A 'beautiful friendship'
News Corp's mega-deal with OpenAI is a watershed moment for the media giant, but the long-term benefits and risks for the company and the wider news industry remain unclear.
It's been one of those weeks where the profound impact generative artificial intelligence is going to have on business and human lives more broadly has repeatedly hit us in the face.
From Hollywood actress Scarlett Johansson’s spat with OpenAI to Australian billionaire Richard White’s revelation that criminals had used generative AI to impersonate him in an extortion attempt and the latest blowout quarter for AI-fuelled chipmaker Nvidia, AI has been everywhere. But today's announcement that Rupert Murdoch-controlled News Corp had signed a five-year $US250 million ($377 million) deal with OpenAI is likely of most interest to ASX investors and the media industry.
On the face of it, the deal looks like a win/win for both sides. OpenAI’s large language models will in theory spit out far more credible results when they are trained on the breaking news and extensive archives of respectable mastheads produced by professional journalists like the Wall Street Journal and The Times. For News Corp, the substantial cash injection across its global operations will soften the blow from the likely loss of a lucrative deal with social media behemoth Meta that was influenced by the Australian government’s media bargaining code.
While the logic of the media code has always been questionable, the case for compensation for publishers from AI platforms is open and shut. When platforms are quite literally ingesting copyrighted material, they must compensate the creators of that material for it.
