00:02:55 · Irene Solaiman
[00:02:55] S2: Well, first on the switches, the conversation you had with Clem, it's funny how prescient you've continuously been. I realized it was before the incident that we endured in July. And when we were seeing already a trend of movement towards open models, it's only expedited since then. So as of, I believe, today Europe time, I'm not sure if you saw Revolut, the kind of neobank for our American listeners that was founded in London and operates largely in Europe, announced that they are switching to open weight models and using only clotting codex for exceptions. We are seeing this overall trend, particularly since July, of more established and startup companies announcing their shift to open weights with the explicit purpose of cutting cost. To your question about what does this mean for the model developers, there are a few ways that people earn money and it is harder for the developers if everything's hosted on prem, but preferable from an enterprise perspective, both for the cost, but also for the data privacy and data residency, especially if you want that in a certain jurisdiction. But particularly for making money, a lot of that is going to be inference costs. It could be a sort of cloud lock in if folks are using inference via, for example, Alibaba Cloud, which is the parent of Qwen, Alibaba's excellent flagship model, or it's a sort of revenue sharing system, which is the kind of boring area of licenses that we can get into if our reader... If our listeners don't get too snoozy.
00:04:38 · Rebecca Balan, Irene Solaiman
[00:04:38] S1: Yeah. Okay. So revenue... Like, for the for the open model providers, like, sharing built into the model license? Or... I know this is something that you've talked about kind of wanting to spearhead it at Hugging Face. [00:04:48] S2: Yes. So licenses are generally drafted in legalese, which is why they don't get a lot of active readers. Right. And there are a couple standard ones that you see most commonly with open weights, MIT and Apache two point o. They're quite permissive, as opposed to the latest iteration of flagship open weight models that are using custom that require some level of revenue sharing if you make some threshold of revenue. [00:05:19] S1: So so we're we're talking revenue sharing. There's there's potential for cloud providers to to get a piece of this pie. Maybe the companies that are, you know, building the apps off these open weight models. Are we... Like, could we possibly be living in a world where open models are creating enormous value for the AI industry while the companies actually developing them are struggling to capture much of it?
00:05:19 · Rebecca Balan, Irene Solaiman
[00:05:19] S1: So so we're we're talking revenue sharing. There's there's potential for cloud providers to to get a piece of this pie. Maybe the companies that are, you know, building the apps off these open weight models. Are we... Like, could we possibly be living in a world where open models are creating enormous value for the AI industry while the companies actually developing them are struggling to capture much of it? [00:05:38] S2: It's hard to say without seeing the the explicit financials and not everything is a public company, so it'll be quite an interesting next few months. The level of value from the deployers and from the developers, I think, also depends on the makeup of the the business organization. So for Alibaba Cloud, they're just such an enormous cloud company. It could be considered a sort of feature to bring folks into Alibaba Cloud and Qwen is used really worldwide. So it's... They're both their smaller model, the 27 b, which is Apache two point o and runnable on a laptop, and their larger model, which is frontier level. The latest is Qwen 3.8 Max, which is open weight, can be used on prem, or it's easier to use inference. So a lot of folks in those kind of scenarios do make a substantial amount, but we're not able to view those exact metrics.
00:05:38 · Irene Solaiman, Rebecca Balan
[00:05:38] S2: It's hard to say without seeing the the explicit financials and not everything is a public company, so it'll be quite an interesting next few months. The level of value from the deployers and from the developers, I think, also depends on the makeup of the the business organization. So for Alibaba Cloud, they're just such an enormous cloud company. It could be considered a sort of feature to bring folks into Alibaba Cloud and Qwen is used really worldwide. So it's... They're both their smaller model, the 27 b, which is Apache two point o and runnable on a laptop, and their larger model, which is frontier level. The latest is Qwen 3.8 Max, which is open weight, can be used on prem, or it's easier to use inference. So a lot of folks in those kind of scenarios do make a substantial amount, but we're not able to view those exact metrics. [00:06:37] S1: Right. So... So some of the bigger companies, specifically, we're talking China here, like Alibaba, they're offering open source models, but they're also offering the cloud and the compute. Right? Exactly. So they're able to offer this as kind of a package deal. Whereas if we look at maybe the American ecosystem, that's not necessarily the case, right? A lot of the open model providers are just open model providers. They don't have compute that they can... I mean, maybe they have deals with Neo Clouds that they're trying to, like, sell a package deal with, but they're not the ones getting revenue from the compute. So I I kinda I kinda worry for them a little bit more in this in this case.
00:06:37 · Rebecca Balan, Irene Solaiman
[00:06:37] S1: Right. So... So some of the bigger companies, specifically, we're talking China here, like Alibaba, they're offering open source models, but they're also offering the cloud and the compute. Right? Exactly. So they're able to offer this as kind of a package deal. Whereas if we look at maybe the American ecosystem, that's not necessarily the case, right? A lot of the open model providers are just open model providers. They don't have compute that they can... I mean, maybe they have deals with Neo Clouds that they're trying to, like, sell a package deal with, but they're not the ones getting revenue from the compute. So I I kinda I kinda worry for them a little bit more in this in this case. [00:07:12] S2: It's a tricky decision on if you're releasing an open model that doesn't quite reach or beat Frontier level. A lot of folks love using Frontier. I mean, they're great products. They're easy. Then how do you get those kinds of users interested in deploying? And this is where these customized licenses come in for The US model providers on the open weight side. Some of the more visible ones who have done a great job are, I mean, Meta historically has been an open weight champion, and RC, Reflection have been releasing with permissive licenses, but they also do enterprise contracts. So you'll see with Reflection, they did a enterprise agreement with South Korea and have a partnership to build a sovereign AI cloud. So there are other ways to do these kinds of custom solutions.
00:07:12 · Irene Solaiman, Rebecca Balan
[00:07:12] S2: It's a tricky decision on if you're releasing an open model that doesn't quite reach or beat Frontier level. A lot of folks love using Frontier. I mean, they're great products. They're easy. Then how do you get those kinds of users interested in deploying? And this is where these customized licenses come in for The US model providers on the open weight side. Some of the more visible ones who have done a great job are, I mean, Meta historically has been an open weight champion, and RC, Reflection have been releasing with permissive licenses, but they also do enterprise contracts. So you'll see with Reflection, they did a enterprise agreement with South Korea and have a partnership to build a sovereign AI cloud. So there are other ways to do these kinds of custom solutions. [00:08:03] S1: Okay. So so almost like a white glove service. Will, like, you know, you wanna build your own sovereign or enterprise solution and you wanna use open source model school, we'll build it for you kind of thing. [00:08:12] S2: Yeah. It's... For how much interest there is in AI, there are very few people that really know how to customize this relatively.