People Inc. Signs AI Licensing Deal with Microsoft Amid Google Traffic Decline

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People Inc., a major U.S. media publisher, has signed a significant AI licensing deal with Microsoft, becoming a launch partner in Microsoft’s new publisher content marketplace. This marketplace is structured as a pay-per-use model where AI companies directly compensate publishers for the use of their content on an “a la carte” basis. This deal follows People Inc.’s earlier partnership with OpenAI, marking its second AI licensing agreement. People Inc. CEO Neil Vogel highlighted Microsoft’s commitment to paying for content to support AI development, with Microsoft’s Copilot set to be the first buyer in the marketplace. He described this collaboration as a strong endorsement of the value of publishing content in creating high-quality AI.

The news was disclosed during the third-quarter earnings call of People Inc.’s parent company, IAC. Alongside this, it was revealed that Google Search’s AI Overviews have negatively impacted People Inc.’s web traffic. Google Search’s share of referral traffic to People Inc. has plunged from 54% two years ago to just 24% in the recent quarter, significantly affecting the publisher’s audience reach.

People Inc. has been vocal about the challenge posed by AI companies using media content without adequate compensation. The company criticized Google’s use of a single bot for both its search engine and AI features, labeling Google a “bad actor” because publishers cannot block this bot without risking a loss of Google-driven traffic. In contrast, People Inc. employs Cloudflare’s technology to block other AI crawlers, enabling it to negotiate licensing deals with AI companies. This blocking strategy has been effective in bringing AI players to the negotiation table, accelerating progress on content licensing agreements.

Financially, despite the decline in Google-driven traffic, People Inc. reported a 9% growth in digital revenue to $269 million, boosted by performance marketing and content licensing, which grew 38% and 24%, respectively. The company also announced its acquisition of Feedfeed, a food-focused media publisher and influencer network.

In summary, People Inc. is actively adapting to an evolving digital landscape where traditional traffic sources like Google Search are diminishing due to AI Overviews, while new revenue streams from AI content licensing with firms like Microsoft are emerging as critical pillars for future growth. This strategy reflects a broader industry shift in how media publishers monetize content in the AI era while grappling with challenges around content use and compensation.