The Inference Commoditization Paradox: As Tokens Get Cheaper, Premium AI Lock-In Gets More Expensive

AI inference costs are projected to drop 65% from 2024-2026, open-source video generation now costs $0.04-0.05/sec vs Sora's $0.10-0.50/sec, and quantization techniques deliver 8-15x model compression with under 1% accuracy loss. Economic theory predicts this commoditization should compress frontier API margins. Instead, frontier labs are moving toward pricing complexity (GPT-5.4's hidden tiered pricing beyond 272K tokens), proprietary context moats (Copilot Cowork's 'Work IQ' organizational data), and capability ceilings that don't commoditize (75% OSWorld computer use, 1M-token context). The paradox: inference commoditization concentrates value in non-commoditizable properties, making the premium tier more defensible, not less.