Story Raises $80 Million to Build Blockchain for Content IP

AI giants like Anthropic, OpenAI and Stability AI have faced a lot of heat over how they’ve scraped data and rode rough-shod over others’ intellectual property when training and operating their foundational models. Now a startup called Story — which today is announcing $80 million in funding — is bidding to rebalance the scales with a blockchain-based platform to help IP owners track usage more effectively.

In the words of CEO and co-founder, S.Y. Lee, the aim is to build a more “sustainable” IP ecosystem fit for the next generation of digital consumers and builders. The startup says its approach is to think of IP like Lego and use blockchain to make that possible. “Anyone can fork and remix your IP permissionlessly while you capture the upside,” Lee said in an interview. (A little ironic to label it “Lego,” given the many IP battles the toy brick company has faced over the years.)

The round is being led by Andreessen Horowitz, specifically its a16z crypto division, with crypto investor Polychain Capital also participating, alongside Scott Trowbridge (the SVP of Stability AI); K11 founder Adrian Cheng; and Cozomo de’ Medici, the digital art collector who took on an alias to evoke the famous Renaissance family. The new funding, a Series B, brings the total raised by Story and its parent, PIP Labs, to $143 million.

Being able to better capture the value of IP when it gets used has the potential to bring in a lot of money to license owners. In anticipation of its platform getting traction and working as envisioned, Story itself is realizing some significant value, too. We understand from sources close to the company that the startup is now valued at $2.25 billion post-money.

Story is building what it describes as an “IP blockchain” — a system and platform by which it envisions that creators will be able to assert their ownership on a piece of content, set usage parameters around that IP, and then let others license and use it.

How exactly that will work in practice still remains to be seen, though. The plan is to use the funding to continue building out the product — aiming for a commercial launch later this year, per Lee. Up to now, the startup has been adding users by way of a free, closed beta.

It says more than 200 teams — and “more than 20 million addressable IPs” — are registered on the platform so far, a result of partnerships with fashion design tool Ablo, Japanese comic platform Sekai and art collaboration startup Magma. 

Chris Dixon, who co-led the investment for a16z with Carra Wu, believes that new applications based on generative AI and other developments like it will be massively disrupting the economic models that traditionally underpinned how people made visual art or literature or music (or any other kind of “content” as it’s typically described these days when it’s digital). To keep the market for creativity thriving, a new way of monetizing content needs to be introduced, is the thesis.

“A new wave of AI-powered search engines give comprehensive answers instead of guiding users to websites. Social networks are increasingly populated by AI-generated images and videos,” Dixon writes in a blog post. “These AI systems were likely trained on original, human-created content but often don’t credit or cite their sources. If there’s no attribution or compensation, what incentive will there be to publish original creations on the open internet?” 

AI systems are just one area where content is being used and will be used in the future, but they are a significant one, which is why Story is not the only player in this space. Just last week, another startup, called Sahara AI, announced $43 million in funding to build out its own approach to addressing the question of how best to track and monetize IP in the age of AI. 

“Story distinguishes itself from Sahara by focusing on the IP and data layer of AI solutions rather than the existing AI infrastructure stack,” Lee told me in response to a question about how the two are different from each other. “While Sahara appears to target intellectual property concerns, these are mostly focused on data which is very different from the legal regime of IP. Story sees potential for partnership as the IP layer of solutions like Sahara and Ritual. We can become close partners.”

Lee himself has had a front-row seat to the story (so to speak) of content in the digital age. He started out as an enterprising journalist in the U.K. when he founded a platform called byline.com in 2014. He then built a crowdsourced, serialized fiction app called Radish (a competitor to the likes of Inkitt and Wattpad), which eventually he sold to Kakao for $440 million. 

Story — which Lee co-founded with Jason Zhao, the CPO — is, in a way, the natural progression of these previous experiences.

“If you look at everything from, you know, Netflix to Disney, they pour billions of dollars into content, but really it’s billions of dollars into marketing,” he said. “It’s kind of a zero sum war for attention to get more users and subscribers.”

His previous company, Radish, getting acquired for $440 million made him “rethink the dynamics of the market,” he said.

“I was drawing a lot of my venture capital money out for marketing,” he added, saying this is his attempt to build a different model to avoid that for creators of the future. 

Whether it will work, and whether creators want to use it, are questions that are yet to be answered. 

Those who believe they have a lock on how to invest for future scenarios are bullish, though. 

“What Bitcoin did for money and finance, Story is doing for content and IP,” said Olaf Carlson-Wee, the founder and CEO of Polychain Capital, in a statement. “Web3’s first phase was triggered by the 2008 financial crisis, leading to a revolution on money through networks like Bitcoin and Ethereum. Now advancements in AI are triggering a second phase in Web3, which will revolutionize IP.”