The advent of the internet unleashed a wave of creativity as users found new ways to create and fuse culture, but it also dealt an economic blow to authors, musicians, and news organizations. Much of the revenue that once flowed to content creators was snatched away by technology platforms like Facebook and Google. Now, at the dawn of the AI era, many fear the same type of economic disruption could happen again.
Now, the threat to creators comes as Silicon Valley companies race to train their AI systems with any content available on the web, often without asking permission. In response, a startup called Story proposes a radical solution: remaking the intellectual property system to allow creators to quickly register their work on a blockchain and use it to track and distribute royalties.
The idea of a startup trying to merge three incredibly complex fields — AI, copyright and blockchain — may seem like a tall order, but the duo behind Story have already garnered enough backing to announce Wednesday that they’re raising $80 million in a Series B round after raising about $54 million in an earlier round. The round was led by the crypto division of venture capital giant Andreessen Horowitz, with contributions from Stability AI SVP Scott Trowbridge, K11 founder Adrian Cheng and digital art collector Cozomo de’ Medici.
“LEGO IP” in the AI era
Story is the brainchild of Oxford-educated SY Lee, a South Korean native, and Jason Zhao, who studied at Stanford and spent two years at Google’s AI subsidiary DeepMind. The duo came to believe that the existing intellectual property system was struggling to keep up with the rapidly changing internet landscape, and that an entirely new approach was needed to deal with the onslaught of AI.
Lee said creators who rely on search engines and social media platforms for consumers to discover their work are particularly vulnerable as tech giants seek to replace existing content with AI-generated material.
“AI can be creative, but it can also be disruptive by hijacking traffic,” he said. “Google was great at getting traffic to websites, but that didn’t last long.”
To compete with the tech giants, Zhao and Li are building a service that allows creators to quickly wrap their work with intellectual property. To do this, they are using an organization called PIP Labs, which is a major contributor to the Story blockchain. Story itself, built to be compatible with the widely used Ethereum blockchain, is currently in so-called testnet mode and is scheduled to be publicly released in November.
The idea is that Story will not only act as a sort of IP registrar, but also become a forum where creators can use smart contracts to designate who can access their work, and collect and pay royalties on behalf of contributors. In this way, Lee says, Story will act as a “QR code for IP,” providing modular units that amount to a kind of “Lego IP.”
When asked who is using their service, Story’s founders cited users of Magma, a popular online art platform, as examples. They also said that some users might want to create their own spin on Nike sneaker designs or develop fictional worlds inspired by Nike sneakers. Harry Potter As for these kinds of examples, Li and Chao said PIP Labs envisions striking deals with companies that would allow users with large fanbases to license and sell creations derived from their brands.
“With Story, creators can not only declare sovereignty over their IP and define the parameters of their IP’s usage, but also launch a global network that turns fans into evangelists by remixing, selling, and distributing their IP,” PIP Labs said in a press release announcing the funding round.
Get inspired by social media creators
The idea of a fast, easy-to-use IP regime designed for the AI era sounds great, at least in theory. But in practice, Story and its users must contend with the reality that powerful IP holders such as Disney or fashion giant LVMH are unlikely to make the startup’s blockchain part of their legal regimes. Meanwhile, Silicon Valley tech giants and prominent IP lawyers are also unlikely to clamor for a service like Story.
Compounding the startup’s challenge is the fact that parts of intellectual property law, such as the scope of copyright’s fair use doctrine and rules regarding digital trademarks, are currently unsettled. How will Story’s “LEGO IP” blockchain take into account new laws, regulations and court rulings that narrow or broaden the scope of intellectual property?
Story’s founders say they’re not intimidated by these obstacles, and point out that they take the legal nuances of intellectual property seriously. Their efforts on that front include hiring an intellectual property lawyer at the Los Angeles office of major law firm Latham & Watkins.
Li and Chao might also take heart from the fact that others have successfully built new intellectual property regimes for the digital age. One notable example is the Creative Commons licensing regime, a set of rules and online legal tools first introduced in 2002 that makes it easier for internet users to share and remix web-based content.
Zhao said Story is inspired in part by the Creative Commons model and is designed to offer similar functionality, but also a way for users to earn and share revenue.
He acknowledges that Story is unlikely to attract a powerful incumbent player like Disney. Rather, he says, the platform is built to appeal to creators of “tier 2 IP” who are creating large amounts of data, memes, character traits and the like.
Zhao said the generation of creators growing up using AI tools is similar to the generation of social media stars that came before them, who also weren’t taken seriously by traditional brands.
“Just like YouTube, it didn’t start with people asking Steven Spielberg to post something. It started with people uploading on their phones, and 15 years later, Mr. Beast was born.”
