Interviewer: Jason Zhao, Co-founder of Story Protocol

Interview and article: Wendy, Foresight News

Since Satoshi Nakamoto wrote a front-page news story from The Times into the Bitcoin Genesis Block, the development of blockchain technology has been closely linked to the media. Since then, every bull market cycle in the crypto space has seen efforts to reshape the media industry with blockchain technology.

In the last cycle, with the popularity of NFT and other product types, this effort has attracted special attention. Traditional Hollywood leaders including NBC Universal and Disney have increased their investment in the metaverse, and Web3 native content projects have also been sought after by top venture capital institutions. Among them, Mirror.xyz is quite representative. This project highlights the summary of the core of the three Internet waves by Chris Dixon, managing partner of a16z Crypto Fund, that is, read, write, and own. He recently launched a new book with this title - "Read, Write, Own: Building the Next Generation of the Internet".

However, like all innovations, efforts to reshape the media industry with blockchain have encountered many challenges. In early May this year, Mirror.xyz officially announced its sale to competitor Paragraph, an on-chain content publishing platform backed by venture capital institutions such as Union Square, Coinbase and Binance Labs. The price of the transaction was not disclosed.

“Even though Mirror had to sell, they are still fulfilling their mission,” Story Protocol co-founder Jason Zhao told Foresight News. “We admire Mirror very much, and they were an early inspiration for what we’re doing at Story.”

As an innovative project led by the a16z crypto fund, Story Protocol attempts to "build on the strength of Mirror" and create a new native IP paradigm for the next generation of the Internet through "programmable IP" and reshape the global intellectual property (IP) market worth trillions of dollars.

Story Protocol has received a lot of attention since its inception in the bear market. So far, Story Protocol has received a total of more than 54 million US dollars in financing. How will it solve the "application" problem that is common in the content industry? How will it cope with the challenges brought by the explosive development of generative AI to the global IP market? In response to these questions, Jason Zhao, co-founder of Story Protocol, had the following conversation with Foresight News in Silicon Valley, USA.

Foresight News: On your website, the company vision statement states that "Story Protocol aims to become the native IP infrastructure of the internet." Can you further explain the meaning and connotation of "native IP infrastructure"?

Jason Zhao: Our core view is that whenever technology changes, there will be demand for new intellectual property (IP) and creative economy.

For example, the first intellectual property law, the first copyright law, was created after the printing press was modified. Before the printing press was modified, it was very easy to protect works because it was very expensive to create a new book, and you had to copy it by hand. But with the printing press, you could copy infinitely at very low cost, so creators needed to be allowed to protect their works from being copied. If you didn't do that, there would be no incentive to create.

This has worked for the last few hundred years, but now we are entering a new world. First, the internet has given everyone the opportunity for global distribution. So it's very easy to spread content to millions of people on TikTok, Reddit, Twitter. Second, recently generative AI has made everyone a creator. You can create Hollywood-style content in minutes, so now everyone can create super high-quality content through AI and reach the whole world. This is fundamentally different from the world of the printing press.

But our intellectual property has not evolved, it's still basically the same law that it was hundreds of years ago. So we think there needs to be something done using blockchain infrastructure that can track ownership, align incentives, align licensing and royalties at the speed and scale of the internet, which paper laws can't do right now. That's what we mean by infrastructure.

Foresight News: We will talk more about generative AI later. But for now, let's focus on the relationship between IP and blockchain. In terms of IP, there have been many related explorations since the birth of blockchain. In the 2016-17 cycle, there were many projects related to news libraries. In the 2021-22 cycle, there were also representative projects such as Mirror.xyz, but these did not develop well. Most of the news-related projects were shut down. Mirror was recently sold to Paragraph. A common problem they faced was adoption. After all, more than 99% of copyright-related scenarios are now conducted off-chain. Who do you think will pay for your products/services? How to break through the stock limit of the crypto market? How to bridge between Web2 and Web3?

Jason Zhao: You're right, I think a lot of groundbreaking projects do struggle with pioneering new business models in publishing. That being said, we admire Mirror a lot, and they were an early inspiration for what we're doing at Story. I know Dennis, the founder of Mirror (Denis Nazarov), and he's a great guy. Mirror is still operating, even though they had to sell. In my opinion, they're still achieving their mission. So, Mirror was an important and necessary early step. What Story wants to do is build on that.

Many early projects in the content space were trying to put media on the chain. (The question they were thinking about was) Can we put a piece of text on the chain? Can we put a picture on the chain? Can we put all of these things on the chain? But they didn't put the "rights" on the chain.

Intellectual property is more than just the media content itself. It's not just one image, it's that image and all the rights associated with it, and all the rules for how other people can use it. That's intellectual property. So we think it's really important not just to put media files on the blockchain, but to have every piece of content on the Internet have software-based rules that dictate how other people can license, recreate, and extend that intellectual property.

So you can have media content on-chain, and you can have rights on-chain. Any creator, application, or developer can read those rights. If they agree to those rights, they can immediately monetize and develop that IP. Right now, if I like an IP on the internet and I don't know how to get the rights to use it, I might need to email someone and pay a lot of money to hire a lawyer. With Story, not only can you consume content on-chain, but you can immediately understand how to use that content, how to reorganize it, how to combine it with other content. So, we turn media into Lego blocks in the IP world (which can be reorganized and recreated at will).

Mirror took the first step, and we are extending it. We are putting rights on the blockchain and making intellectual property programmable. This is our vision and what makes us different.

The second part of your question is about how we can build a bridge between Web2 and Web3, which is a great idea. First of all, I would say that we work with many Web2 partners. One of them is a partner called Magma, which has 2.5 million users, all of whom are Web2 users, and they don't have any blockchain channels.

We just built an API that allows us to abstract away all the wallets and gas. So our belief is that we are not the programmable intellectual property layer for blockchains, we are the programmable intellectual property layer for the internet.

It’s true that 99% of the quality content is in Web2 right now. But when YouTube first started, 99% of the quality content was offline. Now, 100% of the quality content is online, and even traditional Hollywood studios are releasing content on YouTube and Netflix. Therefore, any new content paradigm must create a new class of creators. You can’t just go after the existing class, because people like Spielberg and MrBeast are already served by the current system and have no incentive to move to something new.

But there are thousands of creators who want to monetize their intellectual property, and currently they don't have a way to do that. They're going to create brand new, crypto-native, Story-native IP, and we think that's going to be maybe 1% this year, maybe 2% next year. But in another 5 to 10 years, this will become the standard way to create IP. This is community-driven, open source, on-chain IP creation.

Foresight News: You mentioned YouTube. In Web2, many platforms like YouTube can achieve mutual benefit and win-win with content creators. The relationship between content creators and audiences is also very delicate, because sometimes some content is spread by giving up IP protection to a certain extent. So my question is, who do you think will promote the adoption and application of on-chain IP or on-chain IP rights pursuit?

Jason Zhao: Giving up some rights is indeed beneficial. The reason why Hollywood is struggling now is that they operate IP in a closed garden, in an isolated island, no one can contribute to these IPs, and no one can benefit from them. Therefore, some companies need to spend a lot of money on advertising to promote their IPs. IPs now have no network effect. The more IPs you have, the more you need to spend money on marketing to get your IP noticed.

This is a big problem, and it will only get worse when generative AI enables everyone to create content. So how do you stand out, how do you attract attention? You need to turn your IP into a network. And to do that, you need to get other people in the community involved.

The whole idea of ​​Story is, can we allow others to create and profit based on your IP - of course, giving back to the original creator - so as to build an IP graph and give IP the same network effect as Facebook.

Right now, three of the top 100 most trafficked sites are fan fiction sites. Millions of people are spending millions of hours a year writing fan fiction that few read and that makes no money. And when they get attention, the original authors ask them to stop.

There are so many people who live in the world of second creation but have no say. I think these people will use Story, they will expand these IPs, and they will ask their favorite creators to create on Story because it is good for the creators and they can use the creativity that is currently untapped. For the fans themselves, they also have the opportunity to contribute to the works they love and possibly get income for it.

Foresight News: So, what is your development strategy in promoting applications? You have a lot of consultants from Hollywood, but at the same time, there are rumors that you will start with cooperation with IP giants in Web3.

Jason Zhao: We are fortunate to have a very strong advisory group from Hollywood, which definitely sets us apart from many other projects in the crypto space. At the same time, we are also very pragmatic. We are building a crypto company, and we sincerely believe that organic, bottom-up IP development will unlock some kind of superpower.

I think a lot of crypto-native creators, crypto-native IP, crypto-native projects will be the first to really crack the code because they will be the ones who have no voice in the existing system but have a voice on Story and be able to develop huge intellectual property.

I think in 10 years, the next Avengers will be on Story, and I think there will be no distinction between Web2 and Web3. So for us, it doesn't necessarily have to be Web2. We have to be Web3. It's more of a distinction that people make for technical reasons. But in terms of our strategy, we look for people who understand our vision and are being overlooked by the current system.

We think we want to empower them. A lot of them are coming from Web2. Not everything is going well in Hollywood right now, there are a lot of issues there. So we have a lot of Hollywood creators who are very excited about our technology. We don't reject them because they are not crypto natives, we embrace them.

So it's really not about Web2 or Web3. It's more about whether you understand this new paradigm of creation and whether you're willing to work with us. That's our strategy. So a lot of them are crypto natives. But I think there are a lot of people on Web2 who understand the same principles. Like I said, we try to keep people who don't understand blockchain in a crypto native way of thinking about intellectual property.

Foresight News: Can you reveal some details about the big IPs you are collaborating with?

Jason Zhao: In terms of big IP, we can't reveal too much. But I can say that we are in dialogue with many top NFT projects, and at the same time, we are also in dialogue with some of the most famous creators in Hollywood. I can say that we have both traditional creators and crypto-native IPs that we work closely with.

Foresight News: You mentioned your collaboration with many NFT projects. The overall NFT market has been relatively quiet in this cycle. Do you think projects like Story Protocol can help the NFT market become active again?

Jason Zhao：Of course. The original intention of NFT is to give IP to the community and create community IP. The problem is, as I mentioned before, you don't really put the intellectual property on the chain, you just put the media files on the chain. But what if you really want to monetize Azuki, Pudgy, or any other project you own? For example, I want to create a comic book with my Azuki and your Pudgy. In the existing Web3 world, I have to read and understand my Azuki license first, and then read and understand your Pudgy license. Then I have to find a way to contact you, communicate with you, and ask you if I can use your IP. Then we need to reach an agreement on how the income from this comic will be divided, whether it is 50-50 or 30-70. Next, we have to find a lawyer to draft a legal contract signed by both parties so that we can feel at ease. Finally, someone needs to create the comic and trust that the other party will pay according to the legal contract.

So basically, when you try to do anything with on-chain IP, you have to use the traditional legal system. It's like you want to exchange tokens on Uniswap, but you have to call your bank first, then find another person on the internet who also wants to trade with you, and they also have to call their bank before you can trade. At that point, you might as well just trade in real life, or off-chain.

So I think there's a lot of friction in using IP right now because it's not programmable. It's just a static pointer to a media file. And what we can do for NFT projects is help them achieve a very compelling original intention, which is to put all intellectual property on the blockchain. So for these NFT projects, we're essentially helping them and their holders to be able to monetize and use intellectual property very easily with the click of a button.

Foresight News: Does this mean that smart contracts need to be rewritten?

Jason Zhao：No. The infrastructure we built is backward compatible with ERC 721. They just need to add an account to the NFT that is bound to the Story token. Basically, any NFT that complies with the ERC 721 standard, whether it is an existing project or a new project, we can work with it.

Foresight News: In terms of IP, there has been a widely discussed trend before, which is CC0, which is a slightly different direction.

Jason Zhao: CC0 is really cool, and we can support CC0 on Story.

What Story does is give creators the option to set their terms, and we are a neutral protocol. Some creators may prefer CC0, and some may prefer to protect their IP. We are creating a tool that allows others to decide how to enforce their rights. CC0 is just one option on the spectrum, and the other end of the spectrum is like Disney today, which is very closed. Over time, the market will make the decision.

Foresight News: Regarding the generative AI you mentioned repeatedly. It is indeed developing very fast and will definitely subvert the current IP market. In this very revolutionary or subversive media ecology stage, how does Story Protocol position itself?

Jason Zhao: Generative AI is changing the entire creative field. This is something we think about very deeply.

Most of the teams that come to us to work with us and build on top of us are AI projects because this is a big problem in the AI ​​space. You see, the New York Times is suing ChatGPT because it used their data without any compensation. I think if this continues, creators will lose the incentive to create.

If people don't pay for creators' IP, these models will no longer have any data to train on. So, we think this is a big problem that needs to be solved, not only for AI, but also for creators.

The way we're solving this problem is that we're building a way for creators to monetize their IP as training data in AI. So if you're a creator and you have a unique art style, or if you're a musician and you have your voice, you can store it on Story Protocol. And then you can set the terms for how the AI ​​trains your voice. For example, I can say that anyone can use my voice in AI training, but the prerequisite is that you have to give me 50% of the royalties.

These rules can be automatically read by any software, any AI model, any individual, and Story can track its use. So, we are building this AI monetization layer for creators to make AI sustainable. This is how we think about AI. This is also one of the core visions of the company.

Foresight News: Why do you think blockchain is the best way to solve these problems? Several of your co-founders have made achievements in IP and content-related fields in the Web2 field, and you have also worked at OpenAI? What pushed you to enter Web3 and seek to solve the problems you mentioned in a Web3 way?

Jason Zhao: I think blockchain is the best strategy (to solve the current IP problem). First, it is global. Second, it is trustless.

We are building an intellectual property (IP) system where people put their valuable creative works on top of it. Imagine if we could shut down the whole system like Twitter shut down their API in the 2010s. A lot of developers were using Twitter's API at the time to build different types of front ends, some with creative use cases. Twitter realized they couldn't serve ads to those applications, so they shut down the whole API. A lot of businesses that trusted Twitter just disappeared. So if we want to build a global IP layer for the internet, it has to be owned by the internet. It can't be owned by one company. Even though we are a company that is building this layer, it is a public good.

So blockchain is the only way.

As for how I got into crypto, I worked at DeepMind (Google's AI lab) for two years. My work there was mainly about commercialization, that is, taking the research results of the lab and finding ways to build new products.

I got into crypto for two reasons. One was for research. I found that in crypto, the pipeline from research to production was much faster. Some protocol would appear about two months after the white paper was released. And then all of a sudden, people started building on top of the protocol. It was open source. People tried to fork it. People tried to vampire it. They tried to hack it. It was like an organic open playground, and evolution and iteration happened very quickly. It was very exciting. Whereas in AI, there were probably only five or ten large companies in the world that had enough data and computing power to do research. So it was very slow and very closed.

The second reason is that I studied philosophy in college, specifically political philosophy. In crypto, the original technology started for a very philosophical reason, which was very libertarian, to free money from the government. I thought that was very interesting. When I was getting more involved in crypto at the time, there was also a lot of discussion about DAOs and governance experiments that were almost socialist or communist because it was like everyone should own the network. It was almost like a cooperative, and everyone who used the network should be paid, and they shouldn't just be users, they should be owners. Of course, there's also a very capitalist element to crypto because of all the transactions.

So I think it's interesting that such diverse political philosophies can flourish on a technology. Like a political mirror, no matter what you believe, you feel like blockchain has something that can enable that vision, and I think that's really exciting.

But at the same time, I looked around and realized that there was no non-financial infrastructure in the crypto space, no way to build a creative ecosystem. For most people who are not in DeFi, or Degen, they don't think about Robinhood or trading stocks or finance. They think about culture, they think about places like TikTok and Netflix where people spend their time. So, I want to build technology that allows people to create a new parallel creative ecosystem, not just a new creative financial ecosystem, to serve the mainstream. That's why we got into blockchain.

Foresight News: Information on your official website shows that you are still recruiting a DeFi director. Why?

Jason Zhao：Yes, we are hiring a DeFi director. I think the most interesting part of the crypto space so far is the ability to provide a global immutable decentralized financial ecosystem.

When it comes to building an ecosystem on Story, we want to help creators monetize, and we want to create a new kind of creative economics. This is not possible without the right financial infrastructure built on Story. So we think there's room for all of the traditional financial channels that have been built in the crypto space, but also completely new ways to interact with IP as an asset that can be plugged into DeFi. We call it IPFi. For example, IP is a valuable real-world asset that may have royalty streams that can be used as collateral in DeFi protocols, or the intellectual property is tokenized and securitized. I think these are all very interesting innovations, and we want to explore how intellectual property can be further monetized and further circulated through existing DeFi protocols, but also build more exciting new DeFi protocols or IPFi protocols that can use Story derivatives to provide creators with new ways to monetize and fans with new ways to experience IP.

So, that's definitely our focus. The head of DeFi's job is to build this financial ecosystem on Story.

Foresight News: Do you have a timeline for the mainnet launch and airdrop?

Jason Zhao：We haven't announced anything about the mainnet yet, and we don't have any plans for airdrops at the moment. Right now, we're working hard to launch more beta versions. We're racing against time to build something that people can use as soon as possible. But it's still in the beta stage.

Foresight News: Can you tell us about the current development of the team? The official website shows that you currently have 12 open positions.

Jason Zhao: At Story, we build a lot of technology from the ground up, while building an ecosystem that allows other entrepreneurs to build real businesses on top of Story. So in terms of technology, marketing, ecosystem, and design, we are doing a lot of work at the same time.

Of course, we need a relatively strong team to achieve this goal.

We're about 25 people at the moment, and we're probably going to add another five or 10 this year. We try to keep the team relatively lean. Our hiring philosophy is that we only hire the top 0.1%. That means sometimes it can be hard to hire because there's definitely not that many people who fall into that category. But we'd rather have a position open and have people on the team do more work and take on extra work until we find the perfect person. So our hiring is a very rigorous process, and we're excited to grow the team. But at the same time, our philosophy has always been that everyone has a huge responsibility and accountability, and there are no so-called redundant roles. Every role is very important.

In terms of our priorities, there are a few different areas:

The first is building out the tech stack. The protocol is currently in beta and there's a lot of audit work that needs to be done. We're incorporating a lot of feedback from over 30 partners that are integrating with the protocol. We have hundreds of developers giving us feedback every week. A lot of that needs to be developed. We're also building out some of the infrastructure deeper into supporting the protocol. We'll have more announcements on that front soon. But at this level, we're doing a lot of work to enhance the protocol. So the technical work is definitely a huge priority. You may have seen this in our hiring.

There are two other things we have going forward, one is building a very strong developer community. So that anybody who wants to build on Story can launch an app on Story in minutes. We're building a lot of tooling, not only documentation, but SDKs, super simple quick-start apps. People can just copy the code and get started. On the ecosystem side, I'm doing a lot of work there. And finally, we're doing a lot of product work because we think in any ecosystem, you need block explorers. You need a way for people to browse IP in a very friendly way, for creators to register IP. So we're building some public product infrastructure on the product side to support creators as well as other builders in the ecosystem.

You can see that this is a multi-dimensional problem space. We have multiple priorities, but the technology, ecosystem, and product aspects are the three core priorities of the company.