Right, but these companies are selling their products on the basis that you can offload a good amount of the thinking. And it seems a good deal of investment in AI is also based on this premise. I don't disagree with you, but it's sorta fucked that so much money has been pumped into this and that markets seem to still be okay with it all.
Oh, you beautiful summer child. They are losing money on you . Do you think they are doing that out of the goodness of your heart? They are luring you in, making you dependent on them at a net loss while the VC money are lasting.
When you are totally hooked and they are fully out of money, that's when you'd realize the long con you've been dragged into. At this very moment, that they are tightening the usage limits they are not telling you, and you still think the peanuts you are paying them now would be enough in the future? It's called https://en.wikipedia.org/wiki/Enshittification and you better know that you are in it.
I am buying from willing sellers at the current fair market price. The belief that there will be "one true king" in this race has been incepted by VCs and hype men, and is misguided at best and dangerous at worst.
Like many of the companies that have gone before them, if / when the value proposition is gone, and I get less than 10x the amount I spend, I will be gone.
> Like many of the companies that have gone before them, if / when the value proposition is gone, and I get less than 10x the amount I spend, I will be gone.
Seems you'd soon be going. Well it was fun while it lasted (all 3 months of it).
Not a rumor anymore! Got this in my inbox (I'm a Pro subscriber):
Hi there,
Next month, we're introducing new weekly rate limits for Claude subscribers, affecting less than 5% of users based on current usage patterns.
Claude Code, especially as part of our subscription bundle, has seen unprecedented growth. At the same time, we’ve identified policy violations like account sharing and reselling access—and advanced usage patterns like running Claude 24/7 in the background—that are impacting system capacity for all. Our new rate limits address these issues and provide a more equitable experience for all users.
Current: Usage limit that resets every 5 hours (no change)
New: Overall weekly limit that resets every 7 days
New: Claude Opus 4 weekly limit that resets every 7 days
As we learn more about how developers use Claude Code, we may adjust usage limits to better serve our community.
What this means for you:
Most users won't notice any difference. The weekly limits are designed to support typical daily use across your projects.
Most Pro users can expect 40-80 hours of Sonnet 4 within their weekly rate limits. This will vary based on factors such as codebase size and user settings like auto-accept mode. Users running multiple Claude Code instances in parallel will hit their limits sooner.
You can manage or cancel your subscription anytime in Settings.
We take these decisions seriously. We're committed to supporting long-running use cases through other options in the future, but until then, weekly limits will help us maintain reliable service for everyone.
We also recognize that during this same period, users have encountered several reliability and performance issues. We've been working to fix these as quickly as possible, and will continue addressing any remaining issues over the coming days and weeks.
Is this like saying a gym runs at 40%+ margin because 80% of users don't really use it heavily or forget they even had a subscription? Would be interested to see the breakdown of that number.
That's how nearly every subscription service works, yes. Some fraction has a subscription and doesn't use it, another large chunk only uses a fraction of their usage limits, and a tiny fraction uses the service to it's full potential. Almost no subscription would be profitable if every customer used it to its full potential
TL;DR: their subscriptions have an extra built-in margin closer to 70%, because the entry price, target audience and clever choice of rate limiting period, all keep utilization low.
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In this case I'd imagine it's more of an assumption that almost all such subscriptions will have less than 33% utilization, and excepting few outliers, even the heaviest users won't exceed 60-70% utilization on average.
"33% or less" is, of course, people using a CC subscription only at work. Take an idealized case - using CC only during regular working hours, no overtime: then, even if you use it to the limit all the time, you only use it for 1⁄3 of the day (8h), and 5 days a week - the expected utilization in this scenario is 8/24 × 5/7 = 24%. So you're paying a $200 subscription, but actually getting at most $50 of usage out of it.
Now, throw in a rate limit that refreshes in periods of 5 hours - a value I believe was carefully chosen to achieve this very effect - and the maximum utilization possible (maxing out limit, waiting for refresh, and maxing out again, in under 8 hours wall-clock time), is still 10 hours equivalent, so 10/24 × 5/7 = 30%. If you just plan to use CC to the first limit and then take meetings for the rest of the day, your max utilization drops to 15%.
Of course people do overtime, use same subscription for personal stuff after work and on weekends, or just run a business, etc. -- but they also need to eat and sleep, so interactively, you'd still expect them to stay below 75% (83% if counting in 5-hour blocks) total utilization.
Sharing subscriptions doesn't affect these calculations much - two people maxing out a single subscription is, from the provider side, strictly not greater than two subscriptions with 50% utilization. The math will stop working once a significant fraction of users figure out non-interactive workflows, that run CC 24/7. We'll get there eventually, but we're not there yet. Until then, Anthropic is happy we're all paying $200/month but only getting $50 or less of service out of it.
Is that for per token costs or in these bundled subscriptions companies are selling?
For example, when playing around with claude code using a per token paid API key, it was going to cost ~$50aud a day with pretty general usage.
But their subscription plan is less than that per month. Them lowering their limits suggests that this wasn't proving profitable at the current limits.
Exactly. The enormous margin is why companies like OpenAI and Anthropic are known for being so immensely profitable. Just money printing machines compared to the amount of cash they burn
How long can AI be subsidized in the name of growth? They need to radically increase the price. If I replace a $150k yr employee should I pay $200 a month or $2,000 a month. $200 is too cheap.
$200 a month with Opus 4 and Sonnet 4 won't let you replace a $12.5k / month employee - but it's cheap enough that everyone, including you and even your employees, will want to see how much utility they can squeeze out of it.
This is a price to get people hooked up, yes, but also to get them to explore all kinds of weird tricks and wacky workflows, especially ones that are prohibitively costly when billed per token. In some sense, this is crowdsourcing R&D - and then when Opus 7 or whatever comes along to take advantage of best practices people worked out, and that turns out to be good enough to replace your $150k/yr / $12.5k/mo employee - then they'll jack up prices to $10k/month or whatever.
And makes your codebase completely unmaintainable, even for Claude. The more Claude runs one does, the more unmaintainable the codebase becomes, and more tokens Claude spends on each subsequent run. It's a perfect ecosystem!
It's interesting that businesses can build an obviously toxic subscription model that robs consumers of both money and time, but when asked to change it now we have to consider their costs.
I understand the idea behind the threshold for changing rules but this still feels very broken. There is a constant struggle of having to do everything perfectly to make any positive progress, but bad actors can operate however they like with seemingly little repercussions.
The bar should be where changes happen to move in the correct direction easily, while moving in the incorrect direction harder. If the rule was to "force companies to have confusing cancel processes", the rulemaking process would have zero burdens, because the "potential gains" of doing so would be enormous.
> If the rule was to "force companies to have confusing cancel processes", the rulemaking process would have zero burdens
I can't speak to hypotheticals with certainty, but a straightforward reading of this law is that it would have exactly the same regulatory process requirements as the requirement to remove them.
That is easy to say. However I don't think you can define "correct direction" in a useful way that also gets at what you mean. Every definition you can come up with someone will find a loop hole that fits the letter of your definition, while it is against what you mean.
By putting process in place for rules we give us time to notice bad rule proposals and give us a process to stop them.
Rules that give leeway to act when consumer costs are estimated to be above a certain threshold, instead of when company costs are below a certain threshold would be a much better, if still imperfect, rule that would satisfy the “correct direction in a useful way”.
Just off the top of my head, you could have a rule that if some business activity is estimated to cost consumers $100 million or more, then FTC can implement it instead of looking at the cost to companies. The “average US household” spends $200 a year on forgotten or unused subscriptions [1], if even 10% of those are due to a lack of click to cancel, that is $2.6 billion per year.
When bad actors have a low bar but good actors have a high bar, the country is bound to collapse. Look at how many rules the current regime is flouting. But the other side has to dot every i for some reason.
Are we still talking about click-to-cancel here? There aren't 'other sides' in any meaningful sense on this sort of administrative decision. There is a solid consensus that people shouldn't have to pay for subscriptions they don't want and a couple of broadly inconsequential points to debate on how to implement it.
This is exactly the sort of situation where just following all the rules and procedures is fine and it doesn't, within a pretty broad range of outcomes, who gets final say.
The "other side" does not consider themselves anti-consumer. You disagree with them on what anti-consumer means, but they have their own reasons to consider their position pro-consumer and you are doing debate a disservice by ignoring that.
They do consider themselves anti-regulation and anti-government in general, but they are not (mostly) anarchists, they do agree with some regulation and government, they just want the minimum possible and thus place a high bar on how bad the alternatives must be before they will agree to regulation/government.
I for one was definitely speaking about the general case, not this particular case. My point was that due process is not, generally speaking, a bad thing - even if it means that "progress" is sometimes a little slow to come by.
Yeah, my reaction to this was "Big deal? How is this news to anyone"
It reads like articles put out by consultants at the height of SOA. Someone thought for a few minutes about something and figured it was worth an article.
You can but then you need some other way to gatekeep because a community of trust has to have an inside and an outside. Someone needs to keep people who don’t belong out, for whatever value of “don’t belong” you want to build a community around.
We already do. It’s called the value of your time. If there’s too much traffic, chose another route. We don’t need more tech shit trying to improve mobility when the solution is clear- fewer cars, more mass transit (and not hyperloop crap)
What exactly is the superpower here? Having a large chunk of steel you need to micro manage the location of, or pay up the nose to have a dedicated space for?
Have you ever ridden a bike? Taken the subway? Heck, you can just use a taxi to get around. Why would you want to deal with having a car in somewhere like Manhattan? Do you hate your fellow citizens so much you need to be constantly insulated from society?
Note to the author, put this up front, so I know that you did the bare minimum and I can safely ignore this article for the slop it is.