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Perplexity AI's Revenue Sharing Program Amid Allegations of Plagiarism and Industry Scrutiny

GOOVER DAILY REPORT August 11, 2024
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TABLE OF CONTENTS

  1. Summary
  2. Introduction to Perplexity AI's Revenue Sharing Program
  3. Details and Mechanics of the Revenue Sharing Agreement
  4. Plagiarism Allegations Against Perplexity AI
  5. Industry Context and Comparisons
  6. Publisher and Industry Reactions
  7. Conclusion

1. Summary

  • The report addresses Perplexity AI's new revenue-sharing program designed to form alliances with news publishers by sharing advertising revenue. The initiative promises financial benefits for participating publishers such as TIME, Der Spiegel, and Fortune. However, the program is clouded by plagiarism allegations from Forbes and WIRED, who claim improper use of their content by Perplexity. The report examines how Perplexity's Chief Business Officer, Dmitry Shevelenko, and the company have defended their practices and responded to these accusations. Key aspects of the report include the program's revenue-sharing terms, modifications in response to criticism, and the broader AI industry’s scrutiny and legal challenges concerning content use without proper attribution.

2. Introduction to Perplexity AI's Revenue Sharing Program

  • 2-1. Overview of the revenue-sharing initiative

  • Perplexity AI has introduced a new revenue-sharing program aimed at fostering partnerships with news publishers and sharing advertising revenue. The program is designed to distribute a portion of advertising earnings to publishers when their content appears alongside ads in Perplexity's search results. According to the company's Chief Business Officer, Dmitry Shevelenko, this initiative is intended to build profitable alliances and support a thriving ecosystem for journalism. The Perplexity Publishers' Program is a multi-year agreement, although the duration may vary for each publisher.

  • 2-2. Key partners involved in the program

  • Several prominent media outlets have joined Perplexity AI's revenue-sharing program. The initial partners include TIME, Der Spiegel, Fortune, Entrepreneur, The Texas Tribune, and Automattic. These partnerships are crucial, as they help pave the way for additional publishers to join the program. Despite recent controversies, Perplexity continues to encourage other publishers, including those who have criticized the use of their content, to participate in the initiative.

  • 2-3. Terms of the revenue-sharing agreement

  • While Perplexity AI has not disclosed the exact terms of its revenue-sharing agreements, it has stated that publishers can expect to earn a double-digit percentage of the advertising revenue for each article featured in search results. Payments are made based on the number of articles referenced, meaning publishers are compensated for each instance their content is used in responses. The revenue-sharing rate may fluctuate based on the performance of the new business model, but any increases will be applied uniformly to all participating publishers. For early partners, particularly favorable terms have been offered, but those joining later may receive a lower rate.

3. Details and Mechanics of the Revenue Sharing Agreement

  • 3-1. Ad revenue distribution model

  • Perplexity AI's new revenue-sharing program is designed to distribute a portion of advertising revenue to its publishing partners. Dmitry Shevelenko, Perplexity's Chief Business Officer, mentioned that publishers will earn a double-digit percentage of the advertising revenue for each article featured in search results. This means if a query result features articles from the same publisher, the publisher will earn double the commission. However, the company has not disclosed the precise terms and conditions of this revenue distribution.

  • 3-2. Performance-based adjustments in revenue share

  • The revenue-sharing rate is intended to fluctuate based on the performance of Perplexity AI's new business model. Shevelenko highlighted that any rate increase will apply uniformly to all publishers, including those who initially joined the program. On the contrary, publishers joining later may have to accept a lower rate. This performance-based adjustment ensures that early adopters benefit more substantially compared to new entrants.

  • 3-3. Impact on initial and new partners

  • Perplexity AI has secured multi-year agreements with several major publishers, including Time, Der Spiegel, Fortune, Entrepreneur, The Texas Tribune, and Automattic. While the terms are the same for all participating publishers, the program offers particularly favorable terms for initial partners. The program includes compensation on a per-source basis, meaning publishers are paid for each article used in the responses. Additionally, these early partners benefit from perks such as access to Perplexity's APIs, developer support, and enhanced data privacy and security capabilities.

4. Plagiarism Allegations Against Perplexity AI

  • 4-1. Forbes and WIRED allegations

  • Perplexity AI has faced serious allegations from Forbes and WIRED. Forbes accused Perplexity of using its paywalled content without proper attribution, specifically pointing to an incident involving former Google CEO Eric Schmidt. The issue arose when content appeared in Perplexity’s 'Pages' feature and was used in an AI-generated podcast without citing Forbes. WIRED further alleged that Perplexity scraped content from news sites through alternative IP addresses, prompting an investigation by Amazon, which found no wrongdoing. These allegations have led to significant scrutiny and criticism from the media industry.

  • 4-2. Defenses and responses from Perplexity

  • Perplexity defends its actions by claiming fair use and denies any intentional plagiarism. Dmitry Shevelenko, Perplexity’s Chief Business Officer, stated that the program is not a reactive PR move but a genuine effort to create a sustainable business model for journalism. After the allegations, Perplexity made changes to its content display, prominently citing sources. Additionally, after Wired's story, the company disabled the functionality that could visit URLs with 'do not crawl' requests, demonstrating a proactive approach to address concerns.

  • 4-3. Impacts of the allegations on publisher partnerships

  • The allegations have had noticeable impacts on Perplexity's publisher partnerships. Some publishers decided to drop out of the program due to internal concerns from their staff. This led Perplexity to undertake efforts to reassure partners like Time, Fortune, and Der Spiegel of their good faith. Despite these challenges, Perplexity launched its revenue-sharing program with publishers including TIME, Der Spiegel, Fortune, Entrepreneur, The Texas Tribune, and Automattic, aiming to build profitable alliances and address the controversy through transparency and collaboration.

5. Industry Context and Comparisons

  • 5-1. Scrutiny over AI content usage in the industry

  • The generative AI industry is currently facing significant scrutiny for copyright violations and illegal content scraping practices. Notably, Perplexity AI, funded by Jeff Bezos and other investors, has been accused of knocking off stories from other publications to provide summarized responses to user queries. Similarly, OpenAI and Google have been involved in controversial practices, with OpenAI signing deals with multiple publishers for accessing their historical data, while Google relies on its extensive web search index. Perplexity has also contended with accusations of failing to provide proper citations and surreptitiously scraping content using alternative IP addresses. Although Perplexity has made changes to display more prominent citations, the criticisms from media companies and reporters remain intense.

  • 5-2. Comparisons with competitors like OpenAI

  • Perplexity AI’s approach to addressing plagiarism accusations involves sharing advertising revenue with news publishers. This strategy sets it apart from competitors like OpenAI and Google. For instance, OpenAI recently launched SearchGPT, positioning it as a tool for delivering relevant search results with enhanced conversational abilities. However, OpenAI's partnerships do not yet include revenue-sharing agreements, focusing instead on driving traffic back to publishers' websites with prominent citations. Perplexity's deal offers a double-digit percentage of ad revenues to publishers whose content is surfaced by its chatbot, positioning it as a more cooperative entity in the eyes of media partners compared to its competitors.

  • 5-3. Lawsuits and legal challenges faced by AI firms

  • AI firms, including OpenAI, have faced numerous legal challenges related to their content usage practices. The New York Times has filed a lawsuit against OpenAI, accusing it of using its articles without permission to train its AI models. OpenAI's legal tactics include pressuring NYT to hand over reporters' notes and other materials, which has sparked discussions on First Amendment rights and journalist protections. In contrast, Perplexity AI has managed to secure partnerships with major publishers like Fortune, Der Spiegel, and TIME, despite facing similar plagiarism allegations. Perplexity's proactive approach in addressing these issues, such as voluntarily disabling a controversial feature and enhancing data privacy capabilities, has helped it navigate legal challenges more effectively than some of its peers.

6. Publisher and Industry Reactions

  • 6-1. Feedback from participating publishers

  • Participating publishers have had mixed reactions to Perplexity AI’s revenue-sharing program. Publishers such as Fortune, Der Spiegel, Time, Entrepreneur, The Texas Tribune, and Automattic have signed up for the program. Dmitry Shevelenko, Chief Business Officer at Perplexity, highlighted the importance of creating a vibrant set of business models for journalism, which the program aims to support. The publishers that create high-quality, informative content are expected to receive a double-digit percentage of the advertising revenue for each featured article. Shevelenko noted that the revenue-sharing rate could change depending on the program's performance but will uniformly apply to all initial publishers. Despite the potential benefits, the specific terms of the agreement remain undisclosed.

  • 6-2. Withdrawals and publicly stated concerns

  • Several publishers have withdrawn from the partnership program amid criticism and allegations of unethical content usage. Forbes and Wired have publicly accused Perplexity of improper citation and unauthorized content scraping. These allegations led to internal revolts among staff in some publishers who were uneasy with Perplexity’s methods. Dmitry Shevelenko reported that after the Forbes and Wired revelations, some publishers, who were close to signing up, decided to wait instead. The allegations prompted Perplexity to change its citation display on pages to address these concerns, although it didn’t fully alleviate the criticism from the media companies.

  • 6-3. Dmitry Shevelenko’s perspective

  • Dmitry Shevelenko has emphasized Perplexity's commitment to ethical practices and cooperation with publishers. Responding to Wired’s accusations of using alternative IP addresses for scraping content, Shevelenko clarified that the company's IP usage was in response to user actions and not proactive crawling. Shevelenko also mentioned that Perplexity voluntarily disabled functionalities that conflicted with publisher content policies. He stressed that the initial criticism stemmed from misunderstandings about the company’s approach. Despite the steps taken to rectify the issues, the scrutiny led to a few publishers hesitating to engage with the program.

7. Conclusion

  • Perplexity AI's revenue-sharing program is a pioneering effort to integrate financial collaboration with news publishers and tackle content usage challenges ethically. However, the surrounding plagiarism allegations underscore the fragile nature of trust within AI-content partnerships. Despite promising financial incentives, such as a double-digit percentage share of advertising revenue for early partners like TIME, Der Spiegel, and Fortune, the initiative faces significant obstacles, illustrated by hesitation and withdrawals among certain publishers. The varying responses from the AI industry, with companies like OpenAI taking different approaches, highlight the complexities of implementing fair use policies. Going forward, Perplexity AI must enhance transparency, ethical content practices, and adaptive legal strategies to strengthen its partnerships and navigate the intense scrutiny effectively. Future prospects involve refining their model to ensure it remains fair and robust against ethical and legal challenges, potentially setting a new standard for AI's collaboration with media.”}

8. Glossary

  • 8-1. Perplexity AI [Company]

  • Perplexity AI is an artificial intelligence firm known for its search engine capabilities and AI-generated content. It has developed a revenue-sharing program with news publishers to share advertising revenues from content displayed in searches. The company faces scrutiny and plagiarism allegations but aims to foster ethical content use and support journalism sustainability through its partnerships.

  • 8-2. Dmitry Shevelenko [Person]

  • Chief Business Officer of Perplexity AI, Dmitry Shevelenko plays a central role in launching and defending the company's revenue-sharing program. He emphasizes the mutual benefit of the program for Perplexity and its publishing partners and provides insights into the company's strategies to manage the plagiarism allegations.

  • 8-3. TIME, Der Spiegel, Fortune, Entrepreneur, The Texas Tribune, Automattic [Companies/Organizations]

  • These are the initial partners in Perplexity AI's revenue-sharing program. They stand to receive a share of advertising revenue when their content is featured in Perplexity’s search results, though their engagement encompasses varied benefits and expectations based on performance and agreement terms.

  • 8-4. Plagiarism Allegations [Issue]

  • Accusations from Forbes and WIRED alleging improper use of paywalled and copyrighted content by Perplexity AI. These allegations have led to industry-wide scrutiny and have influenced the perceptions and behaviors of other publishers considering engagement with Perplexity's program.

  • 8-5. OpenAI [Company]

  • Perplexity AI's competitor, known for its AI-generated content and initiatives like SearchGPT. Unlike Perplexity, OpenAI has not implemented a revenue-sharing program with media outlets. The comparison highlights differing approaches to addressing content use and publisher collaborations in the AI industry.

9. Source Documents