TBT: Creators, Frontier Tech, and the Coming Age of IP Power

As we look towards our upcoming KINETK launch, we went back to the archives and thought this piece from the summer of 2023 was more relevant than ever. Enjoy!

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Creators, Frontier Tech, and the Coming Age of IP Power, July 31, 2023

Creativity is the lifeblood of any thriving civilization. It spurs innovation, fosters community, underpins individuality, and defines culture. It also creates wealth. Intellectual Property (IP) and its manifestation via patents, trademarks and copyrights are the markers of such endeavors, and have been a primary driver of millennia of human innovation and progress – from the Roman aqueducts to da Vinci, and from Mozart to the transistor. As the world looks ahead from today’s Internet into the future, expectations for rapid and significant innovation have perhaps never been higher. Yet the inherent challenges of appropriate protection of creative ideas, of their authentication, and the issue of just compensation to their creators, will not only embed obstacles to continued creativity, but also present opportunities heretofore unseen. Effectively capturing these opportunities promises a renaissance of creators and creativity, but will also require thoughtful, concerted efforts in the face of the variety of challenges that exist today.

Intellectual property protection is enshrined in the U.S. Constitution, and Congress passed the first copyright law in 1790 with the intention of preserving the rights of authors and encouraging innovation. On that law’s upcoming 250th anniversary in 2040, what will we be celebrating? Will it be a renewed commitment to the preservation of creativity and innovation secured through robust IP rights supporting a flourishing ecosystem of Creators, or the destruction of those protective rights? Much as the protection of data and privacy rights became widely acknowledged focal points of the last 25 years, protection of personal IP and its attendant rights, and the allocation of the financial rewards flowing from those rights, is likely to become a central economic, legal and social concern of the next 25 years.

IP, the last 25 years: all about the Internet

In 1998, the content / distribution paradigm effectively received its first formal recognition with the passage of the Digital Millennium Copyright Act (DMCA). This was a seminal event that would be the unwritten bridge from Web 1 information paradigms to Web 2 interactive business models. Physical boundaries were about to be broken down while distribution promised to become democratized, and accessible to all with little to no upfront investment or manufacturing costs. Creators would now be able to directly monetize their content, perpetually and globally. They were about to start making money. Chris Anderson presciently described this vision in his classic 2004 Wired article The Long Tail.

2004 was still early days - new content platforms and applications were being launched, use cases were being developed, and a seeming explosion of new voices and content offered consumers unprecedented, and virtually unlimited, choices, all from their sofas. In the following years two events supercharged this trend: first, Apple rolled out the iPhone, the world’s first pocket supercomputer, then mobile bandwidth exploded. Come 2012 the idiom “Creator Economy” was born.

These changes promised a profound effect on accessibility, liquidity and the building of generational wealth within the Creator community through: (i) breaking down of physical barriers, (ii) near-zero marginal cost of duplication and distribution, and (iii) exponentially increasing the size and reach of potential audiences through universal connectivity. Yet, the transformations Anderson outlined almost 20 years ago have largely gone unrealized. Instead, large global distribution platforms emerged with highly sophisticated and largely opaque algorithms, and in many cases mimicking offline distribution systems. All that said, two things are undeniable: one is that for a small elite of the Creator class, the revenue has been sufficient to allow these structural problems and frustrations to be overlooked. The second is that, for the first time in history, the potential for a large Creator Middle Class was a realistic possibility.

The Creator Economy get Supercharged

In recent years, hundreds of thousands, if not millions, of new creators, from Instagram influencers to YouTube and TikTok stars, have found ways to derive income from digital assets.

Consider where we are:

• American IP is worth $6.6 trillion, more than the nominal GDP of any other country in the world, and accounts for 52% of all U.S. merchandise exports, per the Chamber of Commerce’s Global IP Center (GIPC).

• Goldman Sachs predicts a half a Trillion-dollar Creator Economy market in less than five years.

• 1 Billion people will self-identify as Creators in the next 5 years.

• 1 in 4 children want to become influencers.

Given the vast potential of the Creator economy for creative empowerment and wealth creation, now is the time to develop new mechanisms and approaches allowing a broader range of creators to generate self-sustaining income streams from the world’s consumption of more and more of their works. Amongst the most promising is the thoughtful incorporation of emerging frontier technologies to ensure Creators are able to establish and authenticate ownership, monitor usage and monetize their content in the current, and yet to be constructed, future landscapes. Achieving these ends will support Creators in critical ways, and ultimately encourage and promote both their creativity and financial security.

IP, the next 25 years: all about Frontier Tech

Frontier Tech, broadly the adoption of bleeding technologies and their impact on economic and geopolitical models, is the future. Decentralized ledger technology – check. AI – check, Much of the human race has spent the better part of the last 25 years putting their ideas, thoughts, writings, recordings, visuals and overall consciousness online. This has all been decomposed to 1s and 0s to make up the world’s ultimate data lake. And while thousands of companies emerge to build hundreds of ecosystem components, at its core is the use of existing IP to disassemble, reconfigure, and create new IP.

Blockchain…[should] play an important role in emerging economic structures. After all, what are decentralized ledgers but the use of cryptographic elements to create immutable, irrefutable recordation of facts. When combined with AI as a means to monitor for copyright use and infringement, together with models from Decentralized Finance (DeFi), it is difficult to imagine a better use case as Intellectual Property becomes ground zero on the exploration and exploitation of AI.

Of course, this starts with authentication and protection, and the technologies noted above promise important steps in addressing these challenges. Yet the scale of the challenges ahead is immense, and the global court systems are going to have their hands full. A simple google search of AI and Copyright doesn’t even scratch the surface, yet leaves no doubt about the magnitude of the problem. Whether it is NFTs being created based on the IP of other people, (as in the case of the Birkin Bags NFT collection and lawsuit subsequently filed by Hermes) or accusations and lawsuits around concerns of AI LLMs being trained on a corpus of copyrighted material, sides are being taken and lines being drawn. Frameworks will need to be developed, but in reality will take time to be constructed.

A good primer on the scale of the challenges ahead can be found in this wonderfully written and illustrative piece from the Harvard Business Review in April 2023 Generative AI Has an Intellectual Property Problem. The article provides an excellent framing on the challenges ahead. At the same time, it implicitly illustrates how the tools above are likely to be highly effective, and almost undoubtedly part of any viable long-term solution.

The Interwoven Pillars of a Robust IP Regime and a Thriving Creator Economy

Authentication <> Protection of Rights <> Capital

While the concept of a thriving Creator economy is universally lauded, few truly appreciate the underlying challenges needing to be addressed before this becomes a reality. A compelling argument can be made that a flourishing Creator economy is critically dependent upon three mutually supporting pillars, those of authentication of assets, protection of rights, and efficient distribution of revenues to the rightful party (the original Creator or a derivative rights holder).

The interwoven nature of these pillars, all of which are crucial if a creator economy is to truly thrive in an interconnected, fluid digital world, (and for it to survive in a world in which generative AI driven systems can create derivative work from existing IP) is also beyond dispute. Creators deserve a robust system of protection of rights, one that is established upon an immutable, permissionless system of authentication and verification capable of tracking usage and underpinning the implementation of those rights, as table stakes in order to profit from current and future monetization schemas. Without these pillars as foundations, a robust creator economy, and the vibrant society to which creators contribute, will struggle to emerge.

This scale of competing challenges notwithstanding, we are finally on the cusp of making Creator financial freedom a reality. It is unquestionably a tall task and the reality of true independence for Creators can only be realized if ALL of the pillars are developed and maintained together. Meeting each of the challenges – codified and robustly enforced legal protections, coupled with the availability of effective authentication, monitoring, and accounting tools – will require the established ecosystem to adapt in ways it hasn’t to date.

With all this comes a host of questions, complex problems and a world of opportunity.

• Will the permissionless distributed ledger as a neutral, accessible source of truth, authentication, and verification find a compelling mainstream use case?

• Can frontier tech such as blockchain technology and AI be used to monitor, protect and track IP?

• How and when will institutional capital flow to personal IP in ways that promote and enable new business models for the world’s anticipated 1 billion Creators?

We at Trips [now KINETK] are committed to tackling these questions head on, in the hopes of furthering the Creator Economy as a whole. Our mission is simple: build great products that provide Creators of all types a path to transforming their creative assets into financial assets. By using KINETK today, Creators can create an immutable stamp of their works, bringing their digitally native IP assets on chain and thus establishing their copyright’s initial digital provenance. That is the first step in a longer journey, one that includes accessing previously unavailable liquidity opportunities, while future proofing creations against unauthorized, derivative uses where just compensation should, but often does not, flow to the original author. The KINETK vision is to build an ecosystem that will allow the establishment, conveyance, and tracking of ownership and use rights throughout the global digital ecosystem, and will enable the matching of revenue streams to rights ownership in a fully transparent and scalable manner.