A week in AI is like a year in other industries. I hope these issues become your weekly source of AI information, inspiration, and ideas. If we haven’t met before, I’m Amanda Smith. I write about AI and the fascinating folks who are building in this brave new world.
Good morning. One of my favorite parts about covering AI is the breath of folks I get to cover who are building in the space. I’m constantly having my perspectives challenged from speaking to all types of builders.
I have a window to this technology that’s changing the world faster than anyone can comprehend. My goal is to give you a healthy outlook on AI – revealing the good, the bad, the opportunities, and the obscure.
As a writer myself, AI hype hits close to home. It puts my craft in question. But this week’s founder is building a whole new royalty model that celebrates human creativity. Authors can make a living through incremental AI revenue. How cool.
Enjoy this read.
🤝 This edition is brought to you by Delve
You thought CSV’s were bad. Then you opened your first platform questionnaire and saw a 200-question surprise waiting for you. Today, Delve is making that go away once and for all with our AI browser extensions for security questionnaires! Delve’s agent auto-extracts all the questions, answers them based on your reports, policies, and tech stack - directly in your Chrome tab.
See why Bland, Wisprflow, Greptile, and over 1000 more trust Delve to get and stay compliant with SOC 2, ISO 27001, GDPR and more.
Book a demo here to see the AI extension in action and get $1,500 off compliance.
This week in AI:
Tech stocks sold off on “AI concerns”
Disruption fears are impacting Wall Street.
NPR host sues Google over NotebookLM voice
We’re going to see more cases like this.
Rampant AI demand is causing a shortage of memory chips.
Company background: Created by Humans
Founded: January 2024
Team size: 11 full-time employees
Funding to date: $5.5 million seed funding round
ARR: Not disclosed
Growth metric: His network from his first startup. Alder has spent his entire career in the book industry.
Trip Alder, Created by Humans
Trip Alder started his first startup, Scribd, right after college. It’s a subscription service for books and audio books. He started it as a way to store documents on the web. That business did over $200 billion in revenue and served over a billion users. Now Alder’s onto his second startup, Created by Humans.
After building the digital library with over 195 documents, Alder set out to solve copyright in the AI era – so books (and their authors) can thrive in the AI world.
The problem
Alder pioneered a new model for the industry at his previous startup. When AI came along, he saw the book industry was responding via lawsuits. He knew there had to be a better way then suing each other – a new era that respected both innovation and creator rights.
“We didn’t know how we were going to solve it. We just started talking to authors, publishers, literary agents, the Author’s Guild, and AI companies,” Alder said.
He realized the AI rights and language had yet to be defined in order to be signed off, so that’s where they started.
“There wasn’t really any vocabulary around that when we got started. We defined AI rights into three categories: Training rights, reference rights, and transformative rights.”
The right to train on books, the right to reference books using RAG (Retrieval-Augmentation Generation), and the ability to transform a book into something new using AI.
The Author’s Guild were already far along in their thinking around AI rights and the lawsuit piece, so Alder helped “build the plumbing” to create the marketplace to make those rights easily licensable to AI companies.
The business model
“We broker licensing deals between rights holders for authors and publishers and AI companies. When a deal happens, we take a cut of that.”
The infrastructure is an important piece. In order to connect books and companies, there’s infrastructure that needs to be built out. Typically, in the book industry they send out files, Alder explained.
“We’re actually creating the infrastructure that stores books in an AI-ready format. The last piece we’re building is our own consuming-facing products on top of our AI rights and infrastructure. That’s in the works right now.”
With large AI labs, if they’re already training on scraped data, what’s the incentive for them to pay for it?
Alder said when they originally started the company, he thought the challenge was licensing books for training, given how tricky the rights were. “But what’s happening is that a lot of these AI companies are waiting for the lawsuits to play out before they do deals. We’re getting a lot more traction for reference rights and transformative rights.”
For example, let’s say you ask a model a question and the answer is on page 100 of a book. It would pull up that book and link it to where the answer came from. AI companies are getting permission to use the books to help sell them and they’re also sharing incremental AI revenue for those use cases.
They’re also seeing a lot of traction with taking a book and transforming it using AI.
Authors earn new sources of revenue via AI in three ways:
More distribution: Having their books show up in AI models, so they sell more.
Incremental AI revenue: Someone asks a question and the answer references their book. The author could earn money for powering that answer.
Publisher payments: In some cases, Created by Humans pays authors directly. They pay publishers and distribute those payments back to authors.
Alder said each right, each deal and each book is different. It has to happen one book at a time, but in the long term, he hopes it’ll be scalable so that if a big model wants a million bucks for training, the rails are in place for that to happen.
Scaling the solution
Alder has built a self-serve platform that allows authors to sign up, claim their books, and license AI rights. They have new authors joining every day.
It’s a multi-pronged effort, signing up authors, publishers, and agents. He said they’ve done a good job of finding authors who are excited about AI. They have dedicated team members for author relations and publisher relations.
Their growth so far has been leveraging established relationships from Alder’s 19-year career in the book industry. “We also built virality into the products so that others can invite out to their co-authors. We’re still at an early stage and putting the plumbing in place, but we’ll scale with more marketing over time.”
“We want to have a world where humans are still creating things and being paid to do so. Having a model like ours in place makes it really easy for all parties involved,” Alder concluded.
Takeaways
Become an AI-first company. You can move really fast as a company if you do that. “The more we lean into AI to build products, the faster we can go.”
Don’t overlook who you know. Alder has spent his entire career in the book industry. His contact list over 19 years is his moat.
His vision to solve AI copyright for books is both specific and universal. If he solves it, the licensing model could be a blueprint for other sectors.
How's the depth of today's edition?
P.S. If you want to get a founder feature about your own story, reply to this email. If you’d like to reach our newsletter audience (founders, creators, and marketers), click the button below.
If you’re new here, I’m over the moon you’ve joined us! To help me craft content that’s actually useful (and not just noise in your inbox), I’d love it if you took 1 minute to answer this quick survey below. Your insights help shape everything I write.
✨ Insane Media is more than one voice
Dive into our other newsletters - where psychology meets the creator economy, e-commerce marketing, and Human resources.
