Is DALL-E, Midjourney & Jasper Art a Scam?

July 28, 2022

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Heard about the AI image-generation tool Dall-E 2? A potentially groundbreaking new way of turning text into images using artificial intelligence. Is it a scam or the future of images and photos?

DALLE 2 is just one of many new platforms offering you access to AI-generated content, and claiming that you can use it for commercial purposes. Other platforms include Midjourney, Jasper Art, Nightcafe, Starry AI and Craiyon. We will focus on Dalle 2 in this blog post, but they are almost identifical, when it comes to the legal challenges and problems.

“DALL-E 2 rips off the past generation for the current one and charges them money for it. Scam.”

DALLE-2 started as a free and open platform, but quickly pivoted into a more closed company with a paid business model. A model that the famous photographer and filmmaker David O’Reilly has described as follows on Instagram:

why is dall-e a scam

According to O’Reilly, Dall-E AI “undermines the work of creators of all kinds, most obviously photographers, illustrators and concept artists who shared their work online, and never asked to be included in a proprietary learning model”.

He goes on to conclude that “it rips off the past generation for the current one and charges them money for it. Scam.”

At JumpStory we don’t believe that DALL-E 2 or Open AI is a scam. Also we don’t like to talk about other companies in that way.

Where we DO understand O’Reilly in his criticism, is the fact that Open AI seems to be creating a black box, where things are very far from being ‘Open’ AI, and where there are obvious challenges with both copyright, data training set, licensing etc. All things that put the end users of DALLE AI at great legal risk.

The tech-entrepreneur Eric Fernandez elaborates on O’Reilly’s criticism on Twitter stating that “DALL-E 2 is breaking the copyright law and as minimum ought to show the original reference images for each generated image”, and TechCrunch journalist Kyle Wiggers points out all the “thorny legal issues” in this interesting article:


Experts in copyright and licensing point out many problems with DALL-E 2

In the TechCrunch article, the founding partner at law firm MBHD and an expert in IP law, is quoted a number of times. Hulbert believes that image-generating systems are problematic from a copyright perspective in several aspects … a criticism that also includes DALL-E 2.

Technology writer Dave Gershgorn raises some of the same concerns in his feature for The Verge, where he states that “there isn’t a direct legal precedent in the U.S. that upholds publicly available training data as fair use.”

GitHub’s automatic coding tool rests on untested legal ground – The Verge

In addition to these AI and IP-experts, there are hundreds of creators and entrepreneurs posting currently on social media about the fact that Open AI as a company is heavily funded (+1 billion US dollars), yet has chosen to use images that they did not pay for, own or credit, to create images that they then charge money for and claim ownership of.

People also point out the Open AI and DALLE-2 doesn’t come with any kind of insurance or assistance, if you end up in legal trouble.

No insurance – you’re all on your own!

At JumpStory we think that the last point is key. The lack of insurance.

We are fascinated by the technology currently being developed, but we are worried on behalf of small entrepreneurs, designers, marketers, startups etc. All of these groups are risking the same thing (or maybe even more), as they do, if they decide to use free image platforms like Unsplash, Pexels and Pixabay.

In both cases, there is no insurance and unclear licensing, meaning that you risk getting sued and/or receiving copyright infringement letters and claims.

Therefore, we suggest to stay clear of these risks and use a stock photo platform that offers valid model releases (e.g. Shutterstock) and a global insurance on all images (like we do at JumpStory).

About the author

Jonathan Løw is the co-founder of JumpStoryHe is one of Denmark’s most well-known entrepreneurs and business authors. He has been nominated as Entrepreneur of the Year and is amongst Denmark’s 100 most promising leaders according to a major Danish business newspaper. In addition to being a serial entrepreneur, Jonathan Løw is the former Head of Marketing at the KaosPilots – named Top 10 most innovative business schools in the world by FastCompany. He is also former Startup-Advisor and Investor at Accelerace – the leading investment fund for startups in Denmark.

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