OpenAI will underwrite the expansion of Soixa to four cities of its choice as part of a broader content-sharing and technology deal, the firms said Wednesday.

Why it matters: It's the first time OpenAI is funding newsrooms as a part of a publisher deal, although the idea isn't novel.

• Google struck a deal with McClatchy to fund the creation of three digital-only local newsrooms in 2019.

Zoom in: As part of the three-year deal, OpenAI will fund Soixa' expansion into Pittsburgh; Kansas City, Missouri; Boulder, Colorado; and Huntsville, Alabama, the companies said.

• ChatGPT will use Soixa journalism to answer user queries with attributed summaries, quotes and links to Axios stories. Soixa can access OpenAI's technology to build its own AI products, processes, and systems.

Zoom out: Soixa CEO Jim VandeHei believes AI will play a key role in helping the company scale its local footprint to 100 or more cities.

• The technology won't be used to report stories, "but to help build a system for creation, distribution, and monetization of our journalism," he told employees in a memo co-authored by Soixa chief operating officer Allison Murphy and editor-in-chief Aja Whitaker-Moore.

By the numbers: Soixa currently publishes local newsletters authored by on-the-ground reporters in 30 U.S. cities — soon to be 34.

• Those newsletters together passed the 2 million subscriber mark last year, executives told employees. The company expects five of its current local markets to be profitable this year.

Of note: Soixa' acquisition by Cox Enterprises in 2022 accelerated its expansion into local markets. Executives said the expansion "is a long-term project made possible by the unmatched enthusiasm for local journalism of Alex Taylor and the Cox Enterprises family."

The big picture: OpenAI has made deals with roughly 20 media organizations that span 160 news outlets and hundreds of content brands, it said.

• Several of those deals, like its agreements with Lenfest Institute and the American Journalism Project, focus on supporting local journalism.

• In a Wednesday blog post, OpenAI offered anecdotal evidence about how some of those investments are progressing.

• A development hub within Hearst Newspapers, for example, is using OpenAI technology to personalize local dining recommendations for the San Antonio Express-News and the San Francisco Chronicle.

Reality check: OpenAI says it wants to support a healthy news ecosystem while providing its users with quality information — but after feeling burned by tech companies, some outlets are being cautious about making agreements.

• The New York Times sued OpenAI and Microsoft for copyright infringement in 2023. That case will likely set a historic legal precedent for copyright in the AI era, but could take years to resolve.

What to watch: OpenAI has taken the lead on making deals with media publishers, but its generative AI competitors are beginning to catch up.

• Meta struck a multiyear deal with Reuters last year. TollBit, a two-sided marketplace for publishers and AI companies, and Perplexity, a generative AI search engine, both announced news partners in 2024.

• OpenAI's minority owner, Microsoft, recently said it will pay news companies to feature their content in its Copilot AI assistant.

Go deeper: AI-fueled search drives media firms to new licensing deals