Microsoft just scored a major content coup, signing People Inc. as the launch partner for its new AI content marketplace. The deal comes as the media giant's Google traffic plummeted from 54% to 24% in just two years, forcing publishers to find new revenue streams beyond search dependency.
People Inc., one of America's largest media publishers, just landed what could be the template for how content creators survive the AI revolution. The company announced its second major AI licensing deal during IAC's third-quarter earnings Tuesday, this time partnering with Microsoft to become the launch partner for the tech giant's new publisher content marketplace.
The timing couldn't be more critical. For the first time, People Inc. revealed the brutal reality behind AI's impact on traditional media traffic. Google Search, which drove 54% of the publisher's traffic just two years ago, has collapsed to a mere 24% in the most recent quarter. The culprit? Google's AI Overviews feature, which answers user queries directly without sending them to publisher websites.
"It's essentially a pay-per-use market where AI players directly can compensate publishers for use of their content on, sort of like an 'a la carte' basis," People Inc. CEO Neil Vogel explained during the earnings call. The marketplace represents a fundamental shift from content scraping to direct publisher compensation, with Microsoft's Copilot serving as the inaugural buyer.
This deal marks People Inc's second major AI partnership, building on its earlier agreement with OpenAI last year. But there's a key difference in monetization strategy. Where the OpenAI arrangement operates more like an "all-you-can-eat" subscription model, Microsoft's marketplace follows transaction-based pricing. "What matters to the company is that its work is 'respected and paid for,'" Vogel emphasized, though specific financial terms remain undisclosed.
The publisher's aggressive stance against unpaid AI training has been paying off literally. People Inc. deployed Cloudflare's web infrastructure technology to block AI crawlers, forcing companies to negotiate rather than simply scrape content. "Blocking AI crawlers has been 'very effective' and 'brought almost everyone to the table,'" Vogel reported, hinting that additional licensing deals are in the pipeline.
Vogel hasn't been shy about calling out tech giants for what he sees as content theft. He recently labeled Google a "bad actor" because the company uses the same crawling bot for both search indexing and AI training, making it impossible for publishers to block AI access without losing search traffic entirely. This catch-22 has created an existential crisis for content creators who built their businesses on Google's traffic.
The financial impact of these strategic pivots is already showing up in People Inc's quarterly results. Digital revenue jumped 9% to $269 million, with licensing revenue specifically surging 24% year-over-year. Performance marketing, another diversification play, grew an impressive 38%. These numbers suggest publishers who adapt quickly to AI partnerships might not just survive the transition but thrive.
Microsoft's commitment to paying for content positions the company as a potential white knight for publishers squeezed by AI disruption. "It's a very strong endorsement of us to be in the room with them and a very strong endorsement of the publishing marketplace and the value of content to make AI that is of high value," Vogel noted, highlighting how premium content partnerships could differentiate AI products in an increasingly crowded market.
The publisher content marketplace concept could reshape how AI companies source training data and real-time information. Instead of the current model of scraping first and asking permission later, this creates a formal economic relationship between content creators and AI developers. For Microsoft, quality content partnerships could give Copilot a competitive edge over rivals relying on more questionable data sources.
People Inc. also announced its acquisition of food-focused media publisher and influencer network Feedfeed, signaling continued expansion despite traffic headwinds. The move suggests that while traditional search traffic declines, publishers are finding new ways to monetize their content through direct partnerships and specialized audiences.
The People Inc-Microsoft deal signals a turning point for media companies caught between AI disruption and revenue survival. While Google's AI Overviews continue decimating traditional search traffic, publishers who proactively negotiate licensing agreements are carving out new revenue streams. This pay-per-use marketplace model could become the industry standard, finally creating sustainable economics between content creators and AI developers. For Microsoft, premium content partnerships offer a clear path to differentiate Copilot in the competitive AI assistant market. The real test will be whether other major publishers follow People Inc's lead and whether the licensing fees can offset the massive traffic losses from traditional search.
