The artificial intelligence firm OpenAI is paying the digital media company Dotdash Meredith a minimum of around $16 million per year to license its content, according to public financial documents from IAC, the parent company of Dotdash Meredith.
The figure is a minimum because it only reflects the “fixed†component of the payment and not the “variable†component, which will be calculated in the future, IAC chief operating and financial officer Chris Halpin told analysts on an earnings call last week.
“If you look at Q3 of 2024, licensing revenue was up about $4.1 million year over year. The lion’s share of that would be driven by the OpenAI license,†Halpin said. “So that’s—on a quarterly basis—a good proxy for the revenue we’re recognizing. And then the variable components will be calculated and recognized in the future.â€
Dotdash Meredith, IAC, and OpenAI declined to comment.
The multi-year partnership between the two companies was announced in May and is one of several deals that OpenAI has struck with publishers over the last year to train its large-language models on publishers’ content.
The AI firm has also signed agreements with Axel Springer, Vox Media, Condé Nast, The Atlantic, and The Financial Times, among others.
While the Dotdash Meredith tie-up has been widely reported, the size of the payment has not. In fact, with the exception of News Corp., which is receiving up to $250 million over five years for use of its content, OpenAI has kept hidden the financial details of its publisher partnerships.
The secrecy has spurred both speculation and consternation, as publishers looking to determine the value of their own libraries have lacked public comparables. In January, The Information reported that OpenAI was offering publishers between $1 million to $5 million per year.
The size of the payments is also integral in helping publishers determine whether they want to pursue a partnership or explore alternative solutions. The New York Times, for instance, has sued OpenAI for copyright infringement.
Without the inclusion of the variable payment, the full value of the agreement is impossible to determine. But taken on its own, the roughly $16 million fixed payment amounts to 3.6% of the company’s $439 million third-quarter revenue.
The partnership and payment
The $16 million is paid out in quarterly installments of roughly $4 million, which Dotdash Meredith includes in the licensing section of its financial reports. The section also includes other licensing revenue, such as payments from Apple News+.
In the seven quarters before the OpenAI deal, Dotdash Meredith generated an average of $25.5 million in licensing revenue. In the two quarters following the announcement of the deal, licensing revenue has brought in an average of $29.75 million.
Most of the deals that OpenAI has struck with publishers are structured around two components, according to a leaked pitch deck obtained by ADWEEK in May. Publishers receive a fixed payment based on the value of their archival content and a variable payment based on how often their content appears in OpenAI products.
The $16 million represents the fixed payment, but Dotdash Meredith has not received—and therefore has not yet reported—its variable payment. As a result, the size of the total annual payment will almost certainly be higher.
In the case of Dotdash Meredith, there is also a third component of the partnership. In addition to the data licensing, the two parties are also partnering to enhance D/Cipher, the contextual ad-targeting tool Dotdash Meredith launched in May 2023.
In its most recent earnings, Dotdash Meredith reported its third consecutive quarter of double-digit digital advertising growth.
