People Inc. & Microsoft AI Licensing Deal Amidst Google Traffic Decline

People Inc. and Microsoft Forge AI Licensing Partnership

People Inc., a leading U.S. media publishing company, has entered into an AI licensing agreement with Microsoft. This announcement was made on Tuesday during the third-quarter earnings report of its parent company, IAC, formerly known as Dotdash Meredith.

Launch Partner in Microsoft's Publisher Content Marketplace

People Inc. will function as a key launch partner within Microsoft’s new publisher content marketplace. This collaboration marks the company’s second significant AI-related deal, following a previous agreement established with OpenAI in the prior year.

A "Pay-Per-Use" Model for AI Content Access

Neil Vogel, CEO of People Inc., described the new marketplace as a “pay-per-use” system. This allows AI developers to directly compensate publishers for utilizing their content, functioning on an “a la carte” basis.

Microsoft's Commitment to Content Compensation

Vogel also highlighted Microsoft’s dedication to financially supporting content creators to fuel its AI initiatives. He confirmed that Microsoft’s Copilot will be the initial purchaser within this new marketplace.

Endorsement of Publishing Value

“This inclusion demonstrates a strong validation of our company and the broader publishing marketplace,” Vogel stated. “It underscores the inherent value of content in creating high-quality AI.”

Impact of Google's AI Overviews on Traffic

The Microsoft deal announcement coincided with news regarding the negative impact of Google Search’s AI Overviews on People Inc.’s website traffic. The publisher shared data with investors revealing a substantial decline in traffic originating from Google Search.

Traffic Decline from Google Search

Specifically, Google Search accounted for 54% of People Inc.’s traffic two years ago, but this figure has decreased to just 24% during the most recent quarter.

Comparing the Microsoft and OpenAI Agreements

The agreement with Microsoft differs from the OpenAI deal, which Vogel characterized as an “all-you-can-eat” access model. However, People Inc. expressed satisfaction with both approaches, emphasizing the importance of having its work “respected and paid for.” Specific financial details of the Microsoft deal were not disclosed.

Concerns Regarding Uncompensated AI Content Ingestion

People Inc. has voiced concerns about AI companies utilizing media content without providing adequate compensation. Vogel recently criticized Google, labeling the company a “bad actor” for employing a single bot for both its search engine and AI features.

Blocking AI Crawlers to Encourage Negotiation

Publishers are unable to block this bot, as Google search remains a significant traffic source. However, People Inc. utilizes technology from Cloudflare to block other AI crawlers, which has prompted AI companies to seek content licensing deals.

Cloudflare Technology as a Negotiation Tactic

In September, Vogel explained that leveraging Cloudflare’s technology was a strategic move to encourage AI companies to engage in negotiations. He noted that progress on securing deals had “accelerated” following the implementation of this solution.

Effectiveness of Blocking AI Crawlers

Vogel reiterated these points during the earnings call, stating that blocking AI crawlers has been “very effective” and has “brought almost everyone to the table.” He anticipates further deal announcements in the future.

IAC Reports Strong Digital Revenue Growth

IAC reported that People Inc. achieved a 9% increase in digital revenue, reaching $269 million for the quarter. This growth was driven by performance marketing (up 38%) and licensing (up 24%).

Recent Acquisition of Feedfeed

The company also announced its acquisition of Feedfeed, a media publisher and influencer network specializing in food-related content.