Blockchain After Finance: Programmable IP in the Age of AI l KBW2024

[Music] hey everyone thank you guys for coming I think this is the first session uh after lunch so hopefully I can wake you guys up a little bit I'm sure you guys all had a great Korean meal and are feeling very stuffed so I'll try to make this interesting um thank you uh to the team organizing KBW this is by far the coolest venue I've been able to speak at so it's a real honor to be here in Korea and today uh in the short time that we have together I would like to just give an overview view of what I see as one of the most interesting use cases for blockchains Beyond finance and that's in the area of AI and in particular how intellectual property interacts with AI as we enter this new age of creativity so today I'll be sharing a little bit more about our vision over at story and I'll try to conclude with a few examples of demos that we find inspiring uh as examples for what this new era of creativity could look like so before I start talking about Ai and how AI is changing the lands ape of Ip I first wanted to start off by just covering what IP is uh we talk a lot about IP and most people when they hear that they think about lawyers they think about you know get off my lawn don't use my creativity uh but we see IP much more expansively we see it much more broadly and and to me intellectual property is much more than just you know the top 100 songs on Spotify or the movies that you see in Hollywood uh IP is an AI model IP especially in the age of AI it's your voice it's your name it's your image and your likeness which can now be scaled through artificial intelligence it's also much more than just creative work it is a brand uh like Nike or Blen Yaga and also I'm sure in blockchain we all know it is also memes that power uh most of the internet and most of the content on the internet so IP is a multi-trillion doll asset class and often times we don't talk about it enough as an asset class I think it's very very expansive and there's a lot of opportunity to do more on chain with IP so what story is trying to do with IP is to create in Internet scale IP Legoland what that means at a high level is to take every single piece of content that you see on the internet every piece of content on Netflix on Tik Tok on YouTube on web tunes on watpad and make it programmable by registering it on story and allowing every Creator every application to set their terms for how other people can use that content so how much does it cost to license your work how much does it cost in terms of royalties and recurring payments and who can use this work all of that is not stuck in a pen and paper legal contract it's actually embedded on chain that's our vision and with that Vision every piece of content becomes an IP Lego that can move between one app to another seamlessly through an API call without needing any intermediaries other than smart contracts themselves so the reason why we think this is important is because if you think about IP like I mentioned right now pretty much everyone in the world has IP but the only people the only institutions that are able to leverage this asset class are massive Studios so unless you have 100 lawyers and the person that you're doing business with also has 100 lawyers ERS and you have some way to get in touch with them you really can't do anything with your IP even if you actually own it even if you're actually creating it and so right now the the process of doing anything with this asset is extremely opaque extremely expensive and extremely high friction what we want to do and what we think blockchains are for is for intermediating transactions between assets and this isn't just limited to financial assets we think that content also needs this disintermediation and that we can reduce a lot of the friction and a lot of the centralization around the current legal system so what we're doing is taking these static jpegs these static media files that are trapped on one single platform and turning them into Legos with the terms that creators set that are embedded directly in that content itself basically bringing an API for rights around every single piece of content on the internet and one of the most important features of the solution that we've built is that it's not just software uh I think it's really really important to connect to the traditional legal system and so we've actually created a lot uh we spent a lot of time on the legal side and created a license called the program able IP license and what it does is Maps one to one so every single term on the programmable programmable IP license links to a term in our smart contracts so we're really bridging these two worlds and turning law into code and code into law ultimately this vision is where every single piece of content on the internet basically has a QR code that any machine any AA model or any Creator can read seamlessly and frictionlessly but now comes a question which is very fair to ask and I really want to address in detail which is so what let's imagine we have this IP Lego Land why do we need this and this really gets to the heart of why story exists and the vision that animates the product that we're building and it starts with a fundamental question that question is very simple why aren't we living in a digital Renaissance if you look at things that face value we should be living in a world where creators are the most powerful people most respected people on the planet first of all we have social media we have Global connectivity through the internet and so for those of you taking pictures here or if photos on your phone or created a video you can hit send on a social media platform and reach 10 million people within hours for free that's never been possible in human history you add on to that the power of generative AI with models like stable diffusion or open AI Sora you now have a Hollywood studio in your living room or in your pocket so what we have today is the ability to reach everyone in the world and for all of us here even for extremely notcreative people like me to be able to create high quality content of any medium uh at a single click yet you look around in 2023 Hollywood went on strike for 6 months out of the year and creators online and in other digital places are not doing much better so what gives why do we have these Godlike Technologies and yet creators are still struggling my belief and I did spend a couple years at Deep mine so I've seen you know cuttingedge AI development my belief is that it's not really a matter of faster AI models more powerful AI models or more cheap AI models that will solve this problem it's not about performance the gating issue in artificial elligence today and the biggest open question is around intellectual property monetization we simply have no way to deal with the influx of these new technologies given our current IP system so you're starting to see a lot of cracks at the edges and these are very interesting fun cracks to see in in many ways uh you can see people taking Drake's voice and the weekend's voice and turning it into a song that goes to number one on Soundcloud and this actually happens uh and then people taking their favorite franchises like Harry Potter and remixing it in different styles like Balenciaga or in the style of like Wes Anderson and these are getting tens of millions of views we think this these is a very interesting creative experiments but at the same time it's a lose lose situation if you're JK rling and someone's creating a YouTube remix for you you're not generating any every any revenue from the tens of millions of views and likewise if you're a super fan and you're spending all this effort to create a remix of your favorite franchise you might actually get up end up getting sued and so right now this is a very lose lose Zero Sum situation so AI is not only inevitable we're not going to play whack-a-mole with the Internet and try to shut this all down but it's also illegal so what do we do this is also not just something that's limited to the creative world this is something that we're seeing across every institution not just creativity but also institutions like journalism uh with the New York Times going after open AI for regurgitating their content so ultimately this amounts to what I see as a new Napster moment a new moment when we have Godlike Technologies people are experimenting and pushing these Technologies to the edge but we have no way of sustainably monetizing or addressing this content at scale ultimately this leads to what I call the tragedy of the commons which is a classic economic problem and if you think about the internet as a big grassy field uh the grass is basically all of the user generated content on platforms like Reddit on platforms like Kora on Yelp on Shutterstock the photos the comments the videos that make the internet what it is and right now we have these large model companies the open AI of the world that are training on this data consuming this grass so to speak and that's great they're producing great models but what's worrying is that there's no new seeds being planted they're taking and taking and taking but there's no incentive for the creators for you and me on the internet to continue doing what we're doing and so this field is getting eaten up but nothing's replenishing it I'll give you a very very specific example and that's example of let's say a travel blogger so let's say I you know I'm a travel blogger I've been doing this for five years I'm writing about my trip to soul and I'm covering my favorite 10 K barbecue places here in Soul three years ago or even four years ago uh if I were writing this travel blog I had a basic implicit social contract with Google or with Instagram and that social contract was if I generated enough eyeballs if my content was appealing enough then Google would drive traffic to my website and I could monetize that through advertising so through this model the old model of the internet I might be able to earn $10 $100 a month for my content fast forward to today you know three or four years uh uh from then and now if I'm writing this blog about my favorite 10 crean barbecue places and someone wants to know someone's searching on perplexity now instead of Google they're searching what what what places should I visit in Soul they might see a single bullet about a few kbbq restaurant recommendations summarized through AI uh but I'm getting none of that traffic no one even knows that I wrote that content at all because AI trained on that content and regurgitated it so if you're a Creator put yourself in their shoes right I've write I'm writing this blog no one is visiting my website anymore uh and certainly no one is paying me for my content anymore so regardless of why I create there's really no reason for me to continue writing this block and this isn't just a single isolated example this is happening to everyone on the internet if you're a redditor or if you answer questions on Kora or if you take photos and upload them to Instagram you're asking yourself the same question why am I doing this anymore and so we are really at a Tipping Point this current model is simply unsustainable and so we can either end up in this tragedy of the commons uh or what I think we we can push towards an more optimistic vision of the world we don't have to go down this path we don't have to accept the status quo and the question is how exactly do we change course how do we find the version of the world where AI is actually a Force for good rather than a force for bad so I think you know I'm very optimistic about Ai and I think we can get there in my opinion like I mentioned before what we need to do is is not just make models better it's to harness uh AI positively and to do that we need to we need to create an internet scale IP system uh because right now we're still using the same pen and paper legal system that was invented in the wake of the printing press four or 500 years ago uh we're trying to update it we're trying to stretch it but it's basically applying a medieval IP system onto Godlike modern Technologies and that mismatch is where all the problems are arising where all the cracks at the edges are showing and uh my belief and our belief at story is that blockchains are that internet scale IP system blockchains are what are going to allow us to protect and also expand content sustainably IP sustainably in this area that is now dominated and shaped and defined by AI so that's what story is trying to build it's the world's IP blockchain what does that mean well first and foremost it means that we want to give creators the ability to protect their content and this isn't just uh IP like a like your voice or your image that might be an input into an AI model it's also AI models themselves that can be registered as IP if you're stable to fusion and you want to know who's using your model who's fine-tuning it you have no idea with story we want to allow creators to register their IP and set terms that prot protect them from AI training but it's not just about protection it's not just about defense people have this misconception that IP is about get off my lawn don't use my content leave me alone and my vision for IP is much broader what's most important to me and to story is that this new IP system allows IP to grow and to expand and to monetize more than it ever could by aligning incentives imagine that I am a singer I can put my voice on story I can say that anyone here can use AI to create songs using my voice you just have to share 50% of the revenue with me this is a deal that allows anyone to take my voice put it on different platforms and they may be amazing songwriters that write better songs than I ever could and generate revenue on my behalf but then they also win as well this is a win-win situation uh and we want to transform the current Zero Sum situation into this positive sum world and we think right now is the perfect time to do it because unlike before when it was very very difficult for people to create content all of you and me we can all create high quality cont with AI so if you combine the fact that everyone in the world can now be a Hollywood creator with this Universal library of Ip Legos that story is building we think that we're going to usher in a new era of creativity and this isn't just about technology uh it's much more than that yes we have generative AI yes we're bringing in blockchain and and this IP Lego infrastructure but what's important is that culturally these Trends have been bubbling up under the surface for almost decade now if you look at social media the most popular social media platforms are the ones that enable remixing it's the Tik toks it's the YouTube shorts It's the the duet features and so people want to do this but right now all of that remixing is trapped within a single monolithic platform that defines the terms of IP for its creators on their behalf without asking them for permission and uh Beyond just these social media platforms you can also see that even today three out of the top 100 websites in the world by traffic are FanFiction websites I don't know if you guys have visited these websites like a Archive of Our Own but they look like 90 style Craigslist uis there's it's pure HTML and yet billions of people still visit these websites to create content for their favorite franchises we think that uh if we combine the technology with these cultural Trends we're going to completely redefine what it means to develop IP and what it means to be creative moving from this top down siloed vision of the world where you have a single exec in a in a suit and tie behind closed doors at Disney who who you know decides content for the next 10 years to something that looks almost like open source code where it's totally Bottoms Up totally organic and uh just like open source code grows in this organic evolutionary way it's almost a Wikipedia for fiction except with value capture built in for everyone in their contributions to this large sprawling franchise so I truly think the next Disney the next Marvel the next Spider-Man is going to be built in this way and it's going to dwarf the current Mega franchises of today so just to summarize where we see the AI world I think right now we're in this bottom left corner uh where the red circle is and this is a corner where you know our AI landscape is at by two or three large model providers they're closed they're extremely value extractive and what they're doing is making these oneoff licensing deals uh with large platforms so open AI is making a deal with shutter stock for their photos or open AI is doing a deal with Reddit for their data and while that might look sustainable on the surface I think if we peek under the hood we'll see that this is the same tragedy the commons problem I mentioned before so just put yourself in the shoes let's just say open AI doing a deal with Reddit let's investigate that put yourself in the shoes of an average redditor right open AI is now paying Reddit $10 million a year so that eyeballs go from Reddit to chat PT otherwise open AI wouldn't be paying for this data if it didn't move users from Reddit away from Reddit towards chbt and so what happens as a redditor is that now you know every year there's less and less people reading your posts there's less and less engagement there's less and less comments and so over time on the margins if you're a redditor you just you just stop posting and if you're Reddit your platform gets less and less valuable and so maybe on year One open AI is paying Reddit $10 million a year maybe year two open a is only paying Reddit $6 million a year year three year four they may only be paying $2 or $1 million a year and eventually Reddit as a platform without these redditors will die and and then you think about open AI even from open ai's perspective when Reddit dies when uh Kora or Shutterstock dies they run out of data and so even if you're a large model company you should be really concerned about this vision of the future because it's simply unsustainable for everyone for the individual redditor for the Reddit the platform and even for the model companies that are training on Reddit now against this vision of the world that we're currently headed towards today are very interesting experiments in open source Ai and I'm very supportive of these uh the best one is probably llama from meta uh and this is really great because now everyone can use these models for free but at the same time unless you are a company generating five billion uh 10 billion dollars in Revenue uh every year to be able to sponsor these models you can't do it right so it's it's controlled our Fates are controlled by whether Mark Zuckerberg decides to continue investing in this technology and so what we'd like to do at story is to move the world into this top right corner a world where all the information all the IP on the internet can be open uh and we can align incentives between creators and model uh trainers as well so that anyone can upload IP on the internet safely uh and also and also if you're a model Creator you can look at the content in the internet you can decide what you want to train on and if you generate Revenue you just share a portion of that with the people whose IP used we think that this open sustainable vision of AI is the only way forward where we can continue to incentivize and protect and Empower creators while also letting model creators train freely on data according to the terms that creators have set so that's a little bit about you know our vision and I've talked a lot about the high level of where we'd like to go in ushering this new era of creativity but I also want to end with some concrete examples because ultimately I just want to make this as concrete as possible so we are very lucky at story to have a variety of ecosystem Partners um but today I'm just going to talk through one or two so that you can get a taste of the types of projects that are using this infrastructure that we've built uh the first is a company called which is basically a AI powered digital fashion platform uh they partner with Brands like Balenciaga balain which is the shoe that you're seeing here and they allow people to use generative AI to actually enhance and and uh color and decorate their favorite Brands and and get those clothing items physically so you can see here a demo of the Apple app which we actually have been demoing at story house you can see these actual shoes for yourself self but anyone can use AI to essentially remix a fashion item and you can imagine once that's done it can get posted automatically on social media and the ones that maybe get 10,000 likes or 20,000 likes or some threshold may actually get printed and all the revenue that comes from those licensing deals would automatically be streamed both to the remixer as well to Balenciaga or the original brand automatically through story and so this is an example of how IPOs can allow IP to grow uh across the internet and Empower creators as well as Brands to both win together so appload is a good example of a sort of I would say a single player use case of story where a single app is using our infrastructure uh to do things they couldn't do before or at least do things way more cheaply but I think the vision of the IP IP Legoland really comes in when you have composability when you can actually move IP Legos across different apps and so this example is one uh where we're using magma which is a Creator tool that has two and a half million web to users imagine you've created a character on magma and you can instantly register it on story you can set your terms about how you want other people to use this uh you can maybe share ownership with other people that collaborated with you and then you can register it on Story the moment that happens every single app integrated with a story now has access to this character instantly through this API so you can imagine a second person goes in through the IP Hub an app we've created for others to allow allow them to search and browse and remix IP and the second person might find this character that they really like and they can pay uh based on the terms that the original magma creator has set and remix this character permissionless without having any conversations with the original Creator onto another app this app is called Mogan it's an AI powered remixing tool so now you can actually create many different AI powered versions of this character from magma as a second Creator and when you generate these variations you might pick your favorite and that new derivative character gets registered on the same IP graph linked to the original on magma now you can imagine a third person who finds uh uh this character on seai which is another app that's integrated with story and they can just brow through SEI and automatically see this character uh that's been remixed on mahogan and use it in in order to a comic and so again seai doesn't need to manually find this character all of this is surfaced up from the story because we have a universal media library so imagine this seai comic it's really popular people are paying to access it the moment that payment comes in every single person from the original magma Creator to the mosan AI remixer to the person who created that comic on seai will get rewarded instantly through stories IP graph creating a global system of value in an IP infrastructure that can scale at the speed of the internet so that's a little bit about what we're doing and how we're building this IP Legoland and I think these are just early visions of the future that we see um I'll conclude there and for those interested in building on story you're learning a little bit more uh scan the QR code it'll take you to story Academy which is essentially an incubator that we've built for projects like the one that you've seen just now uh thank you everyone for your time and uh appreciate you guys letting me share a little bit more about story's vision for the future thank you [Music]