Frontier AI models are capturing the vast majority of economic value even though open-source models may account for the majority of raw tokens consumed.
Gavin Baker argues two things can be simultaneously true: frontier models keep capturing most of AI's economic value while open-source models handle most of the actual token volume, countering the thesis that cheap open-source tokens would close the revenue gap. ✦ AI generated
Gavin Baker · BG2 Pod · 2026-06-11 · original ↗
starts at this moment · 50:44
“What are your thoughts on whether or not we've challenged this thesis that cheap open-source tokens are going to always close the gap on these frontier models, or are they extending their leads?”
Two things can be true. The majority of economic value may continue to accrue to the frontier and man has it ever accrued to the frontier thus far and for sure the first 6 months of this year, but the majority of tokens consumed in the world may be open source.
verbatim transcript · starts at 50:44
50:44future as far as the eye can see. So the world this gets me back to, you know, terrafab and space orbital and all this because we we we may in fact unlock real thresholds of intelligence, but we're going to have to let these horses run for a long time in order to get there. Yeah, I would just say two things I two things can be true. >> Mhm.
51:04>> The majority of economic value may continue to accrue to the frontier and man has it ever accrued to the frontier thus far and for sure the first 6 months of this year, but the majority of tokens consumed in the world may be open source. >> And they are >> today. >> Yes. I and I think that this current state is likely to persist. Harvey had a
51:25great blog post that they put out on X and they used and it's just amazing how everything gets out out of date like in 5 days, you know. But they used their own proprietary legal data to do reinforcement learning and supervised fine-tuning with Fireworks on an open source model and then And used a router and a router being something that picks which model you send which query to, and which model
51:50you use to check which model. And they got better outcomes than Opus 4 either 4.7 or 4.8 at a lower cost. >> Yes. >> And I think that is the future. And the reality is they were still consuming a lot of Opus, but a majority of the tokens they were processing probably were in their own open-source models. >> We heard the same thing. We did a We did
52:10um We did an enterprise survey that we'll post of 300 companies how which ones were optimizing, so these are folks who are kind of looking at model routing and saying we're going to send certain tokens over here, which ones are thinking about optimizing, which ones aren't optimizing yet, and then what is their expected use of frontier model tokens, right? And they're all expecting to consume a lot more even though
52:32they're already in the process of optimizing. Think of it in the in in the context of JP Morgan. If they're doing some back of the house stuff, right, on customer service or whatever, they may very well use an open-source model. Now, I think they're loath to use Chinese open-source models, so they're waiting on kind of US open-source models to, you know, be able to really deliver the bang