The Minions, AI, NFTs, and the Future of Fanfiction

AI is crazy, but people are missing a very interesting aspect: what does this mean for fanfiction?

OpenAI released GPT-4 last month. I won’t spend much time on the description because others have done it better than I could, and because I am broke, so haven’t paid for access. But the short of it is: this is a significant improvement from the already awe-inspiring Chat-GPT, and it can now recognize and produce images and text.

One thing is apparent from the advances in AI over the past couple of months: the cost of producing content is going to zero, and soon, anyone will be able to create high-quality content of all forms (video, images, text, etc.). This can put a lot of industries at risk, and it will likely create many opportunities, but let’s focus on what this means for fanfiction and IP over characters we all know and love.

Fanfiction has been popular for as long as the internet has existed. People create content around characters from popular books. It usually is not a big deal, but sometimes fanfiction is good enough to gain commercial success, and the IP owners sue the creator. For example, “Fifty Shades of Grey” originally started as fanfiction based on the famous “Twilight” series by Stephenie Meyer. The author changed the names and some of the details of the characters, but it was still recognizable as fanfiction. After the book became a commercial success, the original author of “Twilight” and her publisher sued for copyright infringement. They ultimately settled out of court for an undisclosed sum.

With AI making it increasingly easy to produce high-quality content, the quantity and quality of fanfiction will explode over the coming years. What does this mean for the owners of the original IP?

IP and trademarks are created to ensure people cannot profit off characters and brands they did not make. Traditionally, studios have been very protective of the characters they create. So protective that in 2019, Disney sued a preschool in Florida over trademark infringement because they had painted Mickey Mouse on the walls.

However, one studio recently took a different approach and was met with quite a lot of success. In 2015, after the first “Minions” movie, Illumination, the animation company behind the franchise, recognized that fans were using Minions to create user-generated content. Everything from memes to t-shirts was branded with the characters. Rather than crack down on these creations, Illumination allowed that user-generated artwork to flourish. By letting fans use the characters for their content, they may have missed out on potential licensing fees, but they were inviting their community to be co-creators.

With AI, it will become increasingly challenging to crack down on these infringements, given the sheer number of possible creators. I am excited to watch how different studios and creators adapt and study the tradeoffs in strategy.

This feels like the time that some crypto fan would be like, “NFTs solve this.” And while I do not consider myself a total Web3 diehard, NFTs could play an interesting role here.

In 2020/2021, when NFTs were all the rage, their potential to revolutionize entertainment, specifically cartoons, was discussed extensively. Seth MacFarlane created the “Red Ape Family” around his Bored Ape NFT, and Ashton Kutcher and Mila Kunis created “Stoner Cats” around their Stoner Cat NFTs. Both of these shows were wallet gated or only available to watch if you own the associated NFTs. The NFTs could be resold, and they were collecting royalties. The Stoner Cat NFT creators get 2.5% of every sell-on transaction.

This is interesting, but I think it misses the point. People, of course, like exclusive content, but they really like being co-creators. As AI makes it easier and easier to create content, I believe the future looks more like this:

Ashton Kutcher and Mila Kunis decide to make Stoner Cats. They create a couple of episodes but then let all owners of the NFTs create additional episodes around the characters. It becomes an entirely user-generated ecosystem. Similar to that of Roblox, where anyone can make and share their own versions of the stories centered around the characters created by Ashton and Mila.

Or, what if Disney comes out with the next Frozen and they NFT all of the characters? People can then pay a small fee to rent the characters to create fanfiction. They can then work to monetize the new content, but Disney maintains the right to a certain percentage of royalties.

I am far from the only person interested in what NFTs can do for brands. Huge companies, including Nike, Coke, the NBA, and others, have begun implementing NFT projects. The use cases vary, but it further proves that brands are interested in how the digital legitimacy of NFTs could impact their marketing strategy. I will not be surprised if some major content studios follow suit shortly.

I am not technical enough to know precisely how NFTs could limit the number of bad actors violating trademarks. Still, I believe NFTs would make creating with approval easier. Rather than seeking a licensing deal with Disney, you could pay for the right to develop with the NFTs, and the royalty payouts are code rather than points to be negotiated with a team of lawyers. As I see it, the NFT approach would make it easier to create within the law rather than harder to create outside the law.

Lately, people have dismissed NFTs as a low-interest rate phenomenon. Still, I think it is possible that as digital content becomes more accessible and easier to produce, there is an increasing need to prove and document ownership on the internet. This could be an interesting convergence of a couple of different trends with AI, NFTs, and the increasing ease of distribution made possible by YouTube, TikTok, Instagram, etc. It remains to be seen how viable any of this is, but I think it is an exciting space. I would love to connect if you are interested in or working on this!