---
id: "action-base-pay-on-operating-profit"
type: "action-item"
source_timestamps: ["§ Ask the Bot"]
tags: ["financial-modeling", "revenue-sharing"]
related: ["concept-per-model-operating-profit", "claim-revenue-distorts-pricing", "framework-cmo-compensation"]
action: "Structure data compensation agreements as a percentage of per-model operating profit rather than gross revenue."
outcome: "Fair compensation that does not distort market pricing or unfairly penalize open-source competitors."
audience: ["negotiators", "legislators", "stakeholders"]
sources: ["tail1"]
sourceVaultSlug: "hbr-seg-tail1"
originDay: 1
articleStem: "hbr-tail-109-ai-pay-fair-rates-content"
sourceUrl: "https://hbr.org/2026/06/how-ai-companies-can-pay-fair-rates-for-the-content-they-need"
sourceTitle: "How AI Companies Can Pay Fair Rates for the Content They Need"
---
# Base compensation on per-model operating profit

## Action

**Structure data-compensation agreements as a percentage of [[concept-per-model-operating-profit|per-model operating profit]] rather than gross revenue.**

When negotiating revenue-sharing agreements or drafting legislation, stakeholders must avoid tying compensation to top-line revenue or overall corporate equity. Compensation should be strictly tied to per-model operating profit to account for the massive variable costs of compute and to avoid penalizing open-source models — the reasoning is spelled out in [[claim-revenue-distorts-pricing]]. This sets the multiplicand for **Step 1** of the [[framework-cmo-compensation]].

## Expected outcome

Fair compensation that does not distort market pricing or unfairly penalize open-source competitors.