The Attribution Layer of the Creator Economy
How Pex empowers creators to win the whack-a-mole battle against content pirating through creative attribution and fair remuneration
Today’s Innovation Armory is brought to you by Elenas:
Elenas is the leading social commerce platform in Latin America, pioneering the model of distributed creator, social-first selling in the region. Elenas works with independent micro-influencers across Latam, providing them with goods from wholesalers and manufacturers to sell through their social channels (including WhatsApp and Facebook), along with the digital tools to manage their business. Elenas' model is a win-win situation for all commerce stakeholders: manufacturers, sellers and consumers. Its model helps meaningfully expand the reach of manufacturers across the continent by tapping into the trusted and genuine networks of local creators, all while empowering micro-entrepreneurs to achieve upward mobility and delivering group-discounted prices to end consumers. The Elenas platform is where social commerce meets the passion economy. Elenas has 50k+ entrepreneurs across Colombia and Mexico already selling on its platform and is growing its gross merchandise volume at an astonishing triple digit rate year-over-year. Check out The Manifesto of Social Commerce for more on why Elenas is well positioned to become the social commerce powerhouse across all of LatAm.
Today’s piece discusses regulatory evolutions in digital creator rights in the EU, Australia and the US and the future of digital creator rights holder management. I interview Amadea Choplin, COO of Pex, a provider of licensing infrastructure for creators, publishers and studios to attribute and license their content across the web in real-time. Read on for more about:
Detail on recent EU, Australian and US regulations related to creator rights
How the “VISA” layer of content attribution will help create trust online across digital media stakeholders
Further opportunities in content pricing, crypto bridges and royalty audits related to creator rights holder infrastructure
The opportunity to leverage creator content infrastructure to aid in the detection of illicit content and deepfakes
The potential convergence of data protection and copyright law
The role of centralized content attribution in a blockchain-based web 3.0 infrastructure
Copyright implications and considerations for composable NFTs
This is a long post so if your email gets clipped at the bottom make sure to click unclip / visit The Innovation Armory to check out the full read.
If you like this piece, I’d appreciate if you shared with the link below. You can also follow me on Twitter @SamNatbony for more insights:
If you’re interested in more thought pieces, you can also subscribe below for future updates from The Innovation Armory:
Since inception, many of the world’s largest technology platforms have gotten away with leveraging user-generated content with free access to news to drive engagement to boost advertising revenue without compensating news outlets, studios or creators. For years, traditional news companies have lobbied Washington to gain a greater share of engagement profits while tech platforms have benefitted and continued to take more share of the value pie. The publisher argument goes as such:
Platforms drive high engagement by leveraging news links to quality content from news outlets and other publishers
This engagement translates into higher advertising revenue and more attention to the platforms rather than the publishers
Yet the publisher content is critical to maintaining this engagement
Therefore, publishers deserve a share of the economics generated from this engagement
Over the past couple of years, there have been a flurry of regulations helping usher in a more equitable system for news outlets and creators of content. Understandingly, traditional social media and tech platforms have lobbied against these sorts of regulations because it imposes previously unrealized content costs on their business models. While many of these platforms acknowledge publicly that regulations ought change for PR purposes, here’s how they are actually reacting internally:
The most salient recent regulations in regards to content and copyright law related to these platforms and empowering creators include the following:
Australia’s News Media and Digital Platforms Mandatory Bargaining Code (NMDPMBC) - In February 2021, Australia passed legislation that requires technology platforms to pay local news and media outlets for content that is linked to on their newsfeeds, platforms and in-app
The US’ CASE Act - In early 2021, the US passed the CASE Act, providing a small claims procedure for administering smaller copyright claims, making it accessible for smaller creators to lobby complaints and have them adjudicated on efficiently without undergoing undue or unnecessary costly or time-consuming legal processes
The EU Copyright Directive - one of the most sweeping regulations in internet history to provide remuneration for creators, rightsholders and journalists when their work is used online, particularly in online platforms. In particular, Article 17 of the directive requires platforms to proactively obtain consent and authorization from content creators, news agencies and publishers to have the content uploaded to their website. Previously, rightsholders could retroactively request their content be taken down, but now these platforms need to proactively help to prevent publishing of content without consent. This active consent and authorization from publishers and creators will likely require payment and compensation to the creators due to the inherent value platforms gain from publishing. While there is still a long way to go towards implementing this directive across the continent, it certainly has the potential to fundamentally alter the historical relationship between creators and traditional platform and usher in a renaissance of creators (even those at a micro-scale) earning incomes off of their platform presence.
The trends towards more creator-protective regulations came to a head earlier this year when Facebook actually blocked access to all news for users in Australia following the passing of Australia’s NMDPMBC. Now that’s a tongue twister of an acronym!!
In what was touted as a successful test case of these regulations, Facebook and Google struck deals with News Corp to license its Australian news content for their platforms. While the idea of a media behemoth like Rupert Murdoch benefiting from these payments doesn’t excite me that much, the broader precedent this sets for digital creative authorship is pretty tremendous.
This initial test case was limited in scope across three core vectors: geography (Australia), rightsholder (news outlets) and medium (written news). However, I believe this and Article 17 of the EU Copyright Directive are sowing the seeds for more sweeping change across the world, across media channels and down the hierarchy of larger publishers all the way down to mom & pop / solo creators:
There will be a lot of infrastructure required to build an internet where this sort of rightsholder attribution, payment and remuneration is possible not only for the largest publishers / studios but also for your average creator. To learn more about these infrastructure requirements, progress made to-date and the extent of the opportunity, I caught up with Amadea Choplin, COO of Pex. Pex is the leading provider of licensing infrastructure for the internet that helps identify, attribute and license content in real-time before it is published with the mission of empowering creators with content control and fair compensation. Pex recently raised $57 million in its latest funding round led by Tencent. Given the robustness of their feature set, I wanted to provide a quick summary of how their tech stack works before jumping into my interview with Amadea.
Pex’s vision is to build out a “VISA layer” of media content distribution on the internet in the same way that VISA standardized payments by building a network that efficiently connects processors, acquirers, merchants, issuing banks and merchant banks. This has the potential to create newfound trust and a more equitable distribution of shared economic value across key stakeholders in the media ecosystem including creators, rights holders, users and platforms.
Please enjoy a snapshot of my conversation below with Amadea!
My Conversation with Amadea Choplin (COO of Pex)
SN: Given developments earlier this year in Australia with Google / Facebook forcing platforms to pay for news / creator content, how do you think that will impact the way content is tracked and attributed online?
AC: This relates to a similar problem that Europe is trying to solve with the copyright directive, which includes news as well. The same situation as Australia also happened in Europe and the platforms ended up agreeing to licensing the news content in Europe as well. It is critical to have regulation catch up with what is feasible from these larger platforms in terms of licensing the content from which they benefit. A huge portion of Facebook’s audience goes on the platform for curation of news and it is a huge value to them. Facebook was willing to say they would leave Australia if need be given the size of the market. However, there is a broader trend towards licensing they can’t ignore elsewhere in the world and they won’t be able to leave every country over the long-term that asks for these payments to happen. I think we will be seeing these policies normalize over the next few years in every country.
SN: From a development perspective, given the fast changing nature of regulations in the space, how do you think about sequencing / prioritization of new features that you believe are regulatory likelihoods but where timing is an unknown factor? How do you weigh potential for first mover advantage vs. the potential to over-build too fast?
AC: First, what the copyright directive asks for in Europe is very multi-faceted. They ask for licensing but that also means you have to be able to instantly license content, which involves a) recognition of content, b) attribution through metadata via a comprehensive registry, c) accurate royalty payments across the world and d) alternative dispute resolution (ADR) processes for mistakes. The ADR processes are going to be one of the most complex areas in implementing the directive in every country, across languages and different legal paradigms in the event there are disputes over ownership. There is also a key recording issue. Platforms will need to report accurately on the use of copyrighted work to rightsholders and creators publishing through their platforms. This infrastructure does not exist right now at all. Therefore, the directive is already multi-layered and we believe all of these will be important. There is also a layer of trusted safety that is hotly contested at the moment, e.g. how do we prevent child pornography, terrorism or other illegal content from going up on platforms through this infrastructure? There is also a broader issue that goes way beyond copyright but could be easily solvable through the same tools.
SN: Could you talk about the size and breadth of the network of your attribution engine and how you think about that engine as a source of competitive advantage?
AC: We’ve indexed more than tens of millions of media objects for purposes of copyright attribution. For us, that catalogue is actually very small compared to the tens of billions of pieces of content we aggregated from the platforms with our DRM product. We’ve had a huge database from the very beginning. We’ve dealt with a huge quantity of content from the get-go and this has always been in our DNA.
SN: Could you talk about the origins of the Company and the massive task of indexing and making value out of these datasets? I saw in my research that it originated as a “Shazaam for Video”, what drove the pivot?
AC: Initially the idea was to create a Shazaam for video so you could point your camera at a screen and identify a piece of content. Nobody wanted to invest in solving that problem and candidly consumers probably didn’t really need it. What film studios said from the get-go was that they have a related problem for content that pops up online. It is a game of whack-a-mole of each time trying to spot and take down improper uses of content only to have it resurface on another part of the web. That insight led the company to pivot first to help rightsholders find their content on every single UGC platform out there. We very quickly worked with the whole music industry, film industry and viral video companies to be able to instantly find every iteration of their video and music as it was being uploaded online. Then, we always had the vision of implementing at the source with platforms, but there was regulation in the way. When the regulation changed, so did their business model and willingness to integrate with Pex.
SN: Given the rapid pace of innovation in online media content, how are you thinking about other forms of new emerging media outside of traditional video / photo / text where there could be similar copyright issues like scarce digital fashion assets or video gaming?
AC: The copyright issues in gaming are actually quite different than other forms of media. There are questions around who owns what content in the gaming sphere. Our intent is to help rightsholders with what they struggle with: for them, it’s more an issue of understanding the scale of their impact and regaining control over tracking where their works might be and what users are doing with it. We are watching the NFT space very closely and I think there will be a lot of interesting work there. There have already been theft issues with NFTs. Wherever there is money, there are going to be copyright issues. It is great that creators are building in multiple different ways and it is our goal to support them in whatever way they choose to distribute their content by providing control over what happens to their art.
SN: How did you structure the platform to engage with different sizes of stakeholders so that it is not only accessible to larger film / music studios but also accessible and scalable for individual creators?
AC: We’ve built the platform with everyone in mind: including the smallest rightsholder who might have one viral video they want to protect and the music majors with large catalogues who have very different problems. Every type of media we are solving for has different problems. There is a lot of standardization around the delivery of metadata for music that doesn't necessarily exist in other media and for other industries. Our reason for being is to allow creators to be able to make money off of their passions. The idea that distribution “gives you exposure” is not good enough, we want to allow creators to make a living off of their creations regardless of how large their creative pursuits are.
SN: Given all of the stakeholders you serve: creators, regulators, platforms, studios that historically had been at odds with one another with regards to economics / value distribution, how do you monetize and earn income across this stakeholder base?
AC: The business model is built on top of the successful licensing of content to platforms. If rightsholders choose to block their content from being served anywhere, we don’t earn money and candidly everyone loses. We don’t view that as the intent of the platform and that is not the intent for most of the rights holders. The general wish is to make better money and have artists be compensated better. We are agnostic in terms of the different ways in which a platform creates monetization options. We can work with subscription, advertising and a variety of business models to create a solution that is tailored to their needs.
Other Rightsholder Infrastructure Innovation
My conversation with Amadea got me thinking about other infrastructure and tools that might be important in this emerging world of rightsholder and creator focused internet. While there is a lot of infrastructure that needs to be built out, a couple of ideas I had were around content pricing, crypto bridges and royalty audits to name a few:
Public Safety and Data Consent
The potential to leverage this rightsholder layer for public safety is immense. Just over the past couple of weeks, Apple announced it will be launching technologies that a) notify parents of potential sexually explicit photos sent or received by their children in imessage and b) will begin to scan iCloud photos for instances of sexual abuse related to children. The technology will work by comparing potentially illicit photos surfaced vs. a government database of sexually explicit media to identify potential instances of child pornography. While there is a lot of debate to be had in the privacy safeguards that need to be in place to prevent this system from being misused, this illustrates that large media databases combined with the large network effects of platforms can be very effective mediums for halting illicit activity. With its database, Pex has the ability to compare photos to illicitly tagged content a) across social media platforms and b) across device types. Besides public safety, this attribution layer also has the potential to help in tagging deep fakes and fake news content on platforms by comparing live social media content to known instances of deep fakes. To learn more about this problem, check out The Dark Side of Innovation. Remember that picture of the camera crew running away from bears towards the beginning of this piece? I realized after writing this piece that was actually a fake image.
Interestingly, while there are already substantial advances being made with regards to privacy laws like GDPR (e.g. Amazon’s recent $886 million fine from violating GDPR), I think creator rightsholder protection laws have interesting indirect implications for data privacy. IP rightsholder policies could be another avenue for digital data rights advocates to crack down on platform data abuses. Take the following two examples of online art / creations:
A viral tweet sold as an NFT
A clip of video game play turned into a dynamic and virtual art asset
As the concept of what constitutes digital art expands further, these two would likely be included in copyright and rightsholder protection laws. However, both of these creations are reducible to data inputs that might traditionally be used by platforms to glean consumer insights for purposes of targeting, advertising or extracting value out of consumers:
The tweet contains keywords that platforms can use to understand intent and certain consumer preferences
The video game play can be disaggregated into a series of choices made by the gamer which can speak to their customer preferences and online tendencies
If these tweets and video game clips are theoretically protected under a new paradigm of copyright law that values NFTs and scare digital assets, then should their inputs (the data discussed above) also be covered by copyright law? I think it depends on how critical the data is to the creation and probably will be adjudicated on a case-by-case basis. In cases where the answer is yes, then abuse of customer data would not only be illegal under GDPR and similar paradigms but also based on expanding scope of copyright law. Platforms that leverage data from a copyrighted piece of content would be violating copyright law. My broader point is that as platforms violate new paradigms around creator copyrights, these violations can also be couched as privacy violations.
More saliently, the rightsholder consent infrastructure that Pex is building out could theoretically be extrapolated to broader data rights consent management. If creators already can choose how their art, videos and creations are used on platforms, Pex and other consent infrastructure players can expand on the integrations with platforms to help facilitate more detailed data consent management for users. Of course, platforms would only allow this if there is further regulatory catalyst in the US to force their hands at data consent management. If rightsholder regulation happens sooner though, the consent infrastructure players within creative rights will be well positioned to leverage their infrastructure for data and other consent areas as regulations further evolve.
Centralized Creative Attribution vs. Decentralized Blockchain Attribution
Pex’s attribution engine is semi-centralized. It is distributed / fragmented at asset contribution (e.g. any individual can register a creative asset in a distributed fashion with their engine). However, content identification and royalty payments are done by comparing vs. a centralized creative database. This sits between blockchain protocols and web 2.0 platforms on the centralization spectrum for media creation / attribution:
This got me thinking about the interplay between Pex’s attribution engine vs. evolving blockchain-based systems for attributing ownership and authorship of digital assets. In a blockchain-based system, ownership and authorship of the digital asset can be verified through prior token public metadata which is theoretically secure, verified and publicly available. Moreover, royalty payments could theoretically be done through smart contracts that transfer with the creative asset as that asset is sold in the future. If you believe in a world where internet 3.0 consists largely of decentralized protocols, there will still be a need for a semi-centralized creative attribution layer:
Even if a large portion of new digital assets are registered on the blockchain, we have a massive amount of existing creative IP from the web 2.0 and pre-internet eras. Pex has a large advantage in terms of tracking creative asset usage for existing creative IP that might not originate as a new creation on the blockchain. Retroactively assigning ownership for those assets on the blockchain would be complex and they of course can’t be ignored
For now and into the foreseeable future, there are and will likely remain to be multiple blockchain protocols. There exists potential value in there being a robust database that can adjudicate ownership disputes across different protocols
At the end of the day, for creative rights to have value, they need to be tied back effectively to copyright law and be enforceable under a valid copyright law. It is substantially less complex for regulators to work with a centralized attribution engine rather than a series of distributed protocols
There are tons of creators that are not crypto native and the current distribution platforms of today are not crypto native. While we may very well live in a world in the future where distribution platforms are crypto native, the bulk of creative activity will not shift there until a) the best platform distribution is there and b) crypto-based creation is more accessible to the average creator
Most saliently, NFTs can only assign ownership and authorship of a project based on when that project originated in the blockchain. However, if that specific project improperly uses content from another project as inspiration that is largely similar, but entered into the blockchain as new, it can be difficult to identify that it is a copycat. Let’s say someone takes a picture of the Mona Lisa and on blockchain A, no picture of the Mona Lisa has ever been catalogued as a creation and this person decides to mint the picture as an NFT. Theoretically, this is the first time a scarce digital asset related to the Mona Lisa is uploaded to blockchain A, but it still violates copyright law in the physical world at the content level.
This is not the best example because the Mona Lisa is such a well known and iconic cultural symbol. But for lesser known existing projects, there is risk they can be minted as a new NFT in a slightly different context or in a different blockchain. Take for example, the popular “Weird Whales” NFT project where 3,350 pixelated whales were sold and then flipped for for profit at $6,000 per whale. Another project started four years early called “Pixel Whales” was subsequently discovered as the inspiration for this project and then the value of the NFT went to nearly zero for acquirers who worried about intellectual property theft. Furthermore, on OpenSea, moderators recently had to take down a “Cryptophunk” NFT project that was too similar to the more popular “Cryptopunk” NFT project for violating copyright law.
Blockchain verification and attribution does not tell buyers of NFTs whether a piece is necessarily a copy of an existing copyrighted work. Pex has a very important role to play in verifying that a new NFT at creation does not merely duplicate another creation or violate existing offline copyright law. This verification layer at provenance will help create trust to enable subsequent future trades of scarce digital assets.
Composable Creations
The cryptopunk vs. cryptophunk example raises an interesting question: as more art and digital creation becomes composable (built on top of one another), at what point is a new creation considered different enough to be its own rare digital asset vs. a copycat? Is the below different enough from the Mona Lisa to be minted as its own NFT?
Especially with digital art, it already is and will become more common for creations to stack on top of another. A gaming NFT will likely include as inputs scarce digital items, music from top artists, fan background artwork and gameplay IP from studios (all independently valid creations in their own right). As more art becomes composable in this way, it will be increasingly important for creators to be able to track how their existing IP is used, repurposed and monetized. Platforms like Pex have an important role to play in tracking how existing IP is incorporated into digital art, attributed to original creators and monetized. While blockchain-based smart contracts could be an efficient avenue of distributing royalty payments to authors of creative inputs for digital art assets, the actual attribution of those inputs could benefit by leveraging a semi-centralized rightsholder management system like Pex that bridges the digital world with offline copyright law. In effect, in the context of composable NFTs and digital art, Pex becomes the attribution layer for inputs that can plug into a blockchain-based smart contract system for creator payment remittance. I wouldn’t be surprised if Pex built out these payment pipes organically in partnership with a protocol with high payments efficiency.
All Innovation Armory publications and the views and opinions expressed at, or through, this site belong solely to the blog owner and his guests and do not represent those of people, employers, institutions or organizations that the owner may or may not be associated with in a professional or personal capacity. All liability with respect to the actions taken or not taken based on the contents of this site are hereby expressly disclaimed. These publications are the blog owners’ personal opinions and are not meant to be relied upon as a basis for investment decisions.