In this episode, I discuss the recent debut of a 32-second ad for a fictional pizza chain called Pepperoni Hugging Spot, which was entirely made using artificial intelligence. The text, voiceover, images, and video were all generated by machines. This got me thinking about the power of intangible AI-generated content, which is infinite and can be scaled easily. While the quality of machine-generated content may not be at par with human-led productions, it is improving rapidly. This poses a challenge for businesses that rely on intangible content for revenue, as machines can now generate it at a large scale. So, the question is, how can you create additional value that does not scale? Something that doesn’t scale is where value comes from, and scarcity comes from things that don’t scale. So, if your business relies on intangible content, it’s time to start thinking about how to create additional value. If you found this topic interesting, please hit the subscribe button.
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What follows is an AI-generated transcript. The transcript may contain errors and is not a substitute for watching the video.
Christopher Penn 0:00
In this episode, let’s talk about intangibles Infiniti AI, and peperoni.
If you missed it this past week, a, a synthetic ad made entirely with artificial intelligence almost entirely with artificial intelligence debuted a 32nd ad for a fictional pizza chain called pepperoni hugging spot.
And in this ad, if you watch it, the text is generated, the voiceover is generated, the images, the video, all that was made by machine, it is very clearly made by machine like when you watch it, this is this is definitely machine made, the the distortions, the funky looking faces, you name it, it is definitely not something that you would ever mistake as being a human led production.
But it worked.
And as we’ve been saying, with all things AI, if it’s rough now, it’ll be less rough in a year, usable in two years and better than the average human made in three years.
When you look at where GPT two was three years ago, its outputs were right GPT-3 outputs were usable.
It was it was pretty good.
GPT-3 point five, more than pretty good and GPT-4, which is what’s out today, better than what is average for human beings to create.
And seeing this got me thinking if it’s intangible, AI allows it to be infinite.
If it’s intangible AI allows for it to be infinite.
Think about this for a second.
You have tangible things, right? You know, this, this mechanical shaver is a tangible thing you can hold on to it has a resource cost, a manufacturing cost, a supply chain cost to make this thing.
I can’t pick up a blog post, or five blog posts or a million blog posts.
In any kind of tangible form.
I can’t take an image, or video, or sound, they’re intangibles.
And what we are seeing in this age of generative AI is that intangibles are something machines can generate now can they generate them better than humans? Sometimes, I mean, if you take the scale of human capabilities and skills from face rolling on the keyboard to fuel it surprise, right, there’s definitely a bit of a bell curve there.
The machines have been able to do better than face rolling for a while, they’ve been able to do better than the back half of the bell curve right there now at I wouldn’t say beyond the midpoint of the bell curve, beyond that, that center point and then nudging towards the front end of the bell curve.
Depending on your skills with prompt engineering and stuff, you can get pretty far down that bell curve before you get to a point where know the quality for something that’s Pulitzer Prize winning still largely the domain of humans.
But what machines do that people can scale? Right? They can scale for anything that is intangible words, they can make words like crazy.
They can make images, they can make sounds and now making videos.
And if it’s intangible, and it’s infinite, that also means that any one given piece of content doesn’t have much value by itself.
There are exceptions, obviously.
But take the average of a million blog posts, how many of them are going to generate traffic? How many of them are going to create conversions? Your Stuff individually, might be better than average, you might be saying to yourself, well, our contents working.
Okay, your content is working.
Not everyone’s is in and in light of that.
If you think about the machines on this bell curve, now being able to create content that’s better than the midpoint of the bell curve.
That meet at at scale, that means that any economic value from the back half of the bell curve now belongs to the machines.
So when you’re thinking about how do we generate value, how do we create value? How do we create something that people would be willing to pay for? You have a scale problem with this bell curve, right? The machines allow for an infinite amount of intangible content to be created.
And the quality of that is going to be average or below average.
But with each year, and each iteration that quality bar goes up.
So how do you make money? How does your company make money? What do you sell? And do you sell something that is tangible? Do you sell something intangible? If you sell something that is intangible But how do you create more value? How do you get people to keep paying for it when machines are creeping up on that area in ways that very few of us predicted, you know, even three years ago, something like auto GPT.
And these other autonomous AI solutions, agent based AI, was theoretically possible.
But we didn’t know that it would be that easy to glue a few instances of a life language model together, just let them do their thing, right? We didn’t know that we were effectively making autonomous versions of The Sims.
intangibles are infinite.
By their very nature, they’re infinite machines can scale them.
So where can you derive value? Value comes in part from scarcity.
There is no scarcity of content anymore.
Look on YouTube.
Even on YouTube, there’s a number of things that are there still human led, but machine assisted.
I was watching some stuff on about Star Trek and the way that people, ordinary people, people with a regular laptop, no need for you know, a supercomputer are generating images and graphics that look so good.
That 10 years ago, that would have been prime time, movie or box office quality.
Now, your gaming laptop cranks it up, you look at what the Unreal Engine can create.
And you look at what generative AI can create.
We are at a point now where the technology is advancing so quickly.
Those things that create high quality content, the expense, that exclusivity is going away, generative AI is making that go away.
In some ways, this is good, this democratizes our ability to create high quality content.
If you make money on content, like movie studios, or TV production studios, you should be watching this stuff really, really carefully, because it’s going to eat into your business model.
Think about this, suppose you have a TV series that was canceled? Looking at you Netflix and Warrior Nun? What if you fed the two seasons that existed into a large language model and said extrapolate to season three.
And then you fed that to mid journey and you fed that to 11 Labs, you fed that to all these different tools and said, make a third season regardless of what the the IP holder has, make a third season or fourth season or fifth season.
Today that would be fairly difficult to do.
Right? Not impossible.
Pepperoni hugging spot is a good example.
That’s not impossible, but it’s more challenging.
In five years time, that might be just a prompt, make a third season of Warrior Nun, right? That might just be a prompt, and then the autonomous systems will just glue together all the pieces necessary.
And with the way language models are evolving, the quality will probably be as good as what the human beings created.
So think about this.
If your value is intangible today, can a machine scale it? If so, what are you doing to create additional value that does not scale? Right? Because value comes from in power from scarcity and scarcity comes from things that don’t scale.
What doesn’t scale in your business? give that some thought.
If you’d like this video, go ahead and hit that subscribe button.
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