Artificial intelligence generative models require massive amounts of training data to enable their systems to produce advanced results. But the data included in them often comes from sources where copyright restrictions apply.
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San Francisco-based startup Story said Wednesday it has raised $80 million in funding for a blockchain designed to prevent artificial intelligence makers like OpenAI from grabbing creators’ intellectual property without permission.
The round values the two-year-old company at $2.25 billion, sources familiar with the matter told CNBC. The sources preferred not to be named as the information has not been made public.
Story said it raised the funds in a Series B round — typically the third major round of funding in a private startup’s growth journey after seed and Series A — led by Andreessen Horowitz, who is also known as a16z. Crypto-focused venture capital firm Polychain also invested in the round.
Story, which is unprofitable and does not disclose revenue, is based on backers’ hopes that its solution will enable creators to be credited and compensated for work powered by popular AI platforms such as OpenAI’s ChatGPT and Perplexity’s AI powered search engine.
Building an “IP legoland”
Blockchain is a distributed database that maintains an immutable record of activity. It is the technology that underpins cryptocurrencies such as bitcoin and ether.
Story works as a blockchain network that allows creators to prove they created a piece of content and are the copyright owner by storing their IP on the platform.
The company’s technology works to protect the IP of individuals and entities by embedding IP-related terms, such as licensing fees and royalty-sharing agreements, into smart contracts.
Smart contracts are digital contracts stored on a blockchain that automatically execute once a certain set of conditions are met.
This makes copyright holders’ IP “programmable,” SY Lee, co-founder and CEO of Story, explained to CNBC, as it sets rules for how their content can be used and the price they have to pay to reproduce or reproduce it. mixing their works.
The benefit of this, Lee said, is that it effectively cuts out the middlemen typically involved in disputes over copyright theft in the media landscape.
“Now it’s turned from an IP to a Lego IP,” Lee told CNBC. “Now, you don’t have to go through lawyers. You don’t have to go through agents. You don’t have to do this long-winded business development negotiation. You just put the terms of licensing and royalties into small contracts.”
Story makes money by charging a network fee for any action that takes place on its network.
An example of a company using Story is Ablo, an AI tool that allows users to make their own custom fashion items using designs from household brands such as French designer clothing company Balmain and Italian luxury fashion house Dolce and Gabbana.
Brands are compensated for the use of the fashion designers’ IP through various respective licensing and revenue-sharing agreements.
Anti-copyright theft AI
Story is now trying to tackle a pressing problem with its technology – theft of copyrighted media on the Internet by powerful AI models like OpenAI’s ChatGPT.
These models, which power many AI chatbots that are increasingly being used as an alternative to search, require massive amounts of training data to enable their systems to produce advanced and informative responses to user queries.
But the data that feeds these AI models often comes from sources where there are copyright restrictions.
The New York Times last year hit Microsoft and OpenAI with a copyright lawsuit seeking damages for misappropriation of the newspaper’s intellectual property.
In the lawsuit, the Times included several examples of instances where GPT-4 produced altered versions of material originally published by the paper.
Big tech companies like Microsoft, which has invested $13 billion in OpenAI and is reportedly entitled to a 49 percent stake in the company, “are basically stealing your IP for educational purposes and actually capturing all the good stuff,” Lee said.
In a motion to dismiss part of the Times’ lawsuit in March, Microsoft said such claims were “baseless” and that the suit presented a false narrative of “future disaster.”
The content used to train these models, Microsoft lawyers argued, “is not a substitute for buying the works, it teaches the language of the models.”
Microsoft was not immediately available for comment when contacted by CNBC about Lee’s comments.
It takes good IP to train such AI models, Story’s Lee told CNBC, but added that AI companies stand to lose in the long run if they don’t adequately compensate the publishers and creators from whom they source these vast troves of IP data.
“You need great AI IP to have a sustainable AI development. Without great human-generated data, AI models won’t be able to train and improve,” Lee said.
There aren’t many startups designing technology specifically designed to combat IP theft by AI.
A project from the University of Chicago, called Glazeoffers a free app for artists to combat the theft of their IP by AI tools with technology that makes subtle changes to artwork designed to disrupt the ability of AI models to read artwork data and mimic the style of the work of art and its artist.
Story, which was founded in 2022, plans to use the new cash to build out its IP network infrastructure and onboard more developer partners. The company already has over 200 developers using its platform to enable content creation using programmable IP.
Lee added: “There’s a huge, amazing digital renaissance that’s making everyone a creator or a studio, but at the same time, if no one is compensating and really monetizing the IP, it’s suicidal for AI in the long run.”
