The price of AI creator tools is on the rise, but will consumers pay for them?

AI has provided a significant engagement opportunity for creator companies. It has enabled creative platforms to market a raft of new features to consumers on top of what they already offered, whether that is creator-focused platforms like Canva and Adobe Express or social video platforms such as YouTube and TikTok. Chief among these opportunities is the chance to demonstrate how easy it is to start creating content with AI tools. Such is the streamlined approach to workflows that the journey from ideation and output, through to publication and audience engagement can theoretically take a few clicks. By offering these tools for free, platforms have been able to lower the barrier to entry and engage with consumers who may have previously lacked the skill to use even basic level tools.

The problem with this approach is that AI generation doesn’t come cheap. While a great vehicle for getting more users creating fast, AI has high infrastructure costs that someone must pay for. Platforms can shoulder these as long as a healthy proportion of those accessing for free go on to pay for more premium tools through one-off fees or a subscription. A common model among AI tools providers is offering a certain number of generation credits for free before charging to access more. 

The question is whether this is no longer a commercially-sound model. AI tools live and die by their sophistication compared to rivals. This drives an insatiable appetite for computing power that requires sustained investment. In fact, the investment in computing and associated costs are expected to rise significantly in the short term: a report by Time found that the cost of the computational power to train AI models was currently doubling every nine months. 

Are AI tools ready for premium monetisation?

For some AI tools providers, the choice of offering AI tools for free or not is being made for them. They simply cannot afford to keep taking the financial hit that comes with offering AI generation for free. However, this creates a problem. While some AI tools are already highly effective at streamlining process and enhancing output, there are also examples of generative AI tools that cannot deliver consistent results. The promise is there, but the output is sporadic or needing a lot of work to make it usable. As MIDiA highlighted in its "State of the video creator economy" report, creators can enjoy a dopamine spike from successful AI generations. However, they can also become disillusioned fast if the generator fails to reach the users creative intent after a few prompts. Put simply, consumers will be a lot more forgiving of AI video and image generators producing choppy results when free. Therefore, AI tools providers must feel comfortable that they have high success rate before putting them behind a pay wall –– but are all AI tools at that stage yet?

CapCut and Canva: a pricing test case

To gauge how consumers will cope with such transition, it is worth keeping a close eye on CapCut and Canva. CapCut had been offering a raft of AI-powered video editing features for free that had proven popular with social video creators. However, many of these tools have now been moved to the CapCut Pro subscription (£13.99 monthly subscription), such as AI caption generation and AI voice generation. This provides two tests. Firstly, whether a significant number of those free users will pay, or simply swap CapCut for another free editing offer like DaVinci Resolve, which is expansive but harder to grapple with. Secondly, it will test whether CapCut’s suite of streamlined, and increasingly AI empowered, social video focused editing tools can compete with long-standing paid for premium editing products like Adobe Premiere Pro, Wondershare Filmora and Cyberlink PowerDirector. Likewise, Canva is also making a pricing pivot that will test consumer appetite for AI tools. It has increased prices by just over 300% for some of its subscription packages to cover the cost of generative AI tools, such as Visual Suite and Magic Studio. For example, Canva Teams will rise from $120 for five users to $500 annually. These changes appear to shift Canva away from being a cut-price alternative to Adobe products to more of a direct competitor on cost. 

What this all boils down to is whether consumers believe AI tools are as valuable as platforms think they are? And with these prices rises, the market is about to find out.