Insider Brief
- Story, a startup co-founded by S.Y. Lee and Jason Zhao, is on a mission to revolutionize intellectual property (IP) management using blockchain technology, addressing the challenges posed by traditional IP systems in the digital age.
- The Story Network, a specialized blockchain, allows creators to dynamically manage and monetize their IP assets with customizable licensing terms, turning IP into a fluid digital asset.
- The platform has secured significant financial backing, including $143 million in funding.
One of the threats of artificial intelligence is its effect on intellectual property (IP), making it a critical yet complex asset of this new AI-powered world.
The traditional systems used to manage and protect IP are increasingly seen as outdated, unable to keep pace with the needs of modern creators and the potential of new technologies like artificial intelligence (AI) and blockchain.
Story, a startup co-founded by S.Y. Lee and Jason Zhao, aims to address these challenges head-on by creating a more “sustainable” IP ecosystem tailored for the digital age. This deep dive explores how Story plans to revolutionize IP management, the challenges it faces, and the financial support it has garnered to drive its ambitious vision forward.
The Problem with Traditional IP Management
Intellectual property, encompassing everything from digital art and AI models to memes and game assets, represents a multi-trillion-dollar asset class. Yet, much of this value remains untapped and inaccessible due to an antiquated legal system that struggles to adapt to the digital age. IP management today is bogged down by inefficiencies, making it difficult for creators to protect, manage, and monetize their work effectively. This situation is only exacerbated by the rapid growth of digital content and the rise of AI, which further complicates the tracking and enforcement of IP rights.
That disruptive power of generative AI may very well be Story’s raison d’être, according to Chris Dixon, who co-led the investment for a16z with Carra Wu,
He believes that generative AI will massively change economic models, including ones that today’s web are based on. A new way to share information while compensating those information creators will be essential, Dixon writes in a blog post.
“A new wave of AI-powered search engines give comprehensive answers instead of guiding users to websites. Social networks are increasingly populated by AI-generated images and videos,” Dixon writes. “These AI systems were likely trained on original, human-created content but often don’t credit or cite their sources. If there’s no attribution or compensation, what incentive will there be to publish original creations on the open internet?”
Story seeks to overhaul this system by leveraging blockchain technology, which it believes can unlock the full potential of IP. By bringing IP onto a blockchain, Story aims to make it programmable, allowing creators to manage their assets more dynamically and profitably. This approach has the potential to transform IP from a static legal construct into a fluid, digital asset that can be easily traded, licensed, and monetized.
How Story Works: An Overview
At the core of Story’s platform is the Story Network, a layer 1 blockchain optimized for managing the complex relationships inherent in intellectual property. A layer 1 blockchain is the foundational network in a blockchain system that directly processes and records transactions without relying on another blockchain. It’s like the main highway where all transactions occur, providing the core infrastructure for security, consensus, and data storage.
Unlike traditional blockchains that operate on linear data structures, the Story Network utilizes a graph-like structure that is better suited to handle the intricate web of connections between various IP assets. This allows for efficient and cost-effective management of IP, enabling creators to maintain control over their work while automating processes like royalty payments and licensing.
Creators using Story can register their intellectual property on the blockchain in just a few clicks, minting it as a digital asset. These IP assets can then be equipped with customizable licensing terms, such as allowing non-commercial remixing, commercial use, or commercial remixing with revenue-sharing options. This flexibility empowers creators to dictate how their work is used and to capture value from it in new ways.
A key feature of the Story Network is its Proof-of-Creativity Protocol, which ensures that the relationships between different IP assets are correctly managed and attributed. This protocol underpins the platform’s ability to automate complex processes like royalty payments, making it easier for creators to monetize their work.
Components of the Story Ecosystem
- Story Network: A layer 1 blockchain designed to handle complex IP relationships with speed and cost efficiency. It uses a graph-like data structure and supports the Ethereum Virtual Machine (EVM), making it compatible with existing blockchain applications.
- IP Assets: Digital representations of intellectual property that are registered on the blockchain. These assets can include anything from digital art to AI models, each with customizable licensing terms.
- Proof-of-Creativity Protocol: A protocol that ensures the correct management and attribution of IP relationships, enabling automated processes like royalty payments.
- Story Academy: A builder program that supports entrepreneurs and developers in creating new applications on top of the Story Network. This program provides technical expertise, marketing support, and access to a network of investors.
Challenges Ahead
Despite its innovative approach, Story faces several significant challenges. The technical complexity of managing IP on a blockchain is non-trivial, particularly when it comes to maintaining the integrity of IP relationships and ensuring that creators are properly compensated. While the Story Network’s graph-based blockchain is designed to address these issues, scaling this solution to handle the vast amount of digital content being created every day is a formidable task.
Another challenge is the adoption of this new system by creators and industries. Intellectual property has long been governed by established legal and business frameworks that are resistant to change. Convincing stakeholders to embrace a blockchain-based system will require not only technological excellence but also significant efforts in education and outreach.
Moreover, the issue of interoperability with existing systems cannot be ignored. While Story’s network is EVM-compatible, meaning it can run existing Ethereum-based applications, integrating with other IP management systems and legal frameworks presents a substantial hurdle.
Financial Backing
Story’s ambitious plans have not gone unnoticed in the venture capital world. According to TechCrunch, Story has raised $143 million in total funding, including a new $75 million Series B round led by Andreessen Horowitz’s a16z crypto division. Other participants in the round include Polychain Capital, Stability AI’s Scott Trowbridge, K11 founder Adrian Cheng, and digital art collector Cozomo de’ Medici.
In an interview with TechCrunch, CEO S.Y. Lee explained that the goal of Story is to build a more “sustainable” IP ecosystem, one that is better suited to the needs of modern digital consumers and creators.
“Anyone can fork and remix your IP permissionlessly while you capture the upside,” Lee said, drawing an analogy to Lego blocks to illustrate how the system could work. This approach, while innovative, is not without its challenges.
TechCrunch pointed out it isn’t exactly known how, or if that will work in practice still remains to be seen, adding that the platform is still in a free, closed beta phase.
The new funding will be used to further develop the Story Network and bring the platform to a commercial launch later this year. Lee is confident that Story’s approach to IP management will catch on, particularly as new applications based on generative AI and other technologies continue to disrupt traditional economic models.
“What Bitcoin did for money and finance, Story is doing for content and IP,” said Olaf Carlson-Wee, founder and CEO of Polychain Capital, in a statement to TechCrunch.
Chris Dixon of a16z, who co-led the investment, echoed this sentiment, emphasizing the need for new monetization models in the digital age. “A new wave of AI-powered search engines give comprehensive answers instead of guiding users to websites. Social networks are increasingly populated by AI-generated images and videos,” Dixon wrote in a blog post cited by TechCrunch. “These AI systems were likely trained on original, human-created content but often don’t credit or cite their sources. If there’s no attribution or compensation, what incentive will there be to publish original creations on the open internet?”
Case Study Briefs
Story is already working with several companies to show how the system could work.
Case Study Brief — Magma
Magma, a collaborative art platform with over 3 million creators, has partnered with Story to empower artists to take control of their intellectual property (IP) in the digital age. By integrating Story’s programmable IP infrastructure, Magma allows creators to register, protect, and monetize their digital assets, turning static artworks into dynamic, collaborative projects. The platform’s use of blockchain technology provides clear ownership, attribution, and licensing terms, enabling artists to track the evolution of their work, engage in community remixing, and maintain control over how their art is used, particularly by AI companies. This collaboration is positioning Magma as a leading platform for the future of digital art, fostering a more accessible and sustainable IP ecosystem for creators.
Case Study Brief — Mahojin
Mahojin is an AI platform built on Story’s blockchain infrastructure that addresses the critical challenges of intellectual property (IP) management in the age of AI-generated content. As AI creativity surges, traditional methods of attribution and compensation fall short, leaving creators and data providers undercompensated for their contributions. Mahojin empowers IP rights owners to set clear commercial terms for their assets, ensuring that AI models trained on their data properly attribute and compensate them. By leveraging Story’s on-chain licensing and IP graph technology, Mahojin provides a transparent and traceable system where every contributor, from raw data providers to model creators, receives fair credit and royalties. This innovative approach not only protects IP but also fosters a sustainable environment for AI development, allowing creators to focus on innovation while ensuring that their contributions are recognized and rewarded. Mahojin’s platform exemplifies how aligning creators with AI builders can pave the way for a more equitable future in AI, turning challenges into opportunities for growth and fairness.
Story — The Vision
By leveraging blockchain and AI, the startup aims to create a more dynamic, accessible and profitable IP ecosystem. While the challenges, Story could serve not just as the “Lego” of the digital content world, but an essential building block for both Web3 and AI.
Dixon write: “We hope for a future in which AI systems and creative people can happily co-exist. For this to work, creators need a modern way to ensure they get compensated for their work. Story takes a proven approach — intellectual property law — and updates it for the age of AI. We are excited to support the Story team on this important mission.”
