San Francisco-based startup Story announced Wednesday that it has raised $80 million in funding for a blockchain designed to forestall artificial intelligence makers like OpenAI from hijacking their developers' mental property without permission.
The round values the two-year-old company at $2.25 billion, sources accustomed to the matter told CNBC. The sources requested anonymity because the knowledge has not been made public.
Story said it raised the funds in a Series B round of financing — typically the third major round of funding in a non-public startup's journey after seed and Series A funding — led by Andreessen Horowitz, also often known as a16z.
Cryptocurrency enterprise capital firm Polychain and Brevan Howard, the investment fund of British billionaire and hedge fund manager Alan Howard, also invested.
Construction of an “IP Legoland”
A blockchain is a distributed database that maintains an immutable record of activity. It is the technology that underlies cryptocurrencies resembling Bitcoin and Ether.
Story acts as a blockchain network that permits creators to prove that they created a bit of content and own the mental property by storing their mental property on the platform.
The company's technology is designed to guard the mental property of people and firms by embedding related terms, resembling royalties and royalty-sharing agreements, into smart contracts.
Smart contracts are digital contracts which can be stored in a blockchain and are mechanically executed as soon as certain conditions are met.
This will make copyright holders' mental property “programmable,” SY Lee, co-founder and CEO of Story, told CNBC, as it’s going to set rules for a way their content will be used and the worth for reproducing or remixing their works.
The advantage of that is that it effectively eliminates the middlemen who normally play a job in copyright infringement disputes within the media landscape, Lee said.
“Now intellectual property has become intellectual property rights,” Lee told CNBC. “Now you don't need lawyers. You don't need agents. You don't have to have these very lengthy business development negotiations. You just tie your licensing and royalty sharing terms into little contracts.”
Story makes money by charging a network fee for each motion that takes place on its network.
An example of an organization that uses Story is Ablo, an AI tool that permits users to create their very own customized fashion items using designs from well-known brands resembling French designer clothing company Balmain and Italian luxury fashion house Dolce and Gabbana.
Brands are compensated for using fashion designers' mental property through various related licensing and revenue sharing agreements.
Fighting copyright theft in AI
Story is now attempting to use its technology to handle a current problem: the theft of copyrighted media on the Internet through powerful generative AI models like OpenAI's ChatGPT.
These models, which construct on the foundations of many AI chatbots which can be increasingly getting used as an alternative choice to search, require huge amounts of coaching data to enable their systems to supply advanced and informative responses to user queries.
But the information that goes into these AI models often comes from sources which can be subject to copyright restrictions.
The New York Times suggested last yr Microsoft and OpenAI with a copyright lawsuit searching for damages for misuse of the newspaper's mental property.
In its lawsuit, the Times cited several examples during which GPT-4 created altered versions of fabric originally published by the newspaper.
Big tech firms like Microsoft, which has invested $13 billion in OpenAI and is reportedly entitled to a 49 percent stake in the corporate, “are essentially stealing your intellectual property for training purposes and taking virtually all the profits,” Lee said.
In a motion to partially dismiss the Times' lawsuit in March, Microsoft said such allegations were “meritless” and that the lawsuit was a misrepresentation of “doomsday futurology.”
The content used to coach these models, Microsoft's lawyers argued, “does not replace the market for the works, but rather teaches the models the language.”
When CNBC contacted Microsoft about Lee's comments, the corporate was not immediately available for comment.
Good mental property is required to coach such AI models, Story's Lee told CNBC, but he added that AI firms will suffer losses in the long term in the event that they don’t properly compensate the publishers and developers from whom they source these vast amounts of mental property data.
“To achieve sustainable growth in AI, you need to have excellent intellectual property. Without excellent human-generated data, AI models will not be able to train and improve themselves,” Lee said.
Not many startups are developing technologies specifically designed to combat IP theft through AI.
A project on the University of Chicago entitled glazeoffers a free app for artists to combat the theft of their mental property by AI tools. This technology is used to make subtle changes to artworks which can be designed to interfere with the flexibility of AI models to read data on the artwork and mimic the form of the artwork and its artist.
Story, founded in 2022, plans to make use of the fresh money to expand its IP network infrastructure and convey more developer partners on board. The company already has over 200 developers using its platform to enable content creation with programmable IP.
Lee added: “There's a big, amazing digital renaissance that's making everyone a creator or a studio, but at the same time, if no one is actually paying compensation and properly monetizing the intellectual property, it's a suicidal act for AI in the long run.”
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