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AI regulations and reviews for 2024 - WR #201
Weekly Roundups
February 16, 2024

AI regulations and reviews for 2024 - WR #201

This week, AI was the focus of attention in the political regulation of copyright. Some discussions are taking place, and we're about to see a lot of changes. Let’s see!

#1. 81% of Spotify users had fewer than 1,000 listeners per month

Music streaming is seeing yet another big step. Inspired by Universal's artist-centric approach, Spotify's new rules at the start of the year favor premium artists and content over lower-quality tracks and less committed creators. In particular, the rule stipulates that tracks streamed on Spotify must have been listened to at least 1,000 times in the last 12 months to qualify for royalties.

However, 81% of the platform's users had fewer than 1,000 listeners per month in 2023, which represents a pretty sizable percentage of users compared to the abundance of music content released on streaming platforms.

Overall, even if the numbers are coming from Chartmetric and not from Spotify officially, this would mean that only a very small part of artists streaming on Spotify would be eligible for royalties.

#2. Spotify market share drops again for major record companies

The balance of power between large music rights holders and independent aggregators is shifting at Spotify. Their financial report for Q4 and full year 2023 reveals that its premium subscribers base has reached 236 million paying users. MBW’s analysis reveals that the joint music market share represented by the three major record labels and Merlin fell below three quarters (74%) in 2023. In contrast, the global market share of recordings downloaded by DIY aggregators and independent labels with direct agreements with Spotify reached a record 26% in the same year.

Although there’s still a decline in market share for majors plus Merlin, Spotify's new "artist-centric" royalty changes could benefit major and high-end independent labels, while independent aggregators could face challenges. However, despite the rise of DIY acts, professional artists continue to generate the vast majority of streams on Spotify. Warner Music Group's CEO stresses that major labels are more relevant than ever in an increasingly complex music landscape.

#3. Warner won’t follow Universal against TikTok

Universal's decision to withdraw its catalog from TikTok drew support from various sectors of the music industry, including music publishers and independent labels. Warner, however, did not follow, having successfully negotiated more favorable terms with TikTok. However, the removal of content from TikTok presents risks, particularly for companies without the clout of UMG, given the platform's considerable influence and popularity with artists and fans.

The fallout from Universal's withdrawal highlights the complexity of the dynamics at play. While Majors may have grievances with TikTok's terms, some artists, such as Noah Kahan, who are signed by Universal Music, may not be affected or even benefit from the absence of his record company content on the platform, as they will be listened to solely by their community. On the other hand, TikTok could favor artists not signed by UMG in response to the void left by the departure, which could be detrimental to their artists. 

Despite the potential impact on both parties, history suggests that licensing disputes like this are often resolved fairly quickly. However, if the impasse persists, both Universal and TikTok are likely to suffer significant consequences, although for now the majority of the music industry remains on the sidelines, watching the impasse unfold.

#4. EU works to regulate AI services and copyright

The European Union's AI law, to be voted on by the European Parliament after approval by the committees, marks an important step in regulating the development and use of AI. However, the definition of what constitutes an AI model and whether developers need to license through copyright remain unclear. This uncertainty raises questions about the application of exceptions and limitations to copyright, and the authorization required from rights holders.

The absence of a "fair use" doctrine in EU copyright rules complicates matters, as AI companies facing lawsuits in the US argue for "fair use" exemptions. The EU's dual objective of protecting citizens from AI-related risks while encouraging innovation and competitiveness creates tensions in the proposed law.

A provision applying EU copyright to all AI services accessible in the EU, regardless of their origin, raises concerns about conflicts with other jurisdictions and potential trade disputes. Violation of internationally recognized intellectual property principles could lead to legal battles and commercial retaliation.

Ultimately, the intersection of AI and copyright in the EU may require judicial resolution, echoing similar debates in the US.

#5. The ELVIS Act marks a big step in AI regulation in the US

The ELVIS Act is gaining ground in the Tennessee House of Representatives. It aims to protect voice, image and likeness from unethical AI manipulation. Backed by Governor Bill Lee, the legislation received unanimous support from the House Banking and Consumer Affairs Subcommittee.

Advocates such as Chrissy Metz, Jamie Moore and Jessie Richard stressed the importance of protecting creators' rights in the face of the rise of generative AI and deepfake technology. Chrissy Metz focused on the potential damage caused by unwarranted deepfakes, underlining the need to protect individual voices. Moore also emphasized the importance of music to Tennessee's culture and economy, condemning AI's ability to reproduce human art without consent.

Richard warned of the misuse of AI to create digital clones, and stressed the need to protect the fundamental rights of artists rather than economic interests. This state-level initiative is part of wider efforts, including federal legislation such as the "No AI FRAUD Act", supported by many industry figures and stakeholders.

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