Axios House: As click behavior rapidly switches, open internet pays the price

CANNES, France — For the first time, bots outnumber people on the internet — and in five years, they could exceed humans by 1,000 to 1, executives said at an Axios Live event.

Why it matters: AI tools are reading the internet's content without paying for it, and content providers are feeling the financial effects, Cloudflare co-founder and CEO Matthew Prince said.

• "Humans are trusting AI more and more, and they're not clicking on the footnotes," Prince said. "The way people are going to find information is through AI, and that cuts publishers out of the equation."

Axios' Sara Fischer and Kerry Flynn moderated conversations with Prince and Spotify co-CEO Gustav Söderström at the June 23 event, which was sponsored by Index Exchange.

What they're saying: AI can compare thousands of products with no brand loyalty or emotional attachment, making it nearly impossible for lesser-known companies to compete, Prince pointed out.

• "I think AI is going to destroy small businesses," he said. "If we don't solve that in a way that new entrants can survive and thrive, we're going to have massive consolidation, and that's bad for us all."

Between the lines: Spotify has already built the model the rest of the internet needs, according to Söderström — AI that gives users more control and pays creators when their work is used.

• Spotify's "large taste model," trained on trillions of listening sequences, lets users steer their own recommendations.
• "Giving people control over the algorithm is very new," Söderström said. "It's a counter to the idea that AI always leads to more addictive feeds."
• Spotify is also building the first legally licensed AI music model, allowing artists to opt in to have their songs remixed and collect royalties when those remixes get played.

Zoom in: Google presents a particularly difficult obstacle. It uses the same crawler for AI and search, so publishers can't block AI without also disappearing from Google's search results, Prince said.

• Getting people to click through from Google to a website is already 10 times harder than it was four years ago, Prince said. The numbers shoot up for AI: from OpenAI, it's 1,500 times harder and Anthropic, 70,000 times.

• A UK ruling now requires Google to allow publishers to opt out of AI training while staying in search. Cloudflare said it can apply that rule globally for any publisher.
• "If we can make Google play by the same rules as everyone else, then all of a sudden everyone's like, if they have to pay, we're willing to pay too," Prince said.

Content from the sponsor's segment:

In a View from the Top conversation, Index Exchange president and CEO Andrew Casale said the open internet is on a decade-long losing streak, and the ad industry needs to stop pretending otherwise.

• "The open internet right now is about $50 billion. Facebook pulled about $250 billion," Casale said. "We don't need the $250 billion. Let's just get $50 [billion] out of there. … That's so much economic value that can completely reset the internet."