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title: 'Story Protocol Market Analysis '
tags: [blockchain, Crypto, storyprotcol, EVM, L1]

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title: 'Whitepaper Reading Club'
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# Whitepaper Reading Club: Story Protocol

:::spoiler Whitepaper Reading Club
We are veterans and enthusiasts, engineers and thinkers, united by the shared curiosity to dive deep into the mechanics powering the Web3 revolution.
[About](https://bit.ly/whitepaper_club_about)
[Previous Summaries](https://bit.ly/WPRC_Analysis)
:::
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![image](https://images.squarespace-cdn.com/content/v1/65be10b23014452b13c31611/af6739ef-4a80-4175-8d04-eb7f7a5e260f/IMG_2592.png?format=300w)

### Whitepaper Reading for August 2024
🗓️ [27 Aug 2024](https://everytimezone.com/s/71f686dc)
⏰ [7-9pm](https://everytimezone.com/s/71f686dc)
📜 [Story Protocol](https://www.storyprotocol.xyz/)
📍 [SGBuilders](https://maps.app.goo.gl/pWyrtG3pMFMciAQD8) (Chinatown, 22A Sago Street)

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## Source Material

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### ✍🏻 Sign-up: https://bit.ly/WPRC_Attendee  
### 🔬 Analysis: https://bit.ly/WPRC_Analysis
### 📜 Doc: https://docs.story.foundation/docs/what-is-story
### 👩🏻‍🏫 Facilitator: 
- Leads session
- Prompts Questions
- Introduces Project
### 💁🏻 Experts:
- Project Team
- Core Contributor
- Industry/Vertical Expert
- Regular User
</div>


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### Initial Thoughts
This will be my first time attending Whitepaper Reading Club, but I am a fan of the concept in general, having previously attending sessions with Professor Prateek Saxena's [Blockchain Fundamentals Technical Reading Group](https://blockchain-nus.github.io/).
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The project whitepaper in question for August will be Story Protocol, which is fortuitous considering my previous life in Film and TV, including stints at ESPN, Star Sports and Netflix, in various roles behind the edit bay, camera, on the director's chair and as technical support for encoding, subtitiling and dubbing facilities providing content delivery into Netflix as part of the Media Engineering Partnerships team. 
    
![Netflix Singapore](https://hackmd.io/_uploads/SyRUvHT5R.jpg)
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### Market Risk Analysis
I am writing this note because Whitepaper Reading Club is intended to be a group activity where a project's whitepaper is broken down and analysed with a fine tooth comb by a group of interested participants.
    
The Story Protocol Whitepaper has a number of interesting concepts such as
- [Programmable IP License](https://docs.storyprotocol.xyz/docs/programmable-ip-license)
- Modules for Licensing, Royalties and Disputes
- ERC-6551 Token Bound accounts for NFTs containing IP metadata
- [Script/Storyline and AI model specific metadata](https://docs.story.foundation/docs/ipa-metadata-standard)
    
All of these are interesting from the perspective of examining on-chain primatives that expand the design space within which innovative solutions can reimagine the way the motion picture industry runs, and I'm sure there will be lots of interesting technical discussions about that during the event.

There's just one problem. No one in the traditional industry is going to use it. Even content creators in web3 who create valuable IP, will want to protect their IP and control the commercial exploitation of it to benefit their community and token holders. But I don't want to derail interesting conversations about blockchain specific threads at the event, so this is something which covers the business case issues.
    
### Wet Blanket Time
This is not the first time blockchain projects have proffered a solution for the motion picture media industry. 
:::spoiler Why not call it media industry?
Media industry can possibly refer to the advertising media industry, which is not the specific kind of media Story Protcol is addressing.
:::

Singular DTV (2016): Intended to be an on-chain studio commissioning and producing content. Website with no links except email address, last twitter activity 2020
Vuulr (2017): Specific for content media buying marketplace. Dead website with maintainence notification, last twitter activity 2022

The motion picture media industry is a multi-sided market with many participants, and any project that tries to achieve product market fit without a clear understanding of the power dynamics in the market is doomed to repeat those mistakes.
    
#### Motion Picture Market Participants (approximately from most power to least)
* Exhibitors
    * Streaming Platforms
    * Network Television
    * Theatres
* Distributors
    * Studios
    * Rights Buyers
    * [Aggregators](https://nofilmschool.com/2016/02/whats-aggregator-and-why-do-you-need-one-release-your-film-online) 
* Producers
    * Executives (money and business people)
    * [Creatives](https://en.wikipedia.org/wiki/Above-the-line_(filmmaking)#:~:text=%22Above%2Dthe%2Dline%22%20refers%20to%20the%20list%20of,%2C%20director%2C%20and%20principal%20cast.) (above the line)
    * Talent
    * [Production Crew](https://en.wikipedia.org/wiki/Below-the-line_(filmmaking)) (below the line)
    
One element of Story Protocol is the claim to solve legal complexity by using the Programmable IP License. Legal complexity exists for a reason, and it's not a safe assumption to assume all parties want to reduce it.
    
Legal complexity exists as a defensive moat and offensive tool for the most powerful market participants in order to extract the most value from the less powerful. 
    
1. The various strikes by the screenwriters, actors guilds have shown that the most powerful and influential **Creatives** have to coordinate at almost global scale and stop work for months, in return for fair value working conditions from the **Studios**.
2. Netflix prefers to own its IP outright, so it can launch globally, all episodes at once as a binge. Even now, it tends do that on truely originated [Originals](https://www.whats-on-netflix.com/news/the-four-types-of-netflix-originals/), and still has to acquire licensed content in a piecemeal manner, because legacy geographic licensing is still an entrenched default across the industry.

These are 2 basic examples to show how important contracts are and how even parties with great power and influence are unable to unify the industry and bend it to their will on their preferred contracts and terms. There are many more [examples](https://dts.podtrac.com/redirect.mp3/chrt.fm/track/288D49/stitcher.simplecastaudio.com/3bb687b0-04af-4257-90f1-39eef4e631b6/episodes/256cd4e6-6950-4ca6-8aeb-c5d686d0fdf4/audio/128/default.mp3?aid=rss_feed&awCollectionId=3bb687b0-04af-4257-90f1-39eef4e631b6&awEpisodeId=256cd4e6-6950-4ca6-8aeb-c5d686d0fdf4&feed=BqbsxVfO) of every aspect of the industry. Legal clearances required to release a film or TV show are so complex, the entire **Aggregator** category above, exists primarily to do that (and the preparation of the final encoded content elements including subtitles, audio dubs and localisation content) on behalf of **Creatives** for a fee, before **Exhibitors** will even look at it. **Exhibitors** are happy for that layer of friction and cost to exist as a bar for **Creatives** to clear, it's their "Proof of Work" that these are serious submissions, most major **Studios** and **Exhibitors** will not engage with individual **Creatives**, they let **Aggregators** filter and screen on their behalf and perform the administration of music license clearances, residuals, releases, etc.
    
Why is a streaming platform, network, theatre chain or successful NFT IP brand going to sacrifice the maximal commercial exploitation rights of their Intellectual Property in order to conform to Story Protocol's PIL, rather than use the contracts crafted by their extremely well resourced and expensive legal teams and enshrined to maximized their benefit by decades of market power?
    
### Industry Incumbents don't gain power and give it away
[This thread by Sarah Jamie Lewis](https://x.com/SarahJamieLewis/status/1324211564979712001?t=bQ6-PC5eYdnIVkoo2FGkbA&s=19) is about why blockchain voting implementations have been problematic, but the overall point is very closely related to this.

You need the party that has the power to be serious about distributing it.

Bitcoin works because of the fair launch.
    
Ethereum works because despite many issues about the pre-sale and DAO hack, there is enough of a community animus around decentralisation that client diversity, Enshrined Proposer Builder Separation and Decentralised Sequencers continue to be prioritised.
    
For xxx industry to credibly decentralised, the dominant party of that industry has to be the main actor choosing to distribute that power. 
    
Even the [hypothetical example in Story Protocol's FAQ](https://docs.story.foundation/docs/faq) doesn't actually exist. It suggests that Azuki and Pudgy NFT holders can register their NFTs and others would be able to license the use of those IPs through Story. If you open the spoilers below, you'll see that based on the respective licensing terms, Azuki and Pudgy's lawyers may not agree.

:::spoiler [Azuki](https://www.azuki.com/en/license)
When you acquire an Azuki NFT, you own all personal property rights to the token underlying the Azuki NFT (e.g., the right to freely sell, transfer, or otherwise dispose of that Azuki NFT), but you do not own the associated artwork, brand, or other intellectual property associated with that Azuki NFT, except for the specific licensed rights set forth below.
    
:::

:::spoiler [Pudgy Penguins](https://pudgypenguins.com/ip-rights)
PRIMARY OWNER MAY NOT USE THE NAME “PUDGY PENGUIN(S)” OR ANY PUDGY PENGUIN NAME, LOGO OR TRADEMARK, THE NAME OF ANY PUDGY PENGUIN CHARACTERS (AS APPLICABLE), OR ANY ANIMATION, CHARACTERS, THEMES OR OTHER MATERIAL RELATED TO THE CREATOR’S OWN DIGITAL CONTENT; AND AGREES THAT THIS PURCHASE OF THE PUDGY PENGUINS NFT DOES NOT PROVIDE ANY RIGHTS, EXPRESS OR IMPLIED, IN (INCLUDING, WITHOUT LIMITATION, ANY COPYRIGHTS OR OTHER INTELLECTUAL PROPERTY RIGHTS IN OR TO) THE PUDGY PENGUINS ASSOCIATED WITH THE NFT OTHER THAN THE LIMITED LICENSES GRANTED IN SECTION 3 AND 4 ABOVE. THE PRIMARY OWNER’S RIGHTS AND INTEREST IN ITS PUDGY PENGUINS NFT, ITS ASSOCIATED PUDGY PENGUINS, ANY DERIVATIVE PUDGY PENGUINS, AND ANY ART PROVIDED BY THESE TERMS WILL IMMEDIATELY TERMINATE UPON ANY SUBSEQUENT SALE, TRANSFER, DISPOSSESSION, BURNING, OR OTHER RELINQUISHMENT OF THEIR PUDGY PENGUINS NFT.
ANY USE OF THE ART OTHER THAN AS EXPRESSLY AUTHORIZED HEREIN, WITHOUT THE PRIOR EXPLICIT WRITTEN PERMISSION OF THE CREATOR, IS STRICTLY PROHIBITED AND SHALL IMMEDIATELY TERMINATE THE RIGHT TO ACCESS AND USE THE PUDGY PENGUINS WEBSITE (AS DEFINED IN PUDGY PENGUINS TERMS OF SERVICE) AND ALL RIGHTS AND LICENSES GRANTED BY THESE TERMS. SUCH UNAUTHORIZED USE MAY ALSO VIOLATE APPLICABLE LAWS INCLUDING COPYRIGHT AND TRADEMARK LAWS AND APPLICABLE COMMUNICATIONS REGULATIONS AND STATUTES.
    
:::
    
Lets not forget the lesson of [SpiceDAO](https://www.garbageday.email/p/the-anime-dune-dao-learns-about-copyright)
    
### Tech VS Incumbents 
When has this power shifted in the past? When technology has introduced the concept of global marketplaces and dis-intermediated incumbents from siloed industries untouched by digital transformation.

Technology has been the differentiator in supplanting dominant incumbents in multiple industries
* Google > Advertising
* Uber > Taxis ([but took 15 years to finally make a profit, once](https://www.theverge.com/2024/2/8/24065999/uber-earnings-profitable-year-net-income))
* Airbnb > Vacation Rentals
* Flexport > Shipping
* Netflix (twice) > Video Rentals AND Motion Picture Media
* Spotify > Music

### Tech's strengths don't apply to crypto, but there's one exception
    
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#### Startups

* Move fast and break things
* Beg for forgiveness > ask for permission 
* Regulation only comes when tech companies have anti-trust levels of monopoly and are too big to fail
* Regulators slept on controlling Tech because they thought it was cat videos and a better fax machine
* Upon achieving dominance, extract value through all means possible, exploit privacy and charge users rent

    
#### Crypto
    
* Decentralized governance is slow AF
* In crypto, move fast & break things = get rugged/hacked & go jail
* Regulation targets the smaller companies, and before they have any meaningful traction
* Regulators are harsh on crypto because it's an alternative to Central Banks and currency
* Extractive or unfair terms in crypto, expect to be forked and vampire attacked
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### Where crypto beats Tech
* Community alignment matters more than the technology: Doge is a case in point
* Dominant players can't lock in users because forks and vampire attacks are legitimate risks
* Liquidity is the ultimate market force: people complain about fees but will suffer it for the best liquidity (Watch how people transact, not what they say)
    
### Create your own market, dominate that, then kill the king
* Airbnb didn't take on hotels, they created a new industry vertical
* Tiktok didn't fight Youtube, they recreated DJ remix culture for video
* Netflix didn't compete with Blockbuster, they mailed DVDs
* Spotify didn't sell CDs, they streamed music online 

Blockchain motion picture Platforms shouldn't be trying to disrupt the current industry, instead they should create a new niche that is web3 native that includes all the features that don't exist, and dominate that.
    
1. Currently Generative AI has serious issues creating consistent and replicable content. The process of fine-tuning models to rectify trash inputs is not going to yield decent results in the medium term. The opportunity is to create on-chain content data structures that can map to [Controlnets](https://www.reddit.com/r/StableDiffusion/comments/119o71b/a1111_controlnet_extension_explained_like_youre_5/), assign art styles, configure gravity and environmental physics, assign 2D NFT images to 3D skeletons, create facial anatomy maps that provide the best customisabilty, configure virtual camera settings, motion blur, and everything that makes the web3 visual arts community's dataset the best LoRA to create virtual content from. Don't use Maya, Blender, Aftereffects or Cinema4D to create your content. Build or help build the data structures current day Generative AI tools need to compete with those suites. Finetune this on web3 native projects, then the tools get better. That's when the other motion picture industries move on chain to use the best Generative AI video tools.
2. Story Protocol [has some data fields which address AI relationships](https://docs.story.foundation/docs/ipa-metadata-standard), this is a useful and foreward looking starting point, but it may be tool early to flesh out metadata standards with Generative AI being as nascent as it is, without having to continuously update the standard and update the backlogged entries to reflect new metadata fields which did not exist on first entry. Trying to follow Generative AI metadata is chasing the puck, defining the standard by providing the platform where the data structures and guardrails help Gen AI fulfill it's potential is skating to where the puck will be.