Facilitating Efficient and Effective Copyright Licensing for AI

AI models have an almost insatiable appetite for content. To date, the vast majority of training content, whether books or blogs or songs or images, has been scraped from the web without authorization from the copyright owners. Many AI companies argue that the use of copyrighted content in this context is “fair use” and does not require a license or compensation. But copyright owners are crying foul, and lawsuits are being filed at a rapid pace, including leading lawsuits from the Authors Guild and most recently the New York Times. Although fair use may be a defense to copyright infringement, only courts can determine if unauthorized copying is justified after performing a complex, fact-based, multi-factor assessment.

Big technology companies occasionally acknowledge that copyright owners deserve to be compensated, and a few early licensing deals have been concluded. Sam Altman, CEO of OpenAI, has repeatedly positioned himself as a moderate on the issue, “We’re trying to work on new models where if an AI system is using your content, or if it’s using your style, you get paid for that.”

However, other AI stakeholders are arguing that copyright owners are not entitled to payments for the use of their works to train AI platforms, and moreover, that any such requirements will stifle innovation and push it offshore. Writing to the US Copyright Office, the well-known VC firm Andreessen Horowitz put it this way: “The bottom line is this, imposing the cost of actual or potential copyright liability on the creators of AI models will either kill or significantly hamper their development.”

However, it is more likely that litigation rather than licensing will kill or disincentivize AI innovation. Companies may be less likely to use or develop AI technology if they may be sued. Moreover, companies will spend tens of millions to defend against lawsuits during the years it will take courts to sort out the law.  However, companies can move forward and establish license agreements now, either directly or through third parties. In fact, setting these commercial precedents will be likely to influence regulators in the future in a way that benefits copyright owners and AI developers alike, in part by proving that the commercial licensing of content will not be fatal to AI innovation. 

For AI development to continue at a rapid pace, a layer of service providers will need to be created to enable transactions without imposing additional friction into the system. A new class of service providers will be launched that will license content from aggregation points (i.e. publishers, agents, etc.), process the data with metatags and tokens, and license the data for training of AI models. This will provide an important legal precedent for the generative-AI industry, while creating new revenue-streams for copyright owners.

Calliope Networks is one such service provider. Calliope Networks is founded by executives with experience in AI and copyright licensing. Calliope Networks’ strategy is to aggregate books from authors and publishers and then to process the books for licensing and ingestion by AI models. Although AI systems have benefitted from the use of free content, new academic research suggests that higher quality aggregated works are significantly more valuable for effective training of large language models (LLMs) which underly generative AI systems. As a recent research report from Microsoft put it, “High quality data can… improve the state-of-the-art of LLMs, while dramatically reducing the dataset size and training compute.” 

One of Calliope Networks’ goals is to facilitate the legitimate use of copyrighted content by generative AI systems, ensuring that as AI evolves, so too does the respect for intellectual property. Calliope Networks is developing a platform that can operate at a speed and scale that can be an enabler to the growth of generative AI, rather than a burden.

Companies like Calliope Networks aren’t limited to the processing and licensing of original content. Calliope Networks in particular is also setting its sights on advanced products designed to enhance copyrighted works in a licensed, monetized fashion. Co-founder and CTO Jim Golden explains, “Our vision transcends mere compliance. We aim to expand the creative landscape by enabling ancillary AI-generated products that can, for example, enrich the experience of reading a book, but do so in a manner that ensures that the authors and publishers benefit appropriately.”

Copyright owners need to act to protect their right to control and be compensated for the use of their works. There is no doubt that the development of AI may represent a perilous and frightening future for creators. Nonetheless, the situation today is the absolute worst-case scenario: works are being used to create competing works, and copyright owners are not being compensated. If copyright owners choose to ignore the situation or simply refuse to demand commercial engagement with AI companies, courts and regulators may begin to believe the cries from Silicon Valley that the only way to ensure continued AI innovation is to broaden the fair use doctrine. 

Licensing will not be a panacea.  It may not provide all of the protections that publishers and authors will want.  Licensing will not protect against the eventual creation of AI-generated books for example. But refusing to engage in the licensing of copyrighted works may only serve to cede the battlefield to the technology companies and perpetuate the worst-case scenario of unauthorized use of creative works without compensation for years to come.

About the Author: Dave Davis is the CEO of Calliope Networks.  He previously served as Chief Commercial Officer of the Motion Picture Licensing Corporation and was an executive at Twentieth Century Fox, Paramount Pictures, NBCUniversal, and the Motion Picture Association.  Dave has a BA from Wesleyan University and a JD from the University of Michigan School of Law.  He can be contacted at Dave@calliopenetworks.ai

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