Future of IP industry, Story Protocol
Interview with Story Protocol
TL;DR
Story Protocol is a blockchain-based open protocol that empowers creators to securely establish their IP ownership, and manage and utilize it in ways previously unimaginable
Story Protocol shows high potential to achieve success even despite market conditions due to three reasons:
1) Founders who have a proven track record in the Web 2.0 IP and AI sectors
2) Profound understanding of the IP industry, its regulations, and the associated technology
3) A successful capital raise, despite the challenging macroeconomic conditions
Story protocol consists of two main parts: 1) standardized data structure and 2) utilization modules. It will focus on establishing a standardized data structure, while the governance of the protocol layer will include user governance to aid scalability.
This report is based on exclusive interviews with Story Protocol Co-Founder Jason Zhao and Core Contributor Weilei Yu. While the interviews provided a deep understanding of Story Protocol, please note that Story Protocol is still in the early stages of pre-launch, so the content of this report may change over time. Additionally, this report includes independent research from Tiger Research in addition to the interview.
Story Protocol raises $54 million despite market headwinds
While many projects are struggling to raise funding in current market conditions, Story Protocol has made waves in the market by raising a total of $54 million in a round led by a16z. The investment reportedly included leading companies such as Hashed, TKO Group Holdings, and Samsung Next, as well as individual investors such as HYBE Chairman Bang Si-hyuk. The size of the seed investment is unusual given the current Web3 market conditions, and it will be interesting to see if the Story Protocol can revitalize the blockchain market in the same way that the GPT model revitalized the formerly stale AI market.
Story Protocol was co-founded by Jason Levy, former head of content at simulation app Episode; Jason Zhao, former product lead at Google's Deep Mind, the company behind AlphaGo; and Seung Yoon Lee, founder of Radish Fiction, often considered as the Netflix of web fiction. No other founders in the Web3 market have had such a well-established background, and investors seem to have had a lot of confidence in their track record and success.
Story Protocol envisions the future of content IP
Story Protocol is a blockchain-based open protocol that enables creators to fully secure their IP ownership rights and effectively manage and utilize them.
In an era of constant content creation brought forth by the internet and AI, the proliferation of IP is occurring at a tremendous rate. It is often reorganized, transformed, and utilized without the permission of the original copyright holder. However, this transformation and utilization of IP is not necessarily a negative thing. Secondary creations and distribution based on an IP can enhance and expand the value of the original IP.
For example, we have already seen the explosive expansion of development ecosystems based on open source culture as shown in the figure below. Similar benefits for the IP ecosystem may occur if we can establish such a culture. Therefore, rather than restricting such activities, it is important to promote a self-sustaining ecosystem by creating a healthy environment to track the ownership and utilization of IP.
IP creators want to collaborate with other creators to maximize the value of their IP, but it's not always easy to facilitate. Traditionally, IP discussions and collaborations have been organized through agencies or by traveling to relevant events and meeting over a period of time. The current approach makes IP sharing and collaboration between creators complex and inefficient, stifling the untapped growth potential of IP and limiting creative culture.
To overcome these inherent problems in the IP industry, Story Protocol proposes a revolutionary concept called "Git for IP". Just as Git has set a new standard for collaboration in software development, Story Protocol proposes a new paradigm for IP sharing and collaboration. It will allow creators to own their IP and continue their creative endeavors in a secure, shared, and scalable environment.
A deep dive into Story Protocol
Story Protocol works similarly to Git, thoroughly tracking the changes and utilization of IP throughout its lifecycle. Just as Git provides a structure for clearly tracking changes to code, Story Protocol provides a structure for continuously tracking the circulation and evolution of IP. Where Story Protocol differs from Git is that it combines blockchain technology to ensure creator sovereignty, making the ownership and distribution of creative works more transparent.
Story Protocol leverages standardized data structures to implement these mechanisms. To date, no such structure has been established for IPs, but Story Protocol attempts to resolve the ambiguity of IPs through this method. Of course, it's not easy to handle all the possible variations, and there will still be gray zones, but efforts are underway to minimize issues of IP ambiguity through standardized data structures.
The Story Protocol supports the creation of various applications on top of the protocol by enabling the creation of API modules that operate in the form of smart contracts. Creators will be able to use this to customize modules that allow for further exploitation at the application level, such as IP license terms or revenue sharing schemes, to directly or indirectly utilize IP.
Then how will Story Protocol be used?
Let's say the "Spider-Man" we all know was recorded in Story Protocol. Under a standardized data structure, the first creator writes the story of a character named Peter Parker, who is bitten by a spider and gains superhuman powers. The creator also monitors the licensing module to register clear license rights to translate the work, create spin-offs, produce merchandise, and so on. This way, he can receive economic compensation from the profits of secondary works covered by the rights.
The next contributor then adds a story where Peter Parker's uncle dies, and another contributor contributes to the expansion of the IP by writing an alternate universe Peter Parker. If Marvel then produces a movie based on that story and it generates significant economic benefit, the economic benefit is shared by all contributors, from the first creator to the next.
This will become even more important in the future generative AI market, where clearly documented data structures and modules will make it clear which parts of the AI were referenced, and thus clarify the distribution of revenue. This is why it's important to proactively protect your copyright and help create more opportunities for indirect revenue from the unstoppable tide of generative AI.
What’s next for Story Protocol?
The ultimate goal of Story Protocol is to democratize the creation and use of IP. For example, Story Protocol seeks to create an environment where anyone can freely participate in and utilize IP, as long as they meet the protocol's consensus methods, rather it being privy to only large corporations being able to utilize large IPs like Harry Potter. This approach is similar to the participation-oriented spirit of open sourcing, and it is expected to expand the IP ecosystem through bottom-up IP creation and utilization. However, what is interesting is that this approach is not the disruptive web3 approach of the past, but rather a regulatory-compliant approach.
To realize this scalability, Story Protocol has set its primary goal as the integration of IP and multiple content platforms. Rather than simply focusing on specific projects, Story Protocol is building a broader ecosystem by strengthening collaborations with leaders in various industries to provide a range of tools and resources to support developers and creators. In particular, Story Protocol is working closely with Web3 natives and business teams at large IP companies that share its founding philosophy. The first steps will be in North America, and the team is looking forward to partnerships in Asia, which is rich with a variety of new IPs.
According to our interview, Story Protocol currently has no plans to develop its own blockchain. Instead, it is building the protocol to operate on top of an EVM-compatible chain, which aims to enable IP transactions at a infrastructural level similar to "Layer Zero," and is considering a revenue model based on fees for using the protocol in consensus with the community.
Will Story Protocol really open a new frontier for IP?
In the early stages of a startup, the team's ability to execute the vision is emphasized over the product. Story Protocol has a great team, vision, and capital. The core talents' IP business experience and AI development capabilities are crucial to organize the data structure that is the core of Story Protocol. Co-founders Jason Levy and Seung-yoon Lee's IP business experience will be a great foundation for the data structure, and Jason Zhao's generative AI expertise will help create a fraud-proof core structure that can effectively utilize the data.
However, this is not a completely new disruptive solution. There has been a steady stream of attempts to leverage blockchain technology to revolutionize the IP market, such as the US-based creative protocol Rally. However, they fell short of reaching real-world application and utilization, and failed to achieve the all-important "market consensus" of the protocol. On the other hand, Story Protocol will be able to achieve significant market consensus even if it is only applied to Radish, where co-founder Lee Seung-yoon has participated in the past. If their investor network also participates in scaling the protocol, it is likely to achieve faster market consensus than any other project.
As Story Protocol is still in the early stages of product development, it will be important to establish a standardized data structure that can be agreed upon by all participants in the IP market. Going forward, it will be necessary to attract many developers to participate in the development of modules that can utilize it. In particular, since modules are responsible for IP utilization such as equity structure and scope of utilization that can directly benefit users, it will be important to provide an environment that fosters active participation.
It's easy to see why Story Protocol has received $54 million in funding, given the clarity of their vision and the confidence they have in it. It will be interesting to see if they can really paint the future of IP with their upcoming 'Emergence Universe' and other features.
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