WTF is pay per 'demonstrated' value in AI content licensing?

"With 'pay-per-value,' AI platforms pay publishers based on the relative value that piece of content contributed to a query, and the value of that query, according to Paul Bannister, chief strategy officer at Raptive. 'This is the most complicated but by far the best model, and is somewhat similar to existing licensing models like ASCAP [and] BMI for music royalties.'"

"Publishers and tech companies are determining how to scale compensation to match the value of the content publishers are allowing AI systems to access. It's another sign of the evolution from flat-fee AI content licensing deals to pay-per-use, and it's called 'pay by demonstrated value' or 'pay per value.'"

"It aligns interest the most. It's almost like a revenue share. Depending on how much money the platform makes, the publisher makes a percentage of that. For example, the difference in price for a deeply investigated journalistic report versus football scores."

AI content licensing is evolving from flat-fee deals to more sophisticated compensation structures. Microsoft's publisher marketplace is pioneering 'pay-per-value' pricing, where publishers receive compensation based on how much their content contributes to specific AI queries. This approach requires publishers to set pricing floors that reflect content quality differences, such as investigative journalism versus routine sports scores. Four main compensation models exist: lump sum deals, pay-per-crawl, pay-per-query, and pay-per-value. The pay-per-value model resembles music licensing systems like ASCAP and BMI, creating revenue-sharing arrangements where publisher earnings correlate with platform profitability, potentially restoring publisher pricing power in AI licensing negotiations.

Read at Digiday