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Legal in Music - WR #168
Weekly Roundups
June 30, 2023

Legal in Music - WR #168

This week brings a lot of interesting news, ranging from the latest developments in Taylor Swift's battle for master ownership to significant acquisitions of multi-million-dollar catalogs. Let’s see what happened this week for ourselves!

#1. Could Taylor Swift have bought her masters?

This hypothesis would have truly delighted her fans during the master ownership saga, which, as you know, is not in her possession. Hence her decision to re-record her early albums.

Last Wednesday, Music Business Worldwide published a detailed report on the contentious issue surrounding the sale of Taylor Swift's 'Big Machine' masters. The article revealed several unexpected findings regarding potential negotiations dating back to 2019-2020.

In November 2019, a representative from Swift's management company, 13 Management, signed a non-disclosure agreement (NDA) with Scooter Braun's Ithaca Holdings, her former manager, who earned a $265 million profit from his purchase and subsequent sale of Swift's first six albums. This NDA granted Swift's team the opportunity to examine Big Machine's financial records with the potential intention of Swift acquiring her masters from Braun.

Furthermore, according to statements from a former employee of Ithaca Holdings, the two unrealized negotiations involved the sale of Swift's masters for $300 million, a $100 million discount compared to the final sale to Shamrock Capital. Once again, this offer was rejected, leading Braun to proceed with the sale to Shamrock, as we know.

Despite these events, they did not hinder Taylor Swift from becoming the best-selling artist worldwide in 2022, according to IFPI, and amassing a fortune of $740 million, as estimated by Forbes.

#2. Is the Next Beatles Album Truly Created with AI?

There has been a lot of talk about the alleged AI-generated Beatles album that is set to be released soon, but it is crucial to be cautious in communication to prevent errors and confusion from arising. In this regard, Sir Paul McCartney has clarified that AI technology was utilized to extract and enhance an old recording of John Lennon's voice, but nothing artificial or synthetic was created. Therefore, the cleaned-up recordings are authentic, and all band members have contributed to the album. This serves as a reminder that AI can be an ally to human beings in facilitating their art and creativity, but it does not intend to assume the role of replacing someone like John Lennon.

To make AI a reliable ally and avoid copyright violations, it must be trained on datasets that respect intellectual property rights. However, most existing datasets mix copyrighted and copyright-free music, disregarding this important distinction.

To address this issue, Global Copyright Exchange (GCX), a subsidiary of music licensing agency Rightsify, has developed an extensive collection of datasets for training AI in a more ethical manner when generating music. These datasets encompass millions of tracks across various genres and regions and come with comprehensive metadata comprising over 400 parameters. GCX has already licensed these datasets to startups, established tech companies, music industry players, and innovators seeking to incorporate audio into their products. Their mission is thus to promote an innovative and ethical future by providing licensed datasets for AI music production.

#3. Multi Million-dollars acquisitions

This week brings significant news in the world of multimillion-dollar acquisitions. In the forefront, Warner Bros. Discovery is in negotiations to sell 50% of its music library for $500 million. The buyer(s) and usage terms still remain undisclosed.

The value of $500 million also applies to the portfolio of compositions acquired by Litmus Music from Benny Blanco. The agreement includes music publishing copyrights and the writer's share of performance for select songs.

And finally, Primary Wave Music has announced yet another significant deal, this time with George Brown, the legendary songwriter, drummer, and founding member of Kool & The Gang. The agreement encompasses the acquisition of a stake in Brown's music catalog, the writer's share, and the writer's share of public performance, for a multimillion-dollar amount.

#4. Repealing the Section 115 Compulsory License?

 Singer-songwriter George Johnson is actively advocating for the repeal of the Section 115 compulsory license and has urged the Copyright Office to conduct a formal study on the subject. In a recent letter to Register of Copyrights Shira Perlmutter, Johnson emphasized the need to reassess the license, pointing out how major record labels have been misusing it. He believes that the license, which was designed for a different era, is not suitable for the current digital landscape that is dominated by trillion-dollar corporations.

Johnson called for comprehensive regulatory measures to address the flaws in the license, its rate structure, and the Copyright Royalty Board process. He argues that rational market actors would opt for private collective blanket licensing providers instead of federal licensing, highlighting the inefficiency of the current system.

Additionally, Johnson's extensive supplementary resources delve into the alleged conflicts of interest arising from major labels owning large publishing companies. The National Music Publishers' Association, representing these labels, has faced criticism for supporting questionable royalty proposals. Notably, the Copyright Royalty Board rejected one such proposal last year that aimed to maintain a longstanding mechanical rate of 9.1 cents per song for physical products and downloads. Subsequently, the NMPA and the major labels agreed to increase the rate to 12 cents per song.

Overall, the ongoing debate surrounding the compulsory license raises concerns about the future of the music industry and its impact on the economic reality of songwriters. We will continue to monitor for updates on this matter!

#5. AI-Powered Identity Verification Against Streaming Fraud

Streaming fraud, bottom-page streams, and copyright infringements have become widespread issues on platforms like Spotify and Apple Music. To tackle this problem, Too Lost, a digital music distribution platform, has implemented AI-powered Veriff technology for rigorous identity verification. This step aims to safeguard labels and artists from the pervasive fraudulent activities within the music industry.

Too Lost recognizes that independent distribution services are heavily impacted by this issue, leading to substantial economic damage with unclaimed royalties and discrepancies in mechanical royalty compensation. To address this, Too Lost has partnered with various industry players to launch the 'Music Fights Fraud Alliance' (MFFA), a global task force dedicated to eradicating fraud in music streaming.

The initial outcomes from Too Lost are already promising, including the termination of thousands of fraudulent accounts, raising hopes for a significant reduction in fraud within the music industry.

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