> It is priced at $0.002 per 1k tokens, which is 10x cheaper than our existing GPT-3.5 models.

This is a massive, massive deal. For context, the reason GPT-3 apps took off over the past few months before ChatGPT went viral is because a) text-davinci-003 was released and was a significant performance increase and b) the cost was cut from $0.06/1k tokens to $0.02/1k tokens, which made consumer applications feasible without a large upfront cost.

A much better model and a 1/10th cost warps the economics completely to the point that it may be better than in-house finetuned LLMs.

I have no idea how OpenAI can make money on this. This has to be a loss-leader to lock out competitors before they even get off the ground.

> I have no idea how OpenAI can make money on this. This has to be a loss-leader to lock out competitors before they even get off the ground.

The worst thing that can happen to OpenAI+ChatGPT right now is what happened to DallE 2, a competitor comes up with an alternative (even worse if it's free/open like Stable Diffusion) and completely undercuts them. Especially with Meta's new Llama models outperforming GPT-3, it's only a matter of time someone else gathers enough human feedback to tune another language model to make an alternate ChatGPT.

I thought it was Midjourney who stole their thunder. Stable Diffusion is free but it's much harder to get good results with it. Midjourney on the other hand spits out art with a very satisfying style.