AI giants like Anthropic, OpenAI, and Stability AI have faced widespread criticism for the way they’ve scraped data and trampled on each other’s intellectual property when training and operating their foundational models. Now, a startup called Story, which announced $80 million in funding today, is trying to redress the balance with a blockchain-based platform to help intellectual property owners more effectively track usage.
According to CEO and co-founder SY Lee, the goal is to build a more “sustainable” IP ecosystem fit for the next generation of digital consumers and builders. The startup says its approach is to think of IP as Lego and use blockchain to make it possible. “Anyone can fork and remix your IP without permission while you profit from it,” Lee said in an interview with TechCrunch. (It’s a bit ironic to call it “Lego,” given the many IP battles the brick company has faced over the years.)
The funding round is led by Andreessen Horowitz, specifically its crypto division a16z, with participation from crypto investor Polychain Capital, along with Scott Trowbridge (SVP of Stability AI), K11 founder Adrian Cheng, and Cozomo de’ Medici, the digital art collector who adopted a pseudonym to evoke the famous Renaissance family. The new funding, a Series B, brings the total raised by Story and its parent company PIP Labs to $143 million.
Being able to better capture the value of intellectual property when it is used could potentially bring in a lot of money for license owners. In anticipation of the popularity of its platform and its intended operation, Story itself is also realizing significant value. We understand from sources close to the company that the startup is now valued at $2.25 billion post-deal.
Story is building what it describes as an “IP blockchain” — a system and platform through which it envisions creators will be able to assert ownership over a piece of content, set usage parameters around that IP, and then let others license and use it.
How this will work in practice remains to be seen, however. The plan is to use the funding to continue developing the product, with the goal of a commercial launch later this year, according to Lee. So far, the startup has added users through a free, closed beta.
According to the company, more than 200 teams – and “over 20 million addressable IP addresses” – are registered on the platform to date, the result of partnerships with fashion design tool Ablo, Japanese comics platform Sekai and art collaboration startup Magma.
Chris Dixon, who co-led the investment for a16z with Carra Wu, believes that new applications based on generative AI and other similar developments will significantly disrupt the business models that have traditionally underpinned how people create visual art, literature or music (or any other type of “content,” as it is commonly described these days when it is digital). For the market for creativity to continue to thrive, a new way of monetizing content is needed, is the thesis.
“A new wave of AI-powered search engines are providing comprehensive answers instead of guiding users to websites. Social media is increasingly populated with AI-generated images and videos,” Dixon wrote in a blog post. “These AI systems were likely trained on original, human-created content, but often don’t cite their sources. If there’s no attribution or compensation, what incentive will there be to publish original creations on the open internet?”
AI systems are just one area where content is being used and will be used in the future, but they are important, which is why Story is not the only player in this space. Last week, another startup, called Sahara AI, announced $43 million in funding to develop its own approach to answering the question of how best to track and monetize intellectual property in the age of AI.
“Story differentiates itself from Sahara by focusing on the IP and data layer of AI solutions rather than the existing AI infrastructure stack,” Lee told me in response to a question about the differences between the two. “While Sahara seems to target IP concerns, those are primarily data-driven, which is very different from the IP legal regime. Story sees partnership potential in the IP layer of solutions like Sahara and Ritual. We can become close partners.”
Lee himself has been at the forefront of the story (so to speak) of content in the digital age. He himself started out as an enterprising journalist in the UK, founding a platform called byline.com in 2014. He then went on to create a collaborative, serialized fiction app called Radish (a competitor to Inkitt and Wattpad), which he eventually sold to Kakao for $440 million.
Story — which Lee co-founded with CPO Jason Zhao — is, in some ways, a natural progression of those earlier experiments.
“If you look at everything from Netflix to Disney, you know, they’re investing billions of dollars in content, but really, it’s billions of dollars that are being invested in marketing,” he said. “It’s kind of a zero-sum war to get attention and get more users and subscribers.”
The $440 million acquisition of his former company, Radish, made him “rethink the dynamics of the market,” he said.
“I was using a lot of my venture capital for marketing,” he added, saying this was his attempt to build a different model to avoid that for future creators.
It is not yet known whether this will work and whether creators will want to use it.
Those who believe they have control over how to invest in future scenarios, however, are optimistic.
“What Bitcoin did for money and finance, Story is doing for content and intellectual property,” said Olaf Carlson-Wee, founder and CEO of Polychain Capital, in a statement. “The first phase of Web3 was sparked by the 2008 financial crisis, which led to a revolution in money via networks like Bitcoin and Ethereum. Now, advances in AI are sparking a second phase of Web3, which will revolutionize intellectual property.”
