How Story Protocol Brings New Vitality to the Billion-Dollar IP Creation Field

1. New Opportunities in the IP/Content Industry: Exponential Explosion of Derivative Content, Large Market Space, but Current Intellectual Property Mechanisms Cannot Adapt

A quick introduction to what "derivative creation" is

"Derivative creation" is short for "secondary creation," referring to new works created by fans or enthusiasts based on their favorite original works (such as animations, comics, games, music, etc.), usually as a way for individuals or communities to pay tribute to or express their love for the original work.
Derivative creations typically do not change the basic settings or characters of the original work but add new content or interpretations within the existing framework, such as drawing fan art or writing fan fiction.
Derivative creations are usually non-commercial and rarely receive authorization from the original creators.

Typical examples include remixing on Douyin and Bilibili, or fan fiction on literary platforms.

Bilibili has tens of thousands of derivative creations of Tom and Jerry, and in Jay Chou's "Greatest Works" derivative creation competition, the "Greatest Works" of the Dark Knight has over 13 million views.
"Fifty Shades of Grey" was originally a fan fiction based on the "Twilight" series, featuring the protagonists Edward and Bella. With the enthusiastic response from the online community, author E.L. James rewrote the story, ultimately publishing it under the title "Fifty Shades of Grey," achieving tremendous success:
The series has sold over 350 million copies worldwide, making it one of the best-selling series of novels in the world.
Its adapted films total three, with a global box office exceeding $1.5 billion.
The series has also spawned various merchandise, including clothing, toys, and video games, with sales reaching billions of dollars.

However, the "copyright" of these derivative works is very complex. Among the tens of thousands of Tom and Jerry derivative works on Bilibili, very few have obtained authorization from Disney; "Twilight" author Stephenie Meyer once filed a copyright lawsuit against "Fifty Shades of Grey" author E.L. James.

This has led to the past state of derivative creation being vibrant and widely disseminated within the community, but constrained by ambiguous authorization, existing in a low-profile and non-commercial manner as a subculture (e.g., FanFiction.Net and Archive of Our Own).

The emergence of AI-generated content has disrupted this balance, leading to an exponential explosion of derivative content. However, due to the current intellectual property mechanisms being unable to adapt, it often results in a lose-lose situation for both content creators and consumers:

Take the AI-generated song "Heart on My Sleeve" by "Drake x The Weeknd" as an example; the content was excellent, with over ten million listens on TikTok, but neither artist could profit from it, and the content was subsequently taken down, resulting in significant losses for both content creators and consumers. from Forbes

(Different musicians have different attitudes; Grime, Elon Musk's ex-wife, tweeted that if AI were to use her voice, she would be willing to share profits 50/50 and not pursue any lawsuits.)

On the other hand, Hollywood relies on derivative works to drive box office revenue but faces unpredictable centralized adaptations and increasingly high marketing costs. Krishnan, who is responsible for crypto investments at A16Z, also identified corresponding opportunities:

"We're seeing that some of the most creative ideas on the internet aren't getting translated into longer formats, like movies and TV," says a16z's Krishnan. "Today, we see many remakes of old shows or comic book series instead." He attributes this to mainstream intellectual property remaining "gatekept and read-only despite multimedia franchises attracting some of the most avid and imaginative communities." "We find that some of the most creative ideas on the internet are not being transformed into longer formats, such as movies and TV shows," Krishnan of a16z said. "Today, we see many remakes of old shows or comic book series." He attributes this to mainstream intellectual property still being "heavily controlled and read-only, despite multimedia franchises attracting some of the most passionate and imaginative communities." from Forbes

In the AI era, the barriers to content generation are becoming lower, and the issues that need to be addressed are copyright attribution and value acquisition, combined with community dissemination to form a positive feedback loop for IP derivative creation.

This is also the structural new opportunity that Story Protocol CEO S.Y. Lee sees.

This opportunity encompasses the entire global entertainment and media industry, with PwC estimating that revenues reached $23 trillion in 2022, of which hundreds of billions are based on existing IP. Story Protocol hopes to carve out a share by becoming the infrastructure for IP derivative creation.

2. Story Protocol Brings New Vitality to the Billion-Dollar IP Derivative Creation Field with "Git for IP"

By combining Blockchain, NFT, and Git, Story Protocol is establishing an IP intellectual property and content creator infrastructure layer that provides licensing, attribution, and rights records, including:

An on-chain IP repository similar to GitHub
A set of powerful modules to extend the on-chain stored IP

By simplifying authorization and collaboration, it achieves ownership and composability of IP, creating a positive-sum game and ushering in the next era of internet creativity.

In this GitHub-like on-chain IP repository:

Using the NFT ERC-721 standard to store IP intellectual property-related information

Creators can use Story Protocol to put images, text, and other content from collectibles on-chain as NFTs, or directly create new NFT works and host content on-chain.
The goal is to maximize compatibility with existing industry standards, not to create a closed system, but to support collaborative creation of different intellectual properties through compatibility.
This standardized data structure allows the protocol to be compatible with existing NFT collectibles, enhancing the protocol's composability. The platform can interoperate with external projects like Azuki without redefining the NFT standard.

Creators have 100% control, balancing flexibility and regulation to achieve a sustainable model.

No licensing does not mean no control; while Story Protocol provides a tolerant environment for derivative creation, it also allows creators to set clear constraints to manage intellectual property, specifying who can access and derive their IP, ensuring that IP is not abused.
Original creators can decide the scope of participants, revenue-sharing ratios, and other details as needed, while derivative creators can receive royalty shares, achieving a win-win with the original creators. This will enhance the value of original content and fan communities, creating a positive-sum game and generating sustained network effects.
S.Y. Lee believes that the Web3 community has already made many interesting attempts in this area, which are worth standardizing and promoting. The model of fan communities participating as business partners will allow creators and fans to resonate together and achieve a win-win situation. (During Korea Blockchain Week, Story Protocol also exchanged IP practices with leading NFT teams.)

Like GitHub, it allows for quick communication between collaborators and can eliminate traditional intermediaries.
Licensing or derivative creation terms can be set with just a few clicks, without the need to hire an entire legal team from S.Y. Lee.
Story Protocol can capture value from each economic activity.

On top of this IP repository, Story Protocol includes related operations such as IP licensing, royalty/income distribution, and allows third-party developers to add modules to enrich the ecosystem, including derivative work tracking, music remix licensing, crowdfunding, etc.

At the same time, Story Protocol enables Web2 platforms to seamlessly integrate with the protocol through SDKs and APIs, allowing for "unperceived" access.

This provides creators with the possibility of having their content exist simultaneously on Web3 applications and Web2 platforms.
The metadata of the creator's content is permanently written to the blockchain, while the content itself can flow freely in decentralized or centralized scenarios, utilizing existing Web2 platforms like YouTube and TikTok for large-scale dissemination.

Ultimately, Story Protocol aims to create an IP network supported by Blockchain and NFTs, composed of fans and creators. Fans are not just consumers; they can add or change content for the IP and even provide funding support, allowing every participant to receive their due rewards. The system becomes more valuable as the number of users increases, forming network effects—creating a better moat and business model than all current content companies. The blockchain provides an efficient tracking mechanism that can record each IP's additions and modifications, as well as the terms of payments or investments.

With technological advancements, the free release of human creativity will reach unprecedented heights. Let us wait and see how Story Protocol will change the IP field after its official launch.

3. Other Insights & Fun Facts

Refining the story itself is more important than relying solely on NFTs, as this will determine the lasting appeal of an intellectual property.

Transitioning from image IP to film, games, or other forms requires a continuously engaging narrative system as support. A dynamically evolving story and worldview are essential for the continuous emergence of derivative content.
Story Protocol encourages content creators to conceive the worldview and possible derivative directions of their IP from the very beginning. Jason Zhao hopes to see more detailed original stories on Story Protocol, rather than just remaining at the stage of image collectibles with a singular effect pursuit. A rich worldview is key to attracting numerous creators to continue participating.

First landing through Web3 applications, then gradually penetrating Web2

Story Protocol's primary goal is to support the emergence of new Web3 applications based on its protocol, such as decentralized video-sharing platforms, which can fully showcase the advantages of the protocol.
After accumulating enough use cases, Story Protocol will gradually integrate with major Web2 platforms. The focus is not on commercial cooperation, but on achieving a smooth and open access process through SDKs and APIs.
Jason Zhao believes that it will take some time to accumulate reputation and influence before mainstream platforms gradually accept this new content collaboration model. Story Protocol will start from vertical niches and gradually penetrate.

Supporting new forms of content production, creating an IP community

KK shared "Lingao Qiming," a fan fiction with hundreds of authors participating in its creation. The main text on Qidian Chinese Network has updated over 16 million words, and the first two volumes of the physical book have been published.
In addition to derivative creation, some online novel platforms are attempting new forms of collaborative creation of original stories. This brings new possibilities for Story Protocol.
By introducing blockchain incentive mechanisms, more people can actively participate in content production and fairly distribute profits. This new way of content generation is also worth trying and supporting on Story Protocol.
S.Y. Lee believes that China is conducting very interesting explorations in this area, which are worth learning from. Story Protocol hopes to become a bridge connecting collective wisdom, creating a co-creation system that maintains fairness and openness.

After S.Y. Lee came up with the idea of connecting fans and creators, he coincidentally discovered that A16Z also had relevant research, which aligned with his concept and prompted him to seek their support.

GitHub is a collaborative and hosting service for computer programs. A16Z was an early supporter of the company, which is now owned by Microsoft.

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