Two of the three major labels are nearing the finish line to sign a number of high-profile licensing deals with AI companies, according to a report in the Financial Times this morning. And yes, those companies include Suno and Udio, the two GenAI music startups being sued by the majors for copyright infringement.
“Talks have involved start-ups including ElevenLabs, Stability AI, Suno, Udio and Klay Vision,” claimed the FT. “The music companies are also in talks with large technology groups including Google and Spotify.”
(Before you fall off your chair in surprise, the report went on to warn that “Spotify was still in the early stages of exploring how to integrate generative AI tools to its platform and no deal was imminent”.)
The report also suggested that the two majors are “seeking a payment structure similar to that for streaming, whereby playing a song triggers a micropayment” – said songs being (we think) the AI-generated output of the licensed platforms.
Needless to say, we have questions – and not just about what Spotify’s plans may be once it has explored them.
First, ElevenLabs. When it recently announced its first music licensing deals, with Merlin and Kobalt, it quickly emerged that the latter had negotiated “parity between publishing and recorded music revenues” in its agreement. Will that carry through into the majors’ deals? If so, it’s a big moment for the publishing sector. If not, well, also a big moment of a different kind.
Second, Suno and Udio. Throughout the majors’ lawsuit against those two companies, an eventual settlement has seemed the likeliest conclusion than a trial. Both sides have much to lose if a verdict went against them, and much to gain by finding a way to work together instead.
That said, bringing in from the cold two companies accused of scraping huge amounts of copyrighted music to train their models carries some risks – particularly for the industry’s relationships with the GenAI music startups who have tried to do things right from the start.
The deals – and the communication of them to other partners – will need to be carefully crafted so they don’t seem to be rewarding (and even cementing a market advantage) for Suno and Udio. But it does make sense to find a working relationship with these two companies for the longer term.
Third, what will artists and songwriters make of this? The majors’ key asks of GenAI music services have been clear: permission, payment and transparency. But rumbling in the background have been creator bodies’ expectations of the same principles from labels and publishers for their rosters.
Whether musicians have the right to refuse to participate in licensing deals signed by their rightsholders with AI companies will be a matter for the contractual lawyers. It has the potential to be messy, particularly in publishing.
But even beyond that, communication will be key. How much and how will the GenAI firms are paying labels? How will that be equitably shared out among musicians? And what other provisions are in these deals to protect and support human creators?
In short, figuring out deals that the labels and AI companies can agree on was a huge task, and news of progress is encouraging. But what happens next around communicating those deals to musicians and securing their support is just as important a challenge to face head-on.
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