Ways to think about token pricing
The article analyzes the current instability and supply-demand dynamics of AI token pricing. It suggests that while current inference margins are high, the market may eventually treat foundation models as low-margin commodity infrastructure.
Why it matters
The economic sustainability of AI models is a major factor in the future of the tech industry and the viability of large-scale AI deployment.
There are only two things you can say with certainty about token prices: we’re in a supply crunch, and this is unstable. All of the variables are in play, and the market will get shaken out over the next few years to arrive at a new equilibrium. Right now we have a lot of frantic analysis of ‘time to power’, but question at the end of that is whether the foundation models have sustainable pricing power, strategic leverage and value capture, or whether they become low-margin commodity infrastructure providers. At the moment, I think every dynamic we can see points to the latter.
The analysis focuses on market economics and industry trends rather than political ideology.
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