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Market bifurcation and generative AI are hollowing out middle-tier digital products like mid-priced online courses, which users can now replicate via conversational AI. Businesses should instead capture attention at massive scale using low-cost or free assets, and convert that attention exclusively into high-touch, ultra-premium, done-for-you or in-person offerings where buyers are relatively price-insensitive.
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As AI makes information free, monetization must shift. Customers now pay for curated opinions, structured educational programs like bootcamps, and guaranteed results—not just access to a database of articles. People are reluctant to pay for raw information but will pay for accountability and a clear path to an outcome.
It seems counterintuitive, but as the volume of free, general information from AI tools like ChatGPT explodes, the demand for curated, specialized expertise actually grows. Clients need experts not just for information, but to provide a specific, transformative journey that cuts through the noise of generic content.
AI can replicate digital content and even expert opinions, diminishing their value. The new moat for creators and experts will be providing direct, in-person access through meetings and events. This unscalable human connection becomes the premium offering that AI cannot replace.
The AI model market has two clear segments: expensive, high-IQ frontier models for critical tasks like cybersecurity, and small, cheap, fast models for high-volume, simple tasks. Mid-tier models are struggling to find a clear product-market fit, as users gravitate to either extreme.
As AI makes code, content, and design infinitely available, scarcity shifts to what AI cannot replicate: creative judgment, original "weird" thinking, and in-person physical experiences. This creates an opportunity for premium, human-centric brands to market themselves as "AI-Free," similar to organic food certifications.
AI tools like ChatGPT can generate travel itineraries on-demand, reducing the market for paid digital guides. This forces creators to shift their value proposition to personal expertise, curation, and trust—qualities that AI cannot replicate—to justify a premium price for their information products.
The market for AI models is bifurcating. Users either pay a premium for top-tier frontier models for high-stakes tasks like cybersecurity or use extremely cheap, small models for high-volume, simple tasks. Mid-tier models struggle to find a viable use case, getting squeezed from both ends.
Don't panic if AI reduces the unit value of your service. This market pressure shift creates new opportunities. You can either sell a much higher volume of the lower-cost service or leverage AI's efficiencies to build and sell a completely new offering.
As AI commoditizes basic functionality, 'good enough' is no longer sufficient and will be considered mediocre. Sustainable advantage will come from the top of the stack: superior design, craft, brand, point of view, and storytelling.
In a world where AI makes software cheap or free, the primary value shifts to specialized human expertise. Companies can monetize by using their software as a low-cost distribution channel to sell high-margin, high-ticket services that customers cannot easily replicate, like specialized security analysis.
