AI, Copyright, and the Future of Music #211

Join hosts Pete Salsich and Gary Pierson on The Screen Lawyer Podcast as they unpack the groundbreaking lawsuit shaking up the music industry. Discover how AI innovators like Suno and Udio are clashing with major music labels over copyright infringement, and what this pivotal battle means for the future of music and artists' rights.

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On this episode of the Screen Lawyer Podcast, I'm joined by my partner Gary Pierson, music industry expert, music lawyer for a long time who's going to help us understand the brand new lawsuit filed by three major music labels against two major music AI companies alleging copyright infringement. Welcome, Gary. Thank you. It's going to be awesome. There's a lot to learn here, folks. This case is like some of the other ones, but it's also different in some important ways. Stick around. Hey there. Welcome to The Screen Lawyer Podcast. I'm Pete Salsich, The Screen Lawyer. And today on this episode, we are going to talk to my friend and partner and long time colleague, Gary Pierson. Gary, welcome. Thank you. Good to be here. You've been here before? I have. It's good to be back. Yeah. Right on. And here today, it's I think it's going to be kind of cool because we are going to dig in to the music industry and some interesting aspects of it. And I really want to learn from you on how, you know, the music industry, how artists make money these days and why this matters. And the frame for all of this is the latest lawsuit filed, against an AI company for alleging copyright infringement in the process of training the AIS. So this most recent lawsuit was just filed by three major music labels Sony Music, Warner Music Group and Universal Music Group, all in conjunction with the RIAA, the Recording Industry Association of America and collectively they represent a massive number of rights holders. Right? Yeah. I mean, these are the three major labels that your label groups in the music industry collectively that control. I don't know what the percentage is these days, but the vast, by far the largest portion of the kind of music, industry. So and really, the fact that they're all coming together with the RIAA is really they're speaking as the music industry. Right? That's correct. Okay. Well, and what's interesting about this one is, so if you recall, and we've talked about it on the podcast over the last year or so, several different lawsuits, the original group was filed last year. we had talked a couple episodes about Sarah Silverman and a group of writers who had sued, OpenAI talking about ChatGPT based on, prompts that they did that allege that these, AI models had been trained by accessing hundreds of thousands of copyrighted printed literary works without permission and then use those to train. And as we saw early on in the process, the AI companies all defend by saying that's fair use under the copyright law. They're not producing any particular work that you can point to and say that copied that. And so the question really is and remains, is accessing this work without permission to train an AI? Is that copyright infringement or is that fair use? So that's the frame, right? And followed after the, Sarah Silverman Group and the writers. We had lawsuits filed by graphic artist representing, I said, for images that were taking paintings that were taking similar defensive arguments. And it should be noted, the courts haven't ruled on this stuff yet. So we don't know what a court is going to say about fair use. But in the middle of that process, also last summer, we had a pretty important U.S. Supreme Court case, involving, Andy Warhol’s paintings that were copy of Prince that were copied from a photograph of Prince and that, you know, really updated the fair use analysis and brought forward some language that I think will turn out to be very important in these cases. Earlier this year, and we had an episode about it, New York Times sued, again, ChatGPT on a basis that it's the ability to search or prompt or ask a question of AI was sort of the equivalent of getting an output that eliminated the need to go to NewYorkTimes.com, or to get a subscription, because you could get the news from the AI because the AI was going and getting the news from New York Times and elsewhere. Right. And we talked about in that case, how one of the fair use factors that you and you go through and analyze whether something is fair use, all of the focus tends to be on is something transformative. And maybe to step back, let's just, you know, the for fair use factors are one is the new use transformative in some way? Is it is it doing something different for a different purpose? The second is what is the nature of the original work? Well, these are all creative works, so they're going to be protected. The third is did you use only as much as is necessary to do your point? Well, here I think they openly admit they're scraping the whole things. but lastly, and this is the one I think is interesting, is does the, new work or does the the action of the defendant negatively impact the market for the original? Is it competing in the marketplace? And the New York Times case made an argument. I think that was more compelling than the others have made so far on that point that really it was the same thing. It is competing. And in the Andy Warhol case, the Supreme Court said, we don't look at different purpose because he did different paint and different colors and created a different, point of view. That was had been our arguments in the lower courts that have been persuasive. But the Supreme Court said, no, wait a second. The photograph, the original photograph was a photograph of a person to sell magazines. Years later, after Prince died, the Warhol paintings were commissioned to sell a special edition of a magazine about Prince's life, and the court said, those are the same purpose. That's not transformative, and they're therefore directly competing. That, I think is fairly profound here because and now this is where I need your help, Gary. How does this how does an AI company like, in the two, defendants in this case are Suno and Udio- two of the biggest AI music companies right now. How does what they're doing negatively impact or does it the marketplace for the original music? Yeah, I think that there's a couple of interesting ways to think about this in terms of how it affects the business of, of music. And music is very much a commercial art form in our world. so it's, the when, when these, when these technologies come out and impact the music industry. there's a pretty long history of, this being the content industry that gets affected, first and sometimes the worst by these new technologies. You know, we often say music is the canary in the coal mine. That tells us what's about to happen with other technologies. And we're interested in technologies. And that's been true for a long time, but especially, in the in the more digital era of file sharing and Napster graphics are all those kinds of things that that was really seen. Well, I think one interesting thing to appreciate here is the music industry, including these companies are using this technology and using, the, the, the kinds of programs and computers and software that do these kinds of things to, help use the, the assets that they have to their fullest potential. So this is true when you say when you say where the those companies are, you're talking about the music labels, the labels, the ones in this suit and others are there is the use of this technology in the technical side of how music is created and used and right and commercialized today. So that's a little bit of a difference from some of these other, you know, areas. I think that there's there's more of that happening now than there has been in the past. Well, so what does that mean? If these companies are also trying to use these, these types of technologies, but working with the assets that they actually own or control or distribute or license, they are they're trying to to make music and make, make products and, and versions of these things that can be used and enjoyed by people in different, different settings. But they're having to do it within the constraints of respecting intellectual property of themselves, of their of their own and others. So and in that so, so let me just pause you there for a second to make sure that that I'm tracking with you, because in that what you're talking about there, is say universal just to pick one of them, you know, if they're taking their own library. Right. But they have the rights to and to which they then owe an obligation to the artists that created it. Absolutely. When money is generated, from the use of the materials, that money goes back to those artists rights, how they make money. Right? So and if they're using entirely their own library and then using AI as a tool to enhance or to do different things with it, right. That's not a problem. Right? Or at least that's not this problem. It's not this problem. And it's a problem that they can decide among the other, appropriate decision makers about what the the right scope of that is. I mean, give you an example, you can take a very old piece of music today that was recorded decades ago, and I have some experience in this exact situation where you don't have digital files to maybe do an enhanced remastered version or a remix or something, but you can take the old analog files and or the analog form, right? And using some of the same or very similar types of technology, you can extract, you know, the elements of the recording and isolate, you know, the guitar and the vocal and the drums and the bass and things like that, and then do things with it that are interesting to do and might have value creatively and artistically in the world. Right. And maybe even create new and updated versions, find new audiences for absolutely that. That's right. So and that can be done by the people like these label groups that owned or controlled those assets. And it takes a lot of investments, very expensive. It's not something that happens overnight. It's not just like, oh, AI go create me a new version of the song, write it to do it properly takes a huge investment of time and resources, and also still comes along with all the obligations that you mentioned. Like who do they have to pay royalties to? Things like that. So for for these companies to be doing that, but to be competing against this other version of that, that doesn't have to do all that right is it is a huge issue. Yeah. And that's the thing I think is so interesting here because what what the complaint talks about and what these labels are alleging is infringement is completely separate, Suno and in, Udio, among others. But those are the main ones right now who are essentially AI companies who you can get a subscription to just an individual and say, create me something like this, that, and pick whatever prompts artists things you like and have them create something that is a mashup. and therefore effectively it seems to me replace the need to go to the original rights holder and yet get something that has enough different mixes that may not withstand a straight up copyright infringement case or quite frankly, it's not worth the artist to go to the expense. And years we've been involved in music that many cases they take forever. Yeah, it's effectively unenforceable. on that level, I think. Right. Because it doesn't it doesn't come with it an amount of damages or a, you know, a in each individual instance, you know, something that makes it worth, worth going after it. But it does create. And this is the point that the label's made. It does create new content that's out there. The vast majority of music is consumed via streaming music services. Right. you know, most people do not buy physical copies. They don't buy any copy of the music. They listen to it via some kind of streaming service. If this if these tools are used to essentially flood the services with, with new, pieces of music that are not owned by anyone, right. And are not, generating royalties for anyone, they're not, you know, they don't have to account to any other rights holders. They are inevitably be going to going to be referenced by the streaming services to be what is served to people when they are not actively choosing what to listen to, when they're going to compete in a way that's impossible. You can't compete with free if you're asking for people to pay. I mean, that's just impossible to do, right? So that's a that's another level of competition of this. That's that's that's really difficult for the industry. Yeah. I mean, I think that's to me that's sort of the profound. And I want to spend a little time understanding the landscape right now for artists and musicians anyway. I mean, it seems to me that for a while now it's been true that they don't even the most successful, music artists don't really make money selling records. They don't even sell records anymore. That's a term that's outdated, right? But they make money touring or sync licensing thing. And so the music is on Spotify and on places like that, in part to build an audience for people that will then pay for expensive concert tickets or to find the filmmaker or commercials that want to sync those that music in their video production. Right. So I mean, the the modern music industry is very much dominated by streaming as we mentioned, and streaming does generate income, but it only generates income at scale. I mean, you have to have a very large scale, a lot of a lot of listens cumulatively to, to really generate much revenue from it. So, I mean, it's the same as it always was the, the most popular artists make a lot of money from streaming, just like they've always made money from whatever. Really made a lot of money from selling records. There are, you know, most physical sales are vinyl these days, right? but even that does not, even large vinyl selling releases don't compete with the income that the streaming of those albums are generating. Right. so, you know, that is a those are those pieces still exist? But yes, the streaming services are used to build an audience that then feeds the, the consumer, you know, model to who they might want to go see in concert or who they, might recognize if their song is in an advertisement which creates value for the owner of the music, then if it's used in that way, like you, you mentioned with sync licensing. So, the streaming service is sort of a radio type, you know. Yeah. Promotional tool. still and it still does generate revenue, but it just doesn't generate it at the level that those other things do replace the sales. That true true. But but again, even as you said, even though that that landscape is evolving and some you know, the, the emerging artists maybe really still struggles in that environment, at least in that environment, it is a function of a licensing structure. Right? It is an acknowledgment. Spotify and Universal Music or Sony, they have agreements with each other to govern what music is on there, how it's on there. Artists have the ability to say yes or no if they want their music included on stream. I mean, the the creators and the rights holders still have the ability to dictate where their music goes, right? Right. to control the artistic integrity of it and to build up their audience for their music. Right. And this strikes me as, something that really has a profound, as you mentioned, the fact that these could gradually just flood the streaming services to where, you know, on the weekend, I don't have my old system of vinyl and tape decks and CDs anymore. I, you know, open up, YouTube music or Spotify and it'll tell me, hey, here's your super mix of what you've been listen to the last month. And I hit. Oh, great. And I get three hours of music. Yeah, but I know every one of those songs. And even if it's the stuff that I don't know or didn't choose, it's in the same genre. But I can look up the I can say, oh, that's cool, sorry, I can see the artist. I can decide if I want more. I could say right there, it's all there. If this all starts getting flooded there, I may never know that half of what I'm listening to, yeah, is AI generated, and I'm not sure that, you know, how good are the AI companies going to go to Spotify and, you know, get their terms? I mean, how it'll be. I'm just not sure how that would all work. Right, that. That's right. And, you know, there there is no doubt that there is already music in those services that is generated by using tools like this or these tools. And I don't think people know when that happens because it's used in that same way at some point. Background kind of kind of use. We've also seen some pretty prominent examples of AI being used to specifically imitate or, you know, mimic. You know, popular artists like that has already happened as well. So, you know, we're we're in an era in the streaming music world that's finally improving for Rightsholders. And that's because of some pretty recent changes. The Music Modernization Act created a mechanism, that music, when it's consumed via streaming services, there's a mechanism for royalties to be generated and collected and know given to the rights holders. And just as a little ad for that, if you're not a if you're a if you're a songwriter and you're not a member of the mechanical licensing collective, you need to do that, because that's how you get paid for streaming. And a lot of people still don't know that because it's fairly new, but that that system is just now kind of coming online and making up for some of the the years of streaming that was really unpaid, uncompensated for a lot of especially songwriters. So for this to come along now at a time when that is finally, you know, making up for some of that as is, it's frustrating as somebody who works in the industry and who champions people who make music getting paid. Right? Right. Exactly. That's I mean, that's this is coming along at that time. So, yeah, I, I don't think there's any doubt that there are things in those streaming services that compete with legitimate human made music for which royalties are being generated when they're when it is used. Yeah, this stuff is going to replace that. Well, and to me that's pretty and that's and that's the point about this when you're talking about the fair use factors of the courts analyzing that, that last fact or does this use whatever that use is negatively impact the commercial market for the original? I think here that seems almost unequivocally, yes, absolutely. And back in the battle days of the file sharing cases, I mean, you remember this. I used to teach a seminar class about these these cases and, you know, the, the pro technology, like, you know, all new technology is good perspectives, like, oh, it's just good new technology. You need to embrace it. And I always pointed to that, well, it's not fair use if it eliminates the value of the actual original. Right. Like you can't call it fair use when it makes my thing like of no value. Exactly anymore. And that's why I think it'll be interesting to follow these cases, because, they're still early, even though some of them now are close to a year old. From their original filing. That's not that long in litigation world, right? Big cases like that where things may get consolidated. So it'll be curious to see. But I think what's interesting so I was looking at, a billboard article about this case yesterday, and there was a quote in there that kind of blew me away. and actually, it quoted a real really. So, so Billboard was quoting rolling Stone. So let's give proper, you know, some of the things first appeared, but one of the investors in Suno, Antonio Rodriguez apparently admitted, admitted startup does not have licenses for whatever music it is trained on. But he added, it was not a concern to him. And he says knowing that the labels and publishers could sue was just, “...the risk we had to underwrite when we invested in the company because we're the fat wallet that will get sued.” And then he goes on to say, “Honestly, if we had deals with labels when this company got started, I probably wouldn't have invested in it. I think they needed to make this product without the constraints.” It's literally a bold face saying who cares, right? If you're a rights holder, right? We just love the tech. This is a free for all. And that strikes me as not the statement you want on the witness stand. If this is the point of this case, I don't know what's your reaction to that? I mean, it's, it's really stunning and really telling. and I think that comes from a perspective of all technology is good and will eventually serve a, a greater purpose than what this law serves. you know, as far as I know, we still live in a, you know, society that, enforces laws. And, you know, if we if it's fine to argue that anarchy is a better way, but until, that that argument triumphs, that I don't think that's what we live in. Well, and frankly, you know, it's the people that can invest $125 million saying that right? To them. It's like I'm a fat wallet, right? Of course, I build threaten the cost of defending a lawsuit, right? That's the game I play. Right? But to all of those musicians and artists who will literally get squeezed out by this, the area, I think it's really interesting. So we, you know, just, as you know, I'm talking to like, film, emerging filmmakers and, working with film projects all, all the time. And music license is always a huge part of the budget. Right. And so if you've got a project where in your particular film or your series, you know, music is an important component of it in the story, right? You have two choices. You either can spend a fair amount of money and negotiation and ask permission to license well-known songs or you, you know, have your own composers or Indies do originals that you compose that that you know, aren't genre specific or whatever, but still somebody is acknowledged as the creator. Yeah. And getting paid for that work. Right, right. And but in AI, we don't have a songwriter. Right, right. We know the Copyright Office has already said there is no copyright in something that doesn't have substantial human authorship. Right. Meaning these works, there won't be a master copyright and there won't be a publishing copyright. Right. There will be no copyright. These will be free for everybody. Right? And if I'm a filmmaker, I find something on here. Why do I need to sync license anymore? Right in in isn't sync licensing for a lot of artists a really significant portion of their their income? Yeah. Very significant. I mean, this is a and this is not this is true at all levels. So the, the the really well known and really expensive. Right. Music to sync. It's an important part of it. And it's also a really important part of it for, like you said, completely independent music that doesn't get heard by the masses, doesn't get put on the radio or anything like that. So it's it's important for, for the all levels of the industry. Yeah. That's a huge, huge portion of the income. So yeah, just and again I, we keep using these terms and I do this from time to time that I think everybody knows. So remind us what a sync license is how that works in this environment. Yeah. So the term sync in the music industry refers to one of the exclusive rights that's reserved to the copyright owner, the right to synchronize the music to, essentially, you know, picture a video elements, right. You know, visual elements. And so that is owned by the songwriter. It's also owned by the recording owner. Right. That exclusive right. And without permission to do that, you can't you can't sync or synchronize music to those things. And isn't that one of the one of the few places where like, if I, if I'm an artist and I'm a big fan of a Bob Dylan song and I want to record my own version of that Bob Dylan song, I don't need the permission from Bob Dylan or his estate owner. I've got to notify the Copyright Office. And if I generate money, the the portion of that that goes to the publisher goes to them. Right? Right. But there's there's at least not this yes or no. Right. Yeah. So, so so that example, there's something called compulsory license to make a new recording of a song that's already been published. There is no compulsory license for, synchronization. Exactly. And that's that's fine. So for the filmmaker that is trying to, you know, has a low or modest budget film, but this song is so key to the whole story. If that song is so important, not only do they need to pay whatever the artist and the label decide to charge, either one of those two rights holders can simply say no, right? And there's nothing you can do about it, right? And that becomes so valuable sometimes for the artist, it's because they don't want their music associated, maybe with certain brand rights or things like that. Right. and so I think that's another aspect, not just the economic, but it's the ability to kind of control and that and that world is very integral to the production legal world, the screen world. Right. and so, yeah, I think this is this is really interesting. This case stood out to me on the one example. It's like yet another one. And what I think is going to be really interesting to follow is will the courts separate out these. So for example, if they're just analyzing the written word on a fair use for training, and they go through the factors and don't find any real impact on competitively, because if I want to get a book by Sarah Silverman, I'm still going to go buy Sarah Silverman's book or whatever it might be. and in the other world, you know, so maybe the fair use factors go that way. But here, it seems to me this is so directly, aggressively intended to put a bunch of free stuff out there so you don't have to buy the originals, right? Like that's its reason for existing, right? Or at least its one of its main reasons, as evidenced by the quote from the investor. Well, one of the reasons I'm glad that this case got filed is because, often in all areas of law, the initial facts that, create law are unique and not really, they're different from what later uses come, come about. I, I'm still concerned that some of those earlier cases are going to, you know, bad facts make bad law as we say. But I think it's important to have these cases adjudicated. Yeah. and, and really to, you know, have some input on how is fair use going to be evaluated in this context. Because I do think it's a, it's a, it's a pretty different context than some of those, those other cases that you mentioned. So I mean, you know, I'm not somebody who wants to cheer for lawsuits happening all the time. I think in general, the music industry historically has sued too much and participated too little in technology. so, you know, there's there's that. but I think we need these cases. I think we need these this kind of enforcement of rights in this space, because otherwise we may have been subject to kind of fair use analysis that didn't really have much to do with these. Yeah. I mean, it could we could have another fair use Supreme Court case in the next 18 months or something like that, right? When we hadn't had one for something like 25 years. Right. So, right. Because it's so all of this technology is forcing the courts to relook at these issues. It's I think it's fascinating. Well, hey, Gary, thanks a lot for joining in here. it's been a great conversation. Yeah. The and it's one we, we will continue to have. Right. This issue is not going away. be very it's always interesting to see you know right now it's so early we haven't seen any responsive pleadings. We haven't seen any of that stuff yet. I'm really curious, as the summer goes along, to see if some of these cases start to tee up. But these don't seem to me the kind of cases that just are going to settle. Yeah, the whole point is courts need to start deciding. So maybe Congress acts in a certain way or license agreements get worked out, things like that. You almost have to. It's almost as if the investor said, yes, we know there's a lawsuit. We're paying for that too, right? Everybody in this industry needs the courts. Tell us where the lines are. Right? And sometimes it's almost like we all know we're going to sue, so let's do. Yeah, yeah. Interesting stuff. Well, thanks very much, folks. If you've enjoyed this conversation, please follow us wherever you get your audio podcasts, find us and follow us there. We publish new episodes every other Wednesday, and if you're watching on YouTube, hit that like and subscribe button and you'll get all of our content. And you can also find everything you're looking for and lots more at TheScreenLawyer.com. Thanks a lot everybody.