---
title: "The Most Important Market in AI is the Middle"
description: "The AI market's center of gravity is mid-tier inference, \u0026 three forces are driving its prices down : lab rivalry, open weights \u0026 fine tuning."
categories: ["AI","economics"]
keywords: ["price of intelligence","AI cost decline","frontier model share","Fable 5.1 spend share","open weight token share","intelligence per dollar","post-training"]
ai_summary: "AI prices are collapsing, but the competition is not at the frontier. Anthropic held the Opus line at $5 \u0026 $25 across five releases while OpenAI cut Luna 80% then 50% again, \u0026 open models now run a majority of token volume at an 86% discount to closed models. The most capable model, Fable 5.1, commanded only 3.7% of gateway spending in its first twelve days. Demand is a normal distribution with a fat middle, \u0026 as intelligence per dollar explodes the tokens may shift to commodity. Whether that happens will determine the economics of the AI market."
date: 2026-09-23
lastmod: 2026-09-23
canonical_url: https://tomtunguz.com/the-most-important-market-in-ai-is-the-middle/
author: "Tomasz Tunguz"
---


Yesterday, Anthropic released a new model & cut its price. Ninety minutes later, OpenAI did the same.

Most business AI use is the messy middle: multi-step workflows that need a smart enough model at a price a company can afford. It is the most important part of the market today, & it is where the competition is fiercest. The price cuts are the evidence.

In June, Anthropic set the frontier price at $10 & $50 per million tokens with Fable 5. In July, OpenAI answered with GPT-5.6 Sol at $5 & $30, matching that capability at a third of the cost per task.

The Opus line had never moved. Opus 4.5, 4, 4.8 & 5 all listed at $5 & $25 per million tokens. Yesterday's cut was the first.

{{< email_image src="qqclunhlpx1jtiaums6q" alt="Price collapse at the frontier" width="540" height="285" >}}

It is even more extreme at the low end. OpenAI cut Luna by 80% in July, then cut it another 50% yesterday.

{{< email_image src="qqxrokwckhxgafl49ohn" alt="My 2¢? Oh, it's actually a penny for your thought." width="540" height="285" >}}

More than just closed source rivalry, open models deflate prices too. The generics on the AI grocery aisle run a majority of token volume on the gateways that publish data, at an 86% discount to the blended price of closed models.

Large customers pursue even greater savings with fine tuning. Cursor's Composer 2 fine tuned Kimi K2.5, an open-weight base, cutting its overall cost 86% against its previous in-house model. Harvey did the same, cutting cost per cell 55% against Sonnet 5 while scoring higher than Fable 5.

But the right tail of the market is thinner than almost anyone forecast. Anthropic's Fable 5.1, its most capable & most expensive model, commanded only 3.7% of gateway spending in its first twelve days. Its predecessor peaked at 13.2% when access was restored in July, then fell to 4.9% a month later when Opus 5 shipped at half the price. Among large corporate accounts, frontier models fell from 53% of token consumption in early August to 45% by September.

{{< email_image src="eqoqf7osf549hdolhp2j" alt="The middle is where the money is: the mid tier claims 40% of spend & 30% of tokens" width="540" height="276" >}}

Demand for intelligence is not a pyramid with a small, wealthy peak paying for everything beneath it. It is a normal distribution with a fat middle. The middle buys intelligence per dollar.

{{< email_image src="vmhsbvivzvtttkhyeilr" alt="The price of artificial thought may have fallen faster than for any other transformative technology in history, relative cost comparison by Epoch AI" width="540" height="675" >}}

Intelligence costs keep plummeting. What enterprises demand from AI does not change nearly as fast. So the tier that satisfies a fixed requirement keeps getting cheaper.

As intelligence per dollar explodes, the distribution of tokens may shift to commodity. Whether that happens will determine the economics of the AI market.