Perplexity says it's moving away from ads and betting on subscriptions (www.businessinsider.com)

Perplexity, the San Francisco-based AI search startup, has announced a strategic shift away from ad-based revenue models, opting instead to focus on subscriptions for business clients, including finance professionals and CEOs. This decision marks a significant departure from the trend seen in rival companies like OpenAI, which is pushing forward with an ad-centric approach. Perplexity plans to enhance its monetization strategies and expand its enterprise sales team, recognizing the potential in catering to large businesses in a competitive landscape where efficiency in information retrieval is paramount. The decision is crucial for the AI/ML community as it highlights a growing skepticism toward ad-supported models in AI applications, particularly given issues around user trust in AI-generated advertising. Instead of metrics like the number of questions answered, Perplexity intends to prioritize revenue and retention, signaling a more sustainable long-term strategy. With reported annual recurring revenue hitting $200 million and promising new enterprise features, Perplexity aims to solidify its position against competitors like Glean, which focuses on optimizing internal data searches. This pivot not only reflects evolving market dynamics but also underscores the ongoing debate about the values and effectiveness of different monetization strategies within the AI sector.