The Value of Generative AI is in the Hands of Those Who Wield It

value of generative ai media c-suite

Some professional writers fear it for the same reason professional investors love it.

Generative AI is a technology that is changing the very nature of productivity and is actively being incorporated into our lives.  It is already being applied within the very industry that educates us about it and shapes our opinions on how valuable it is.  Creative scribes at the heart of that industry fear it will unleash countless barbarians upon the very gates of Hollywood itself.

Strike action will not stop this.  If history (or Hollywood’s own fiction) is anything to go by, it might be a bad idea to bet against the barbarians.  The hard fact is that the smartest money on the planet is pumping capital into generative AI startups at a rate that pales in comparison to other startup companies.  They have already placed their bets.

According to PitchBook data for Q1 2023, average pre-money valuations for early-stage rounds of generative AI companies jumped by 16 percent this year compared to 2022. All other startups saw a 24 percent drop. Investments in generative AI are expected to hit US$42.6 billion by the end of this year.

The reasons are obvious. 

Generative AI makes hard work easier, faster and cheaper.  Those are the single-most important aspects of any technology that has ever improved the future prospects of its adopters.  Consider the adoption of language, fire, rope, the plough, the wheel, the written word, the printing press, the lightbulb, the computer, …   Each of these technologies has sparked a revolutionary leap forward for our species.

Artificial intelligence is a revolutionary technology.  It is not an extra-terrestrial invasion or an extinction-level event.  Despite the media attention that predictions of doom and disaster attract, the probability of AI becoming a self-aware nemesis for the Human-race is firmly seconded to the realms of science fiction.

Like any technology, AI is a tool. 

 “if we are successful at the mission, we’ll create orders of magnitude more value than any company has to date.

Greg Brockman, co-founder of OpenAI in 2019 Reddit comment.

A single human can perform the work of many with the use of AI.  Those who use it will be able to leverage its capabilities to expand their own.  It is what military academics call a force multiplier.  AI will (and already does) increase productivity, efficiency and effectiveness beyond what those without it can achieve.  In any competitive environment, the side making effective use of a force multiplier wins.

So why the crisis?

The Status Quo Ante

There have always been those who were doing quite well before a revolutionary technology stole their advantages.  That is what revolutionary technologies do.  They re-shuffle the deck. 

Much of the world’s investment capital is managed by publicly-listed companies and banks.  These institutional asset managers, including most industry-leading conglomerates, tend to invest in the status quo.  Investing in the status quo is how they maintain their control over industries and the wealth of those they answer to. 

For conservative investors, change is adverse to the status quo and hence to be avoided or actively supressed. 

This is one reason why industry leaders, banks and stock markets rarely see disruption coming.  Or at least, rarely know what to do when it does.  As the status quo changes, conservative asset managers seek to return to the status quo ante. 

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For conservative investors, disruption is bad.  But it is investment in successful industry disruption that creates wealth in the first place by venturing into calculated risks with capital.  Occasionally, a select few of those publicly-listed conglomerates will see the writing on the wall.  A bit of inside knowledge helps.

Breaking Ranks

In December last year, Microsoft announced that it would be investing US$10 billion into OpenAI, the generative AI company that launched the now insanely popular ChatGPT.  Microsoft was an early investor in OpenAI, and its increased investment has coincided with the integration of ChatGPT into Microsoft’s internet search engine, Bing.  But Microsoft is not stopping there.  OpenAI’s tools are being adapted to support some of Microsoft’s most lucrative assets, including Azure. 

In the AI arms race, Microsoft is one of the largest arms dealers.  With its Windows operating system and widely used business productivity suite, Office, Microsoft’s embrace of generative AI for the consumer market makes practical sense.  Add Microsoft’s increasing important cloud computing and enterprise infrastructure into the mix, and artificial intelligence is soon to have an impact on any individual, company or economy that makes use of information technology for work product. 

“[This] next generation AI business will be the fastest-growing US$10 billion business in our history,” Microsoft’s Chief Financial Officer, Amy Hood, told investors two weeks ago.

At the core of ChatGPT is an AI technology called a large language model, or LLM named GPT-4.  This LLM has learned to generate natural-language text after being trained on extensive online information sources.  According to a spokesman for OpenAI, Microsoft has an exclusive license on GPT-4 and all other OpenAI models.

But there are plenty of other LLMs available.

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In March, Google offered some software developers early access to its LLM named, PaLM.

AI startups AI21 Labs, Aleph Alpha and Cohere offer their own LLMs, as does Anthropic, which partnered with Google as its “preferred” cloud provider. 

For OpenAI, the trajectory is apparent.  According to data from PitchBook, OpenAI is on track to generate US$200 million revenues for 2023, up 150% on 2022.  That same data estimates that OpenAI revenues will reach US$1 billion in 2024, a 400% implied growth.

The AI race is global.  Just three weeks ago, French start-up Mistral AI raised €105 million from a host of European VCs in a bid for a European competitor to OpenAI.  It should be noted that Mistral AI launched only four weeks before closing that finance round specifically to create what CEO Arthur Mensch describes as the biggest challenge in the field:  “to make AI useful.” 

In the modern world in which AI is emerging, the application and generation of capital is the primary measure of social, corporate and national success.  For better or worse, gross national product has not yet been supplanted by gross domestic happiness.  Although it can be argued that such a day may come, with the help of AI. 

Making AI Useful

Already, AI is being used to transform the search for more effective antibiotics in the face of increasing bacterial resistance.  Medical imaging and diagnostics are being advanced by decades with the use of AI.  Scientific and social research, aided by Artificial Intelligence, is offering an acceleration of practical applications across food production, water management, building materials, engineering, energy generation and transportation.  Where we live, how we sustain our lifestyles and when we begin to adapt to our changing climate are all areas being advanced with the use of AI.

AI’s disruptive power is already being applied. 

But what we know about AI, and how our knowledge is disseminated within our increasingly globalised world is a function of one industry that has a particular vulnerability to disruption:  the Media & Entertainment industry.  Like it or not, it is the news, television shows, films and social media content that informs us, educates our children and increasingly influences our personal, financial and political choices. 

The Media & Entertainment industry is arguably one of the most powerful, and lucrative, industries on Earth.  It generates more in annual revenues than the top 100 arms manufacturers combined.  It is highly centralised, with well-established mechanisms for limiting and controlling what stories are told, by whom and how they are delivered.  Artificial Intelligence, particularly Generative AI, may just change all of that.

“[T]here are still too many workers in different fields being asked to be creative [with AI], and we need to figure this out for them,” Menshe said.  “We want to give them the tools that are easy to use to create their own products.”

Generative AI’s Momentum Hasn’t Even Started Yet

Industries that are being held back by the hegemony of corporate constraint, lack of competition or artificial bottlenecks on new ideas are most at risk of disruption caused by widespread adoption of AI by those outside industry control. 

The Media & Entertainment industry is no exception.  But what makes AI’s impact upon the Media & Entertainment industry most significant is that this is the industry through which our global societies are informed. 

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The creative apocalypse is unlikely to unfold as the calculating minds of media executives on corporate boards think through the risks of Generative AI.

AI, particularly Generative AI, accelerates the production of creative output.  A single creative mind is now equal to a dozen.  Highly specialised literary techniques can now be applied by anyone, anywhere to present content of quality that rivals any major Hollywood studio or network newsroom.  Technical proficiency in creating production-ready content is no longer a constraint on the proliferation of stories for the telling.

While Generative AI may feel like a threat to many professional writers, it is not the creative mind behind new ideas.  It merely accelerates the proliferation of new ideas.  If that is the threat, then those writers sensitive to it are doomed regardless.    

It is those writers who imagine an emerging parallel with the dystopian trope of Arnold Schwarzenegger’s character in the 1984 film, The Terminator and a future ruled by Artificial Intelligence.  They didn’t create that story as it turns out (that was Harlan Ellison, James Cameron and, of course, Arnold Schwarzenegger). 

What those same writers might wish to consider more fully is the philosophy of another character artfully represented by Schwarzenegger just two years earlier.  The creativity behind Robert Howard, Oliver Stone, John Milius, James Earl Jones and, yes, Arnold Schwarzenegger gave us “The Riddle of Steel” from the 1982 film, Conan the Barbarian

The parallels are profound in the context of our relationship to Generative AI.  Just as with the advent of steel as an enigma that shapes our world, it is the creative mind who AI generates content for that gives it so much power.  For all those who lament the coming of Generative AI, one can only suggest that they begin to think more of themselves. 

To paraphrase Thulsa Doom:

What is the paintbrush, the pen or the keyboard compared to the hand that wields it?

1 Comment

  1. Generative AI will master the ‘Hero’s Journey’ sooner than we think, if not already. However, I will be truly fascinated, popcorn in hand, when it masters nuance away from the economies of scale it currently enjoys and nourishes itself with.

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