People Inc. Partners with Microsoft in AI Licensing Amid Declining Google Traffic
In a strategic move to bolster its position in the evolving digital landscape, People Inc., formerly known as Dotdash Meredith, has entered into an artificial intelligence (AI) licensing agreement with Microsoft. This partnership, announced during the third-quarter earnings call of its parent company, IAC, marks People Inc.’s second significant foray into AI collaborations, following a prior agreement with OpenAI.
A New Era of Content Monetization
Under this new arrangement, People Inc. becomes a launch partner in Microsoft’s publisher content marketplace. This platform is designed to facilitate direct compensation for publishers by AI entities utilizing their content. Neil Vogel, CEO of People Inc., described the marketplace as a pay-per-use system, allowing AI developers to remunerate publishers on an a la carte basis for the use of their content.
Vogel commended Microsoft’s commitment to fairly compensating content creators, highlighting that Microsoft’s AI assistant, Copilot, will be the inaugural purchaser within this marketplace. He emphasized the significance of this collaboration, stating, It’s a very strong endorsement of us to be in the room with them and a very strong endorsement of the publishing marketplace and the value of content to make AI that is of high value.
Addressing the Decline in Google-Driven Traffic
The announcement of the Microsoft partnership coincides with People Inc.’s disclosure of a substantial decline in web traffic originating from Google Search. Data presented to investors revealed a drop from 54% two years ago to 24% in the most recent quarter. This downturn is attributed to the introduction of Google’s AI Overviews feature, which has impacted traditional search traffic patterns.
Diverse Approaches to AI Collaboration
The structure of the Microsoft deal contrasts with People Inc.’s previous agreement with OpenAI. Vogel characterized the OpenAI partnership as an all-you-can-eat model, whereas the Microsoft arrangement offers a more flexible, usage-based compensation system. Despite these differences, Vogel expressed satisfaction with both models, underscoring the importance of ensuring that the company’s content is respected and paid for. Specific financial terms of the Microsoft deal were not disclosed.
Advocating for Fair Compensation in the AI Era
People Inc. has been vocal about the challenges posed by AI companies utilizing media content without proper compensation. Vogel has previously criticized Google for employing the same web crawler for both its search engine and AI features, making it difficult for publishers to control access without affecting their search visibility. To address this, People Inc. has implemented Cloudflare’s technology to block other AI crawlers, a strategy that has successfully prompted AI companies to engage in content licensing discussions.
In September, Vogel noted that leveraging Cloudflare’s technology significantly advanced negotiations with AI firms, stating that progress on deals was much further along following the adoption of this solution. During the recent earnings call, he reiterated the effectiveness of blocking AI crawlers, noting that it has brought almost everyone to the table, and hinted at forthcoming agreements.
Financial Performance and Strategic Acquisitions
Amid these developments, IAC reported a 9% increase in digital revenue for People Inc., reaching $269 million for the quarter. This growth was driven by a 38% rise in performance marketing and a 24% increase in licensing revenues. Additionally, the company expanded its portfolio by acquiring Feedfeed, a media publisher and influencer network focused on the food industry.
Industry-Wide Implications
People Inc.’s proactive approach to AI partnerships reflects a broader trend among media organizations seeking to navigate the challenges and opportunities presented by AI technologies. By securing agreements that ensure fair compensation for content, publishers aim to protect their intellectual property and revenue streams in an increasingly AI-driven digital environment.
Looking Ahead
As the digital landscape continues to evolve, collaborations like the one between People Inc. and Microsoft may set a precedent for how content creators and AI developers can work together. These partnerships not only provide financial benefits to publishers but also contribute to the development of high-quality AI applications that rely on diverse and reputable content sources.
