Perplexity’s missed opportunity?

Perplexity has an opportunity — and plenty of reason — to be the publisher-friendly LLM. Unlike the lump-sum AI training and content licensing deals favored by Amazon, Meta and OpenAI, it’s building revenue share models that incentivize it to continue compensating publishers. 

But there are some major hurdles. In theory, the revenue share model around Perplexity’s Comet Plus subscription tier announced this week sounds pretty good: publishers are paid based on how often their content is visited by humans and crawled by bots on its AI-powered browser Comet. 

It’s a reflection of the latest trend in AI licensing deals between platforms and publishers: the shift to usage-based models. The IAB Tech Lab is developing a mechanism for this.

Some publishing execs are optimistic — at least initially. But so far Perplexity isn’t taking full advantage of this opportunity.

Two publishing execs that spoke to Digiday said they have yet to meet with Perplexity reps to hear more details about Comet Plus. Perplexity has been unresponsive to messages about its revenue share programs, publishing execs told Digiday. (Perhaps the slow communication is due to the fact that Perplexity’s publisher partnership team is made up of just one person.)

It remains unclear how much revenue is actually getting paid out to publishers from Perplexity’s existing ad revenue share program. And Perplexity is getting hit with lawsuits and legal threats from publishers, due to ignoring requests not to scrape their sites for content without compensation.

As one exec told Digiday, the “devil is in the details.” 

Some publishing execs are skeptical that this model will really be the content scraping fix Perplexity is posturing itself as.

First of all, it relies on users actually using Comet. Perplexity hasn’t shared user figures since launching the browser last month to subscribers of its $200-per-month Max plan.

“How important it will be will be determined by how effective in market penetration Perplexity gets with the Comet browser,” said Charles Muselli, vp of business development at Entrepreneur Media.

And while Perplexity’s head of publisher partnerships, Jessica Chan, recently told Digiday that this new revenue share model helps bring transparency to the relationship between publishers and AI companies, execs aren’t so sure, questioning how the revenue will get divvied up amongst them. How much participants in Perplexity’s publisher program actually stand to make is also unclear, though Chan said she could see it being in the “millions.”

This new model does seem more developed than the ad revenue share program that Perplexity launched last year, mostly because the company is setting aside a specific pool of money they can tap into, publishing execs told Digiday. Whereas it remains unclear how much revenue Perplexity has actually given to publishers so far from its ad revenue program. Chan declined to comment, but admitted that the company’s ad business was still nascent. 

Digiday contacted eight participants in Perplexity’s publisher program and asked about the revenue they were seeing. Five declined to answer, and two did not respond before publishing time.

Perplexity’s focus on AI-powered search and browsers (Perplexity recently made a bid to buy Google’s Chrome browser for $34.5 billion) would — again, in theory — solve some of the issues keeping publishers up at night since the emergence of AI: how people will find and consume their content, and how they will get paid for AI’s access to that content.

The fact that Perplexity’s LLM is being added to other platforms other than its own through an AI search API means publishers have the opportunity to get their content in front of people in a number of different spaces. (For example, Zoom’s AI chatbot can give real-time answers to questions — powered by Perplexity’s LLM — and links to publishers’ sites as sources.)

Perplexity also doesn’t have the best reputation. Companies like BBC, Forbes and Raptive have claimed Perplexity’s crawlers are bypassing blocks like robots.txt to scrape their content without permission and compensation. 

News Corp. is taking Perplexity to court over these copyright issues. Two of Japan’s largest media groups, Nikkei and Asahi Shimbun, announced this week that they are suing Perplexity for this too.

So why are publishing execs still interested in expanding their relationship with Perplexity, despite all of this?

“By working closely with some of these large AI companies, you’re picking a lane. You’re placing a bet on how your relationship is going to be with that particular platform,” Muselli said.

Jacob Salamon, vp of business development at Trusted Media Brands, suggested the legal pressure has pushed Perplexity to offer more compensation to publishers, taking a page out of other pay-per-use revenue models emerging from Cloudflare and Tollbit, and ad revenue share programs from ProRata.

“Perplexity is likely staking its own flags here to get ahead of potential disputes and to establish direct relationships with publishers,” Salamon said. “All in all, very exciting stuff.”

What we’ve heard

“We lost about 50% of our traffic, stabilized, and have been there for a long time… My job is, how do we extract more money per user? And that’s where we’ve done a decent job. Have we recovered it all? No, but… we’ve improved our revenue per user by 40%.”

— A publishing exec speaking during Digiday’s latest closed-door virtual town hall last week.

Numbers to know

89%: The percentage decrease in Google search traffic to DMG Media since the release of AI Overviews.

52%: The percentage decline in ChatGPT referral traffic in the past month, according to a Profound analysis.

⅔: The drop in the number of ad pages in Vogue’s September issue over the past decade.

180: The number of countries that now have access to Google’s AI-powered search experience, AI Mode.

What we’ve covered

How one creator built a six-figure career on TikTok without signing sponsors

• TikTok Live has been a key driver of Gabriella Gomez’s business growth as a creator. Her ability to use live gifting to monetize her daily TikTok livestreams has allowed her to avoid relying on sponsorships.
• Live gifting currently accounts for 90% of her revenue, earning over $766,000 through TikTok’s live gifting feature since June 2024.

Read more about Gomez’s TikTok Live strategy here.

How Perplexity’s new revenue model works, according to its head of publisher partnerships

• Perplexity is opening up a pool of $42.5 million to publishers, which they can tap into and get paid from direct, crawler and AI agent traffic through Perplexity’s web browser Comet.
• Jessica Chan, Perplexity’s head of publisher partnerships, said publishers could stand to make “millions” from this program. 

Read more to find out how Perplexity’s new publisher revenue model works in the Q&A with Chan here.

Complex’s new app is the future of its business, CEO says

• Mobile apps are emerging as a channel where publishers see new potential to reach readers directly in the AI era. Complex launched a new app on August 5.
• “All our future-facing things will all be centered around this app,” Complex’s CEO said.

Read more about Complex’s evolving strategy around its app here.

WTF is AI grounding licensing?

• AI licensing deals between platforms and publishers are starting to shift to dynamic, usage-based models.
• One-time lump sum payments are out. Recurring, usage-based licensing agreements are in. 

Read more about this shift in AI licensing deals here.

What we’re reading

Can the news industry stop AI theft?

Adam Lashinsky, an editor-at-large for The San Francisco Standard, looks at the battle between publishers and platforms in this Washington Post column. He points to litigation, legislation and lobbying efforts – but believes the outlook for publishers’ business models is daunting.

TV news anchor Chris Wallace is quietly advising CBS News’ new owner

Chris Wallace is acting as an advisor to news and media investments at RedBird Capital Partners, The New York Times reported. The company is a major investor in Skydance, which recently bought CBS’s parent, Paramount.

Wired and Business Insider delete AI articles written by freelancer 

The two publications are among a number of titles that removed articles submitted by a freelancer, after discovering the stories were generated by AI technology and full of errors and hallucinations, Press Gazette reported. 

Dow Jones and Wikipedia have signed a deal

Wikipedia editors will now have access to Dow Jones’ content, across titles including The Wall Street Journal, Barron’s, MarketWatch and Investor’s Business Daily.

Time gets a new executive editor

Alex Altman was promoted to executive editor at Time, EIC Sam Jacobs announced in a staff memo. Based in San Francisco, his responsibilities will include overseeing coverage of the influence of Silicon Valley.