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ProRata.ai, a US artificial intelligence start-up looking for greater fairness in how media firms are paid for content, has signed licensing deals with publishers including DMG Media, the Daily Mail owner, The Guardian and Sky News.
As a part of the deal, to be announced on Wednesday, DMG Media will take part in a financing round in ProRata that, in keeping with insiders, will value the group, which was founded in January, at around $130 million.
Nicholas Thompson, CEO of The Atlantic magazine, one other ProRata partner, will even join the Los Angeles-based startup's board.
ProRata, which is launching its AI-powered search engine next month, offers media firms in publishing, music and video a novel model that goals to pay fairly for the usage of their content. It has developed technology that pays publishers per use of their content when generating AI answers and searches.
The group will share half of its platform's subscription revenue with its licensing partners, which already include Universal Music, Axel Springer, Financial Times, The Atlantic and Fortune.
The model goals to deal with media industry concerns that AI startups are stealing their content to coach users and provides them timely answers.
This has caused deep divisions between the media and technology industries: Rupert Murdoch's Dow Jones and the New York Post are suing Perplexity AI over what they are saying is a “brazen plan” to tear off their journalism, while the New York Times has filed an identical lawsuit against OpenAI.
Some AI start-ups have tried to strike industrial partnerships and licensing deals with publishers, including News Corp and the FT, which usually include an annual upfront payment and a license fee.
Bill Gross, founding father of ProRata and chairman of tech startup incubator Idealab Studio, said there are revenue-sharing agreements with developers on platforms like Spotify, YouTube and Apple News.
But for “generative AI,” he said, “there may be currently no revenue share since it’s not that easy to measure.” We think that’s unfair. This is unsustainable for publishing, creativity and the flexibility to simply steal and exploit content.”
Gross is taken into account the inventor of pay-per-click keyword Internet promoting, which laid the muse for the multi-billion dollar digital promoting industry.
He compares the behavior of competing AI firms to how Napster copied music twenty years ago. “What AI firms are doing today is crawling the online, exploiting it and never sharing revenue. We imagine that is the longer term and we are attempting to each invent, protect and scale it.”
ProRata desires to license the technology behind its search engine to other generative AI firms. “If you adopt this business model, your lawsuits will end because now you’ll share the revenue properly.”
Rich Caccappolo, deputy chairman of DMG Media, said it was the primary UK news publisher to take an equity stake in ProRata, which he described as “an important first step in promoting accurate and fair attribution and promoting transparency”.
David Rhodes, chief executive of Sky News, said: “ProRata’s solution helps drive prime quality, impartial journalism across AI platforms and publishers.”
ProRata's technology analyzes AI output, measures the worth of contributed content and calculates proportional compensation. ProRata has filed patents for its technology awaiting approval.
Other investors include Mayfield Fund, Revolution Ventures, Prime Movers Lab and Idealab Studio.
