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A broad panorama of the industry: AI, streaming and legal issues
Weekly Roundups
April 28, 2023

A broad panorama of the industry: AI, streaming and legal issues

Last week, the music industry has been struggling with the growing use of AI up to its implications for copyright and creativity, although some musicians are embracing AI. In addition, Spotify reported strong gains, but it may need to target new demographics to keep growing. Let’s dive into another full week!

#1. Was Universal’s reaction to AI-generated content the right one?

It will come at no surprise that AI is taking up more and more space and it feels like every day we’re unveiling new possibilities, especially for the music industry. And of course, the issues regarding AI and copyright didn’t take long to come up.

In fact, Universal Music Group (UMG) has recently made a request to streaming services by sending them a letter, asking to remove AI-generated tracks and stop using artificial intelligence models to analyze its artists' music. The label has cited both moral and commercial responsibility to its artists and concerns over unauthorized use of copyrighted content as the reasons behind the request.

This move comes at a time when AI bots have started to create original music by imitating mainstream artists (but then again, can we really qualify this as original?). UMG being the biggest catalog, including releases from Taylor Swift, The Weeknd, and Drake, has made it a prime target for these bots. UMG has also asked that streaming services "cut off access" to its catalog for developers using it to train AI technology.

Well, that weirdly feels like complete rejection of a technology that we can’t really ignore today. Spotify CEO Daniel Ek has a completely different opinion on generative AI. While acknowledging the risks, Ek also highlighted the positive potential for AI in creativity and production, in the sense of greater democratization and access made possible to anyone even in production. Maybe the biggest music company of the world should collaborate with technical solutions rather than annihilate them altogether?

#2. Making the most out of AI

While streaming platforms are being urged to take action to bring down the music generated by AI, there are those who want to keep working on new possibilities (and accessibility).

For example, Beatly Music aims to provide a decentralized platform for AI-generated music, regardless of whether it's authorized or not. The platform provides anonymous music submission and claims to be safe and reliable with backups. We’ll see how this kind of position sits with the music industry. Tech sure has a lot to offer but the music field has codes to respect.

Meanwhile, Canadian musician Grimes has found a way to collaborate with AI for her activity. She recently offered 50% of the copyright for every hit song generated by AI with her voice. This move not only demonstrates the potential of AI for creation, but also highlights the need for a responsible and collaborative use of this technology. Above all, it could be a realistic option in a world where AI is now an integral part and difficult to stop.

#3. Spotify’s latest numbers

Spotify has reported a strong Q1 2023 earnings, with a 15% year-over-year increase in subscribers, gaining a total of $5 million in the quarter and reaching a total of 210 million subscribers. Also, the company surpassed 500 million monthly active users, with an increase of 26 million in the quarter.

However, the US music streaming market may be reaching saturation as subscriber growth rates begin to decline. To tap into new areas of growth, Spotify may need to target the largely untapped boomer demographic, although this could pose a challenge. Nevertheless, Spotify's Q1 results have been described as a "strong start to 2023."

#4. Updates on Meta’s copyright case in Italy

The Italian antitrust agency has recently ordered Meta Platform to resume talks with the Italian SIAE on music rights. This decision was made after Meta blocked all songs under SIAE on its sites from March 16, which prompted the regulator to investigate whether the company abused its position in the country.

The investigation revealed that, indeed, Meta exploited the economic dependence of SIAE from its contract with the social media company and that Meta also did not provide sufficient information for an adequate evaluation of the offer. Despite Meta’s disagreement, the company will resume talks with SIAE, which, on his part, insists that Meta must provide full disclosure of data on its revenues in the negotiation, to calculate the correct royalties.

This decision has significant implications not only for Meta, but also for other social media giants that generate income from music and other copyrighted materials. As the regulatory environment evolves, social media companies are expected to face increasing control over their business practices, and it remains to be seen how they will respond to such pressures.

#5. Some legal issues in music

The music industry is currently experiencing a wave of lawsuits, with many prominent figures facing legal challenges over copyright infringement and unpaid royalties.

Let’s start with the independent publisher Peermusic, suing Sony Music Publishing over the ownership of the rights and royalties to Lizzo's hit "About Damn Time". In another case, the heirs of The Gap Band dropped a lawsuit against BMG Rights Management over alleged unpaid royalties for their credits on the hit song "Uptown Funk". Lastly, Ed Sheeran is still defending himself against a copyright infringement lawsuit accusing him of using elements of Marvin Gaye's "Let's Get It On" to create "Thinking Out Loud".

These cases highlight the importance of ensuring that all necessary rights and agreements are in place to avoid costly legal disputes in the music industry.

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