating copyrighted content into A.I. applications. The initiative comes at a critical time when accusations of content misappropriation have strained the relationship between A.I. companies and publishers. 

Over the past few years, established media organizations, including Forbes, IAC, and Condé Nast, have all expressed worry that A.I. companies are scraping their content on the web without due acknowledgment or remuneration. Perplexity, which recently faced plagiarism accusations, is attempting to mend these relationships by offering a win-win scenario to publishers. “We structured this program to ensure we have a scalable and sustainable way to align incentives for all parties,” Aravind Srinivas, CEO of Perplexity, wrote in a blog post on July 30. “We appreciate the publishers who have joined us for this program and provided us with valuable feedback about how it should operate. We have always believed that we can build a system where the whole Internet wins, and this is just the first step.”

Among the program’s early adopters are TIME, Der Spiegel and The Texas Tribune, who will have access to Perplexity’s powerful APIs, allowing them to create A.I.-powered content solutions. In addition, these publishers will also receive a substantial portion of the advertising revenue generated whenever their material leads to an A.I. response on Perplexity’s platform.

With the industry divided between litigation and licensing deals, will other A.I. companies follow suit, or will the battle over content rights intensify?

The evolving role of A.I. in journalism

Disputes about the applicability of A.I. appear in the process of its integration into the media sector. While helping provide straight and relevant answers to users’ questions and queries and enhancing user satisfaction, the technology also comes across as a menace to old-school media publishers who rely on web traffic and advertising revenue. 

With the rise of generative A.I. chatbots that can compile information from webpages into a digestible blurb for the user, each response that does not send the consumers to the publisher’s website is a lost sale and lost readership. By offering a revenue-sharing model, Perplexity aims to address the contentious issue of IP rights and compensate publishers for using their content. Through the Publishers’ Program, the company claims that publishers will be paid at least a ‘meaningful percentage’ of the ad revenue. 

However, this approach may “lead to conflicts of interest, as the potential for financial gain might lead to pressure from larger publishers to prioritize content that aligns with algorithmic demands over desired journalistic quality and integrity,” Max Li, CEO and co-founder of the decentralized A.I. platform OORT, told Observer. 

“This will ultimately compromise independence similar to OpenAI’s revenue-sharing agreement with the Associated Press, where OpenAI offered a share of revenue to the AP in exchange for access to its content,” Li added. 

In the recent past, the argument over using online content for training A.I. models has escalated to allegations of plagiarism and piracy. For instance, Forbes requested Perplexity to cease using its material and threatened to sue the company for copyright infringement. The New York Daily News, Chicago Tribune, Orlando Sentinel, San Jose Mercury News and four other publications recently sued OpenAI and Microsoft (MSFT), alleging that the two companies used their articles to train A.I. models without permission or compensation.

“Without revenue-sharing models, legislators may eventually be compelled by their constituents to enact laws protecting the economic interests of content owners, potentially mandating royalty payments for content used by A.I. companies,” Andrew Lo, director of MIT’s Laboratory for Financial Engineering, told Observer. “Although this innovation might introduce additional complexity, it also seems promising and could reduce litigation—unless, of course, A.I. companies and publishers fail to agree on terms.”

As the media industry navigates these challenges, some organizations are bracing for long legal fights, while others opt for collaboration. Recent partnerships between OpenAI and media outlets like TIME and News Corp have set an example for this collaborative approach.

Perplexity’s Publishers’ Program could shake up the publishing world by opening up new revenue streams and fostering collaboration between traditional media and A.I. technologies.

“New types of companies may very likely arise that use A.I. algorithms to automatically generate articles for publishers. These articles will be fake but optimized enough to have more chance of being referred to by the Perplexity AI algorithm, resulting in more revenues for publishers,” Li said. “For financially strained newsrooms, the long-term success of such programs will depend on how effectively it impacts profit margins and its ability to satisfy publisher’ expectations.”