Pay For Play: The New Economics of Streaming

It’s no secret that the transition to streaming-based economic models for the music, movie and television industries has been disruptive to those businesses. But the force of that disruption has not hit all parties equally or equitably.

The media companies that own music labels and publishers, and the film and TV studios have faced challenges adapting, but at least some of the problems they face have been of their own making. The music companies were rocked, starting with Naptser in 1999, by technology changes they could have, and arguably should have, seen coming. Streaming has been a lifeline since then but they’re now dealing with slower subscriber growth amid market saturation in the major territories.

Artistic License

The artists suing AI image generators for copyright infringement suffered a setback this week when a federal district judge in California dismissed most of the charges they brought against Stability AI, Midjourney and DeviantArt. In a 28-page order, Judge William Orrick called the plaintiffs’ complaint “defective in numerous respects,” and noted that two of the three named artist-plaintiffs, Karla Ortiz and Kelly McKernan, had never registered their work with the U.S. Copyright Office and therefore are precluded from bringing an infringement claim in federal court in the first place.

AI Transparency Report

European Union officials made incremental progress in negotiations last week over the final text of the EU AI Act, which could establish a de facto global benchmark for regulating artificial intelligence technology and companies, according to local reports, Known as a trilogue, the negotiations, among the EU Parliament, Commission and Council of Ministers, is the final legislative stage before formal adoption of the framework that will be sent to EU member states for implementation in national laws. A fifth and potentially final round of discussions is set for December, but the trilogue could continue if final agreement is not reached.

News You Can Lose

News media publishers, as a group, made what turned out to be a costly error in the early days of the internet. Excited at the prospect of gaining uncounted new readers beyond their home markets they made their reporting openly available online for free. What they did not, and perhaps could not anticipate in those early days, was the monopolistic potency of network effects that would shape the online ecosystem. The result was to concede publishers’ direct connection with readers to search engines and social media platforms and the rupture of their relationship with advertisers.

AI Maker Anthropic Hit With Lyrical Lawsuit

Amazon-backed Anthropic has joined the AI copyright litigation hit parade, catching a four-count infringement lawsuit from a trio of leading music publishers topped by Universal Music Group. The lawsuit was filed Wednesday in federal district court in Nashville. Concord and ABKCO are also named plaintiffs.

Interestingly, the target of the complaint is Anthropic’s large language model (LLM), Claude, which is not a music generator tool and was not trained with musical compositions per se. Instead, the publishers call out Claude for copying and distributing the lyrics to songs owned or represented by the publishers in both its training input and generative output.

Book Publishers Learning a New Tune

Very little is known, publicly, about the terms of the deals the major publishing houses recently struck with Spotify to make audiobooks available to stream as part of Spotify’s premium subscription service. Nor, does it seem, have publishers shared those details with authors and their agents. Agents complained about a “lack of detail” from publishers about how, and how much, authors will be paid from the deals, while the Society of Authors in the U.K. demanded “transparency” and “urgent action” from publishers to inform authors and agents of the terms.

Competing With AI

The Federal Trade Commission last week held what it billed as a roundtable discussion on the creative economy and generative AI. Substantively, the discussion itself offered little that was terribly new; it was mostly a kind of Festivus for workers in the creative industries to air their grievances over how the companies that employ them increasingly are using generative AI to un-employ them: background actors and fashion models being forced to submit to full-body scanning to create more pliable digital replicas of themselves; advertisers and audio publishers using voice clones in place of voice actors; AI-generated music diluting the market for human-produced tracks. By now, all sadly familiar tales.

When AI Writes On Spec

The deal to settle the Writers Guild of America strike last week could achieve more than to bring an end to one of the longest work stoppages in Hollywood history. It is likely to prove a benchmark agreement for other unions and professions looking to protect their members from the threat to their livelihoods from generative AI, not least the still-on strike Screen Actors Guild.

AI and Authors’ Rights: A French Disconnection

The U.S. Copyright Office last week extended the deadline to submit comments in its inquiry into artificial intelligence, “To ensure that members of the public have sufficient time to prepare fulsome responses to the Office’s questions.” Respondents will now have until the stroke of Halloween to get their comments in, 12 days later than the original deadline. But while U.S. regulators and Congress deliberate, a group of deputies in France’s National Assembly (parliament) this month introduced an AI copyright proposal that could serve as an object lesson in just how difficult it will be to design a coherent and workable copyright regime for the new technology.

Music Royalties Go Private

The Hipgnosis Songs Fund (HSF) kickstarted the music rights investment boom in back in 2018 when its shares first listed on the London Stock Exchange raising $1.2 billion. By then, its founder and CEO, Merck Mercuriadis, had already emerged as a leading voice for the music royalty investment case and had begun assembling a portfolio of several thousand song copyrights. HSF’s successful listing and high-profile early catalog acquisitions drew other music rights investors into the public capital markets, including Round Hill Music, which listed its Round Hill Music Royalty Fund (RHM) on the London Exchange in 2020 and Reservoir Media, which went public through a SPAC merger backed by Roth Capital in 2021.

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