Generative AI Art and NFTs

SecureWeb3 has already discussed the issue of copyright relating to the original source work behind NFTs.  A more subtle issue comes from the use of AI generated artwork to create and sell NFTs.  These AI engines are not completely random.  Their algorithms are trained on existing art styles and take user prompts to create ‘new’ work.

This raises the issue of if these generated artifacts are indeed new?  Some artists have recognised their own works or styles within the creation of AI images.  In January 2023  Sarah Andersen, Kelly McKernan, and Karla Ortiz filed legal action against the organisations behind Stable Diffusion.  The complainants alleged that their artworks were used to build up the underlying AI generation algorithm without their consent.  This is a difficult legal area as the generated works are not direct copies but may be in the style of other artists and could affect the value of their existing and future work by flooding the market with similar goods.  On the other hand there exists the concept of fair use which allows a degree of copying (perhaps for review or teaching) but not for financial gain.

At its simplest AI generated art is ‘Text To Image’.  Night Café Studio for example is free to use but requires registration and additional effects (such as larger images) involve credits that need to be purchased or earnt.  SecureWeb3 created the simple image for this post in a few minutes from the prompt ‘Donkey on the road in Crete’.  It could be a donkey although the Crete connection is hard to see.  Doubtless with more work and imagination something more commercial could be produced.             

This business model can work with the groundwork relying on the creation algorithm and the artistic flair used to manipulate the products.  The algorithm creator Botto made around $1.3 million from the sale of its first 6 artworks in 2021.  There might also be applications within NFT collection markets that consist of a large number of items with a similar style, often simplistic and cartoon like.           

Several players have seen an opportunity and offer services to create AI art and mint it as NFTs.   Hotpot advertises prices starting at 100 images for $5, although minting these as NFTs could involve considerable gas fees.  A closer investigation reveals that like Night Café Studio, Hotpot is primarily an art creation engine.  Within their details for ‘price & licensing’ we see:

‘Licenses authorize you to use Hotpot for commercial purposes. These licenses do not constitute copyright or any form of intellectual property protection. In particular, we cannot guarantee image uniqueness.’

Clearly the creation engines themselves realise their copyright problem.  If the purpose of minting a NFT is to prove ownership and to derive income from its sale then that cannot follow through if the original ownership is in doubt.   Any commercial use of AI generated artwork needs to consider the base image source (which could be hard to establish) and the costs involved in minting and marketing the NFTs.  A brand might also use an AI generator to create many different images all of which promote the organisation.  These would almost certainly involve artwork where the original ownership is clear and could be offered on platforms where Gas fees are relatively low.  In the case of minting NFTs as an income generator the costs involved in creating original professional art might outweigh the risks from possible AI copyright issues.