A Brand-New Business Model for 2024

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Welcome to another issue of Passionate Income.

Today we’ll be discussing a brand-new business model for 2024.

In particular, one in a red-hot industry where you can build a sellable business around your passion while earning ongoing royalties.

Let’s dive in.

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It’s not often a new business model comes around in the online world.

Yes, TikTok Shops allowed existing TikTok users to monetize their following. And while generative AI created an entirely new industry, the business models are the same: Build a SaaS, sell an information product, etc.

But with OpenAI’s launch of the GPT Store yesterday (available to paid Plus members only), we’re seeing the birth of an entirely new business model before our very eyes.

If you’re not familiar with them, GPTs can be thought of like custom versions of ChatGPT. Think of it like fine-tuning a race car.

Let’s say two people buy Dodge chargers, which they plan to race on the streets Fast and Furious style.

At the end of the day, no matter how many parts they replace, or how many modifications they make to the exhaust system or engine, they’re still driving a Dodge Charger.

Which is precisely how GPTs operate.

At the base layer, you have ChatGPT running under the hood (cheesy pun intended). But through the use of custom prompts, file uploads, etc., GPTs allow you to “fine tune” ChatGPT’s outputs.

As an example, one of the most popular GPTs in the store right now is called Consensus.

What makes Consensus different from the regular version of ChatGPT is that it’s fine-tuned to cite research studies and medical journals to back up its claims.

This solves a legitimate problem in the generative AI space (as it relates to text at least). In particular, the problem of ChatGPT making up answers out of thin air (which are known as hallucinations).

Another example is DesignerGPT, which according to its text blurb, allows users to create and host, beautiful websites. Most likely by using ChatGPT to spin up the text and underlying code, and DALLE to produce the images.

The reason for their success?

Similar to any other SaaS or mobile app, a GPT must do one of two things: Solve a problem or provide entertainment. By only delivering credible information, and helping people build pretty websites, both Consensus and DesignerGPT solve a real-world problem.

In the case of entertainment, one GPT that’s going viral right now is: Genz 4 Meme.

In it, you can upload an image of a meme, at which point ChatGPT will analyze it and respond with a humorous description of what the image depicts.

Admittedly, entertainment can be a tough niche to crack. On the flip side, Genz 4 Meme is proof it can be done.

In conclusion, we don’t want to pretend building a business around GPTs will be “easy.”

As of right now, OpenAI users have already created 3 million GPTs since they made the feature public a couple months ago.

With that said, it’s safe to assume 99.99% of GPTs were created by users who were playing around, but have no intention of monetizing their work.

As for the money side of things, starting in Q1, OpenAI will pay GPT creators as part of a pooled royalty sharing model (with payouts based on each’s GPTs engagement levels).

If you’re unfamiliar with how these work, pooled revenue sharing is how platforms like Spotify and Amazon Kindle Unlimited pay creators. Without getting technical, the system involves paying people (authors, musicians, GPT builders) based on consumption.

As an example, let’s say there are 500,000 musicians on Spotify.

As you can imagine, the top 100 most famous artists probably drive 50% of the ~30 billion streams Spotify delivers each month. After the top 100 it tapers off, with less famous artists driving a much smaller percentage, and no-name artists driving very few (if any).

From there, Spotify takes the total number of monthly streams and calculates what percentage of that total every single artist generated (down to God knows how many decimal points).

Then they take their pool of revenue and multiply it by each artist’s percentage (to determine how much of a payout they should get that month).

Which is (basically) how the GPT Store will work.

Except, because GPTs are not OpenAI’s main business, it appears they’ll be setting aside of a pool of funds to distribute to GPT creators (instead of splitting up their total revenues like Spotify does).

So if you’re an AI enthusiast who has a knack for prompting, and you’re willing to put in the work to a) identify a problem you can solve /way you can provide entertainment, and b) do the marketing required to get eyeballs on your project, maybe you should check this out.

As we’ve seen from similar royalty-based businesses, while most people will fail, the ones who have talent and apply themselves can hit it big.

💡 Takeaway: Similar to how Mobile App developers built businesses off the back of the App Store, creators will be able to build businesses off the back of the GTP Store.

Further, starting in Q1, OpenAI will pay GPT creators based on engagement. Given companies like Spotify and Amazon (as part of their Kindle Unlimited program) have already proven this model, there’s no reason to believe it won’t work at OpenAI.

I'll leave you with this quote…

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