What is Programmable IP Licensing Good For?
Also: Hotel Backrooms, Doom Diffusion, and Lounge House
Recently, Story Protocol announced a $140m raise for a new blockchain network focused on programmable IP and Licensing. This is a domain I was actively involved in from 2014-2019, having worked on Ujo Music where we created the first automated royalty payments prototype on Ethereum and created a framework with other pioneers for programmable open IP licensing (called COALA IP).
Back then, the vision we had was that, creatively and financially, the world would be more interesting if it was possible to have a global, programmable API-based licensing on IP. In other words: pay some fee using a programmable money network (eg, Ethereum) and in return receive a license to use the IP for a specific use.
That vision is still interesting and exciting. Today, I think programmable IP licensing is the most interesting when used for:
Open IP that’s illiquid.
Potentially new forms of IP Clubs.
Analog “Programmable IP”
Legally, at least in the US there is some precedent for “programmable IP” in the sense that there exists statutory rights one can obtain without asking for permission. It exists in domains like music composition rights and cable TV rebroadcasting. For example, if you write and record a song, anyone can use the composition (sheet music, lyrics, musical notation, etc) to record a cover song commercially as long as the requisite royalties are paid (to a royalty collections society). The songwriter can’t even deny a cover from being made. There’s also other automated rights, like mechanical royalties when a song is distributed and public performance rights, which must be paid when a song is played in public. Bars/pubs for example pay blanket licenses that allow them play a catalog represented by a royalty collections society. In some cases, the venue must submit playlists or songs that were played, but in other instances the collections society itself take a guess through sampling and other means (note: artists can challenge this).
Thus, technology can be useful here in both ensuring the right people get paid and also in reducing the amount of middlemen required.
Making a programmable IP system for *all* IP, however, is much harder because of the lack of existing legal frameworks for it (as such can be found in the music industry). IP is complicated, and global, and automating that across jurisdictions is *hard*.
A conclusion for us back then was that:
- You’re either going to have to abstract this complexity through some institution (as Story describes: USDC-like abstraction) or
- Forego the traditional IP system altogether and focus on new forms of monetization and attribution that actually doesn’t require interfacing with the existing legal system. In another sense: relinquish meatspace rights in order to enter a new realm of opt-in rights.
The latter to me remains more interesting than trying to plug in the existing IP regime to newer visions, mostly because it 1) makes things easier, and 2) allows us to imagine how culture can be produced differently.
But, there is a domain where I think programmable IP might be useful: open IP that’s illiquid.
Open vs Close + Liquid vs Illiquid
A 2x2 to plot this is to focus on two axes:
Closed vs Open IP
Closed is traditional. Rights reserved. IP owned by people and corporations and requires explicit agreements for exploitation. Open IP goes to Creative Commons and more radical vision of Creative Commons Zero to radical “fair use” as seen in the production of internet memes.
Illiquid vs Liquid
Illiquid refers to the IP’s ability to be exploited and thus result in remuneration for its owners. Most illiquid is traditional IP that requires manual contracts and agreement. Most liquid is memecoins.
Closed & Illiquid
Traditional IP. Most closed and most illiquid are things like a writer trying to sell their book. It becomes more open if a creator is say, an illustrator, and hope to sell commissions. Thus, it has to be publicly visible and they can thus exploit their skills with more liquidity (through commissions).
Closed & Liquid
The most liquid closed IP is probably public stocks of IP. Like, buying Disney shares and through that having a say on exploitation of the IP (as minuscule at that is) and also participating in the upside of successful exploitation. In some cases, like selling options on stories, writers might sell temporary rights to exploit the work. Some companies, for example, specialize in building up a portfolio of temporary options to then either sell that option or work with other producers to make it into a film. Thus, there’s a closed and semi-liquid network for exploitation of rights.
Another example here are royalty rights marketplaces. Musicians for example, can sell rights to royalties of their works in certain regions for a period of time in order to get liquidity on future revenue. ((Marketplace)). It leans towards being more open in the case where IP is sold in perpetuity, like Justin Bieber selling recording rights royalties.
Some NFTs fall into this category: where the artists/owners retain legal ownership of the rights, but sell NFTs, as essentially digitally signed scarce prints of the work.
Open IP & Illiquid
Here it is primarily Creative Commons IP. The intent here is for widespread dissemination and various methods of remixing and optional free commercial rights for derivative works. It’s generally illiquid because monetization still has to happen manually. But, it’s more liquid than closed IP because derivative rights in some cases don’t have to be negotiated. You can freely remix and/or even remix commercially without negotiation. But, natively, it’s not guaranteed.
In many cases, the goal is to actually share & remix freely without monetization.
An ecosystem can become more liquid if it’s big enough to support that exploitation and cross-pollination. For example, SCP can fit in here. If you read the wiki and enjoy the creepypasta, you’re more likely to pay to play the games made from the open IP.
I wrote more on SCP here:
A nebulous category in Open IP + Illiquid is fan-fiction and memes in general. These usually fall under fair-use and by definition are not allowed to directly exploited commercially. In some countries, fair-use isn’t as broad as it is in the US. But, generally, internet memes completely ignore rights involved with most meme creators not even aware that much of it falls under fair-use and in some instances actually being illegal.
Open IP + Liquid
This is a relatively new category. The most extreme in this realm is memecoins where there’s no active consideration on legality of the usage of the media (eg, memes) and it’s entirely fungible on a global ledger. It’s temporary, chaotic, and speculative pvp. There’s a social game of playing the perceived perception of the cultural attention zeitgeist.
Attribution and provenance happens here, but it’s all mostly social. It’s all focused on attention gravity wells.
A bit less open and a bit less liquid is some categories of NFTs. Fully open IP NFTs are explicitly made CC0 (effectively relinquishing rights). Cryptoads is an example.
As I mentioned before, I find this quadrant the most interesting because as wild as it might seem to outsiders, it’s crudely monetizing culture in a new way.
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Not all IP wants or needs programmable licensing. For example, mega-corps are happy to lightly condone fan-fiction because it makes the fans happy, but actively promoting it and condoning it can damage the narrative they are creating. In a broad case, making erotic enemies-to-lovers fan-fiction of Obi-Wan and Darth Maul is just not something Disney would condone. Even if they make insanely fine-grained licensing agreements (“you can make commercial fan-fiction of Obi-Wan Kenobi as long as it is not erotic”), they would still be worried about quality control if it is sanctioned. Thus, a good subset of closed, mega-IP, just doesn’t seem like IP that would benefit dramatically from programmable licensing. It’s closed and illiquid partly because there’s a desire to protect it.
Even in cases like the music industry. Want to create your own unique streaming services and want to license the work to be streamed from a record label? If you pay the programmable license, it immediately becomes available to stream in your own portal/platform? Sounds great, right? Maybe for a developer or a user, but the record label now has to spend additional resources to police its songs wherever it’s streaming. Sure, you can go deeper: build in automated policing systems to find unauthorized use, but then the record label has to ask itself: is opening up this extra avenue for revenue worth the trouble? Unfortunately, power-law exists here, where a record label making a few deals with its biggest artists makes the most of the money. Like any investment, it’s a numbers game, but the numbers look the same to venture capital. A few musicians make the most of the money and retaining that capital over a broad-based marketplace of programmable and licensable music just doesn’t seem like something they’d care for.
The memecoin liquid IP space already left trad IP behind. Register memes and creating traceable provenance from them is not a value add to the bottom-right quadrant. It thrives precisely because it generally ignores the underlying right.
Thus, what’s mostly left is IP that is open, but illiquid. In this space, there’s already examples or circumstances where the goal of the IP is to be freely remixable and potentially commercially exploitable. The desire of the creator/s is for it to be used in derivative works. Making it possible to pay a programmatic fee might be an option from a creator that doesn’t mind non-commerical remixing, but wouldn’t mind getting paid for commercial exploitation.
In the existing world, this automated licensing system (like in music composition & broadcasting rights) happened because of a need to avoid individual negotiation. Thus, it’s essentially legal “IP Club”: songwriters get paid for covers and they accept the benefits at cost of individual price discrimination. Same for rebroadcasting rights for cable. TV show IP owners accept statutory pricing knowing that it will result in more revenue over individual price discrimination in cable TV.
So, the interesting question to me is asking in what circumstances might open IP owners want to club together their rights for usage and exploitation in unique domains?
In tabletop RPGs, maybe an IP club chooses to license various monsters, characters, locations as a group to allow commercial exploitation of those works in derivative campaigns? It’s essentially what Wizards of the Coast does anyway (but as a company). Some of the IP is free and some of it isn’t.
Would SCP consider a subset of their open contributions to not allow for commercial derivatives and charge a price as a club to use that IP?
Ultimately, programmable IP, through automation of licensing can help enable new kinds of creative uses. As a technology and legal arbitrage player it might even generally reduce cost of negotiation (eg, what if all the IP marketplaces had one backbone instead of many platforms?).
The best domain for it is generally open but illiquid IP: the area of the ellipse. Open and liquid IP is already monetized in a new way and most closed IP would likely want to remain closed to some extent. The latter might be interested in it in terms of reducing costs, but not necessarily as new avenues for revenue.
What about AI?
Machine-readable rights are a thing with work from companies like Spawning. They are mostly used for opt-out or do-not-train registries. Rightfully, *a* step that some IP owners might want to consider at machine-readable level is to just be able to have a payment system here and then allow said learning algorithm to use the media for training.
It’s possible, but as with the same issue of negotiating millions of data rights, it feels unlikely that a learning algorithm is going to parse all of this for each piece of media. And thus, an IP Club here, as a form of media union seems more likely than negotiating individual rights. But, this feels farther off as legal issues and rights have to be played out in various jurisdictions. That being said, even in places where it’s legal to data-mine, eventual commodification of the technology might result in marginal benefits accruing to data/IP creators as a gesture of goodwill. It’s the same reason why AI companies are front-running legal challenges by just partnering with news organizations (for example).
There’s a lot that needs to happen and looking forward to see how it all unfolds. I wish the Story Protocol team all the best!
What do you think about programmable IP licensing?
Bonus Content!
Not much to report here. Heading back home today after a great time travelling and resting a bit. Excited to get back to the autumn in the US and focusing on writing, running, and cooking my own food again! Hoping to get back to media consumption soon! Want to watch new Rings of Power and Umbrella Academy and get back to reading and playing some games. Need to focus on maximum rest for my mid-September half marathon!
💾 Links
Hotel Backrooms
Hotels can be weirdly liminal sometimes. Enjoyed this short take on a guy filming hotels and getting lost in the backrooms.
Doom Diffusion
Someone trained an LLM to be able to reproduce playing Doom. Take a look.
Two questions: 1) how well does it work for more complex games? 2) I would love to see the failure cases/hallucinations and see what it looks like? If something odd happens, does it recover and does it materially affect gameplay?
It looks fun, but would it hold up at all as a game engine replacement? Doubt it will, but in there, there’s probably an interesting exploration in LLM-esque game engines that don’t have to be precise. For example, the idea of putting an LLM character in a trad RPG doesn’t make sense (they shouldn’t have that much agency), but as a new type of RPG where it’s more unbounded (mega world sims?), it makes sense. What does that look like for the world itself? Unsure.
🎶 Music
Charles Levine & Martin Buttrich - Festival Queen
I’m a sucker for a good lounge-y house track. Enjoy!
That’s it for this week folks. Hope you get to enjoy a lovely sunset. See you next week.
Simon