One of the largest media publishers in the United States, People Inc. (formerly Dotdash Meredith), has signed an artificial intelligence content licensing agreement with Microsoft. This news was announced by its parent company IAC during the release of its third-quarter financial results on Tuesday.

According to the agreement, People Inc. will become a first-launch partner in Microsoft's "Publisher Content Marketplace." This is the second major AI content licensing agreement signed by this media giant, following a deal with OpenAI last year.

Microsoft Launches a "Pay-as-You-Go" Content Model

Neil Vogel, CEO of People Inc., described Microsoft's new marketplace as: "essentially a pay-as-you-go market where AI participants can directly pay publishers for the use of their content on an à la carte basis."

First Buyer: Vogel praised Microsoft's commitment to paying for the support of its AI work and revealed that Microsoft's AI assistant Copilot will be the first buyer in this market.

Recognizing the Value of Content: Vogel said, "It's a very strong acknowledgment for us to be in the same room with them; it's also a very strong acknowledgment of the value of publishing markets and content for creating high-value AI."

This agreement differs from People Inc.'s previous deal with OpenAI, which Vogel described as more like an "all-you-can-eat" model. However, he stated that regardless of the model, People Inc. is happy with it. For him, the most important thing is that their work is "respected and paid for." However, the company did not disclose specific transaction terms.

Google AI Overviews Impact Traffic, Accelerating Content Monetization

At the same time as announcing the deal with Microsoft, IAC's financial report also revealed a worrying message: Google's "AI Overviews" feature on its search engine is seriously damaging the publisher's traffic.

Drastic Drop in Traffic: People Inc. disclosed specific data for the first time to investors: Two years ago, Google Search accounted for 54% of its total traffic, but in the past quarter, this proportion has dropped sharply to 24%.

Accusing Google of "Bad Behavior": Vogel has long been dissatisfied with AI companies that obtain media content without payment to train their models. He recently criticized Google as a "bad actor", as it uses the same crawlers to scrape websites for both its search engine and AI features. Since Google Search still accounts for a large portion of its traffic, the publisher cannot completely block this crawler.

Technical Blocking Strategy Works: Forcing AI Companies to the Negotiation Table

To protect content and drive negotiations, People Inc. took proactive technical measures.

Enabling Cloudflare: People Inc. used the technology of network infrastructure provider Cloudflare to block other AI crawlers, a move that forced AI players to seek content partnerships actively.

"Very Effective": Vogel reiterated at the earnings call that the strategy of blocking AI crawlers was "very effective" and that it "brought almost everyone to the negotiation table." He hinted that more similar deals would be announced in the future.

Financial Highlights and New Acquisition

Despite the traffic challenges from Google, IAC reported that People Inc.'s digital revenue grew by 9% to $269 million in the quarter, mainly driven by strong growth in performance marketing (up 38%) and licensing business (up 24%).