📑 CMU Digest: Suno and Udio file fair use d efence + The 1975 sued by Malaysian festival

CMU Digest is our weekly round-up of the most interesting music business news stories from the last seven days.

This week: Music AI companies Suno and Udio respond to the major label lawsuits, with RIAA declaring that their responses include a “major concession”. US Copyright Office says there is an urgent need for a new digital replica right to combat unapproved deepfakes. The 1975 have been sued by the promoter of the Malaysian festival where frontman Matty Healy caused controversy last year. The MLC responds to Spotify’s recent letter on the big bundling dispute. And Warner Music announces a big rejig of its recorded music business, with CEO of Warner Recorded Music Max Lousada departing.

ICMYI: Live Nation’s market dominance criticised in Australian Parliament; South Africa defends fair use proposal; StubHub sued over drip pricing; Gloria Gaynor sues producer in contract dispute; US government outlines TikTok data grievances; Music Canada criticises new streaming levy; NTIA puts spotlight on noise complaints.

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The RIAA says Suno and Udio’s defences include a major concession

Music AI businesses Suno and Udio have both formally responded to copyright infringement lawsuits filed against them by the major record companies. Both concede that the large datasets of existing music used to train their respective generative AI models “presumably” included recordings owned by the majors. Given they had previously been vague about what music had been used for training, the RIAA says that is “a major concession of facts they spent months trying to hide and acknowledged only when forced by a lawsuit”.

Having admitted to making use of the majors’ recordings, Suno and Udio insist that AI training is ‘fair use’ under US copyright law, meaning they did not need to get permission from the record companies. Needless to say, the RIAA’s statement strongly denies that claim. Suno and Udio also accuse the majors of anticompetitive conduct, which is a misuse of copyright. The RIAA counters that it’s Suno and Udio acting in an anticompetitive way, because they have an unfair advantage over rivals which are looking to license the music they use for training their models.

US Copyright Office calls for a digital replica right, senators propose one

A new report on copyright and AI from the US Copyright Office says that current laws do not provide sufficient protection against unapproved deepfakes and voice clones. Therefore, it concludes, there is an urgent need for a new US-wide ‘digital replica right’ that would allow people to control the use of their likeness and voice in the context of AI. Shortly before the report was published senators in US Congress formally introduced the NO FAKES Act, which sets out proposals for a new right in line with what the Copyright Office proposes.

In its report, the Copyright Office considers whether the new digital replica right should continue after an individual’s death, and whether a person should be able to assign the right to a business partner, advising against assignment. The right proposed in the NO FAKES Act would extend beyond a person’s life-time, for up to 70 years, subject to some use-or-lose-it requirements. It would not be assignable, though people could allow a business partner to control the right under licence. However, licensing deals would be limited to ten years.

The 1975 were sued by Malaysia’s Good Vibes Festival

The band caused controversy at the 2023 edition of the festival when frontman Matty Healy staged a mid-set protest against Malaysia’s anti-LGBTQ+ laws, calling the country’s government “a bunch of fucking retards” and kissing bandmate Ross MacDonald on the mouth. This violated strict rules that govern performances by foreign artists in Malaysia. So much so, not only was The 1975’s set cut short, but the authorities revoked the festival’s licence causing the remaining two days of the event to be cancelled.

In a lawsuit filed with the London courts, the promoter of the festival says that The 1975 were aware of the rules - including a prohibition on kissing on stage - and had promised to abide by them. The day before their performance they almost pulled out of the festival, it alleges, but instead decided to change their set to include the protest. The promoter’s lawsuit also criticises other aspects of Healy’s conduct during his set, including allegations that the musician smoked cigarettes and drank alcohol, acted in a “drunken way” and “spat excessively”.

The MLC responded to Spotify's recent letter in the bundling dispute

The US collecting society has sued Spotify over its decision to reclassify its premium subscription product as a music + audiobooks bundle, so that it can benefit from a bundling discount in the MLC-administered compulsory licence that sets out what streaming services must pay songwriters and music publishers in the US. To qualify for the discount, what the service offers beyond music must have more than ‘token value’. In a recent letter to the court, Spotify said Americans spend over $2 billion a year on audiobooks, proving that Spotify subscribers now getting some audiobooks access clearly has more than token value.

In its own letter, the MLC said that the value of the audiobooks market generally is irrelevant, what matters is what value audiobooks have to Spotify subscribers who were motivated to sign up in order to access music. Spotify’s recent letter, the MLC argued, had “no information at all as to whether Spotify Premium subscribers consider the addition of audiobook access to have ‘more than token value’". And even if it did, “that still would not be dispositive of the question of whether audiobooks have more than token value either to Spotify or the vast bulk of Spotify's subscribers, who … sign up for the service because of the music”.

Warner Music is restructuring its recorded music business

It involves a flattening of the major’s corporate hierarchy with more execs reporting directly into CEO Robert Kyncl. As a result, Max Lousada, currently CEO of Warner Recorded Music, is stepping down and won’t be replaced.

In the US, there will be two big label groups, the bosses of which will report into Kyncl. The Warner Records group will continue to be led by Tom Corson and Aaron Bay-Schuck. But the Atlantic Music Group will have a new CEO, Elliot Grainge, son of Universal Music boss Lucian Grainge, who joined the Warner leadership team last year when the major bought into his company 10K Projects.

Outside the US there will be three big regional divisions: EMEA, Latin America and Asia Pacific. The bosses of those, as well as Warner’s catalogue division, ADA services business, and WMX merch and superfan unit, will all also directly report into Kyncl, who says, “We have an amazing bench of creative leaders and I’m looking forward to working more closely with them”.