AI leaders such as Anthropic, OpenAI, and Stability AI have drawn considerable criticism for their practices concerning data scraping and potential infringements on intellectual property (IP) when training their foundational models. Responding to this challenge, a new startup called Story has announced $80 million in funding to launch a blockchain-based platform aimed at empowering IP owners to track usage effectively.
According to CEO and co-founder S.Y. Lee, the goal is to create a more “sustainable” IP ecosystem tailored for the next generation of digital users and innovators. Story envisions treating IP like Lego blocks, allowing creators to remix and utilize their assets while still reaping the benefits. “Anyone can fork and remix your IP permissionlessly while you capture the upside,” Lee explained during an interview. This comparison to Lego is particularly intriguing, given the iconic toy brand's own IP challenges over the years.
The funding round is spearheaded by Andreessen Horowitz's a16z crypto division, with participation from Polychain Capital, Scott Trowbridge (SVP of Stability AI), K11 founder Adrian Cheng, and digital art collector Cozomo de’ Medici, who evokes a connection to the prominent Renaissance family. This Series B funding elevates Story's total capital raised to $143 million.
By enabling better monetization of IP, Story could significantly benefit license owners. As its platform gains traction, the startup is also realizing substantial value, having reportedly reached a valuation of $2.25 billion post-money.
Story is developing what it terms an “IP blockchain” — a pioneering platform allowing creators to assert ownership of their content, establish usage parameters, and facilitate licensing. However, the practical execution of this concept remains to be seen. The funding will focus on product development, with an aim for a commercial launch later this year. Currently, the startup is in a closed beta phase, and over 200 teams and “more than 20 million addressable IPs” are already registered on the platform, thanks to collaborations with fashion design tool Ablo, Japanese comic platform Sekai, and art collaboration startup Magma.
Chris Dixon, who co-led the investment for a16z alongside Carra Wu, asserts that emerging applications based on generative AI and similar technologies are set to disrupt traditional economic models for creating visual art, literature, and music. To sustain a vibrant creative market, new monetization strategies for content must be developed.
“A new wave of AI-powered search engines provides comprehensive answers rather than directing users to websites. Social networks are becoming increasingly filled with AI-generated images and videos,” Dixon notes. “These AI systems are often trained on original human-created content without proper attribution or compensation. Without recognition or payment, what motivation is there for creators to share original work online?”
Although AI is just one area of content utilization, it represents a significant frontier, making it a rich ground for innovation. Story isn't the only startup aiming to address these issues; last week, Sahara AI also announced $43 million in funding to explore ways to effectively track and monetize IP in the AI-dominated landscape.
“Story distinguishes itself from Sahara by emphasizing the IP and data layer of AI solutions instead of the existing AI infrastructure,” Lee noted when asked about the two startups' differences. “While Sahara’s focus seems to lean toward data-centric IP concerns, we’re uniquely focused on the legal aspects of IP and see potential for strategic partnerships with solutions like Sahara and Ritual.”
Lee's journey in the digital content realm has been noteworthy. As a former journalist, he founded byline.com in 2014 and later created Radish, a serialized fiction app that he sold to Kakao for $440 million. Story, co-founded with Jason Zhao, represents a natural evolution of his experiences.
“Look at companies like Netflix and Disney; they invest billions into content, but much of that is effectively spent on marketing,” Lee stated. “It’s a zero-sum game for attention, vying for subscribers.” His experience with Radish led him to reconsider market dynamics.
“I drew a lot of venture capital for marketing,” he admitted, emphasizing his ambition to create a model that better serves the future creators.
Whether Story’s model will succeed and resonate with creators remains uncertain. However, those confident in shaping future investments view the potential with optimism.
“What Bitcoin did for finance, Story aims to achieve for content and IP,” remarked Olaf Carlson-Wee, founder and CEO of Polychain Capital. “The initial phase of Web3, ignited by the 2008 financial crisis, revolutionized monetary systems through Bitcoin and Ethereum. Now, AI advancements are ushering in a new phase in Web3, set to transform IP dynamics.”
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