Why the power of AI may hold the key to distributing wealth throughout the music industry (Part 2)

MBW Views is a series of exclusive op/eds from eminent music industry people… with something to say. The following op/ed comes from Ran Geffen Levy, CEO of Amusica Song Management in Israel and Chief Future Officer at OG.studio, an extended reality content and business development agency facilitating transitions to web3.

Music Wars: Armageddon Part II

The battle for the re-distribution of wealth throughout the music industry continues. In Part I, the AI Menace was revealed, the Avatars, Synthetics, and Cyborgs of the music industry were identified. But new opportunities for current and future creators also emerged, and the era of the Generation Generation was proclaimed.

Since then, artists have seized an advantage. Grimes reached out to her fandom and encouraged them to create new music using her voice, offering a 50/50 split and breaking ties with her label. At the same time, fans of various artists took advantage of AI tools to create new music based on their heroes. Enjoy the chaos, as Grimes put it.

Now, in Part II, we explore the complex relationship between copyright holders and tech titans, raise questions around ownership over likeness and image, suggest a program of action to a new Jedi council led by Coldplay, McCartney, Zuckerberg and Sunak and offer new hope.

Episode VI: The Attack of the Majors 

More than a year ago, I wrote an op-ed for MBW titled “How Future-Proof is the Current Evaluation of Music Copyright?” The short answer is: it’s probably not. Legacy deals can’t fully monetise copyrights in the new world built on Web3 and AI as it requires control over likeness and image which is not owned by the labels. Making data mining of their recordings a “fair use” in some territories is another nail in the coffin of the labels’ legacy deals. The market has reacted: BPN’s William Parker downgraded UMG’s stock from outperform to underperform whilst other players boosted their target price 

Major music companies are taking drastic measures to stay relevant in the rapidly changing world of AI and Web3 technologies. On the AI front, they are launching campaigns defending the ‘irreplaceable role of human artistry’ and, according to the FT, demanding to remove AI-generated music and prevent AI-powered tech from ‘scraping melodies and lyrics’ from their artists’ songs. They claim to have the rights to the voices of their performers, which feature on the recordings that AI was trained on. But it is not all bad, as MBW pointed out.

To survive, major music companies are applying Robert Michels’ ‘Iron Rule of Oligarchy’: Do everything to survive. They are adopting a range of strategies in an attempt to do so. They are buying legacy catalogues that include rights to image likeness and publicity; signing new deals that include the latter; issuing takedown notices around image and likeness in AI generated recordings,  investing in Web3 platforms; buying equity in platforms that trade in rights they don’t own; registering patents around the way music is consumed and engaged; signing and developing acts based on avatars; releasing NFTs with music created by AI with minimal human intervention; trading the rights to use their assets for a share in the equity of music tech companies; opening dedicated streaming platforms around their assets; investing in virtual fashion; and opening hotels… We are seeing new ideas on an almost weekly basis.  

It seems they are going back to their roots: tech-holding companies. The first music label, Edison Records, established by Thomas Edison in 1877, started this way. This can cause a conflict of interest. In a world where Tencent owns major music companies as well as streaming services, how aggressive can the majors be? As a Tencent investor, Spotify is also a shareholder in major music companies. What is the best value for the shareholders of the cross-owned majors who owns rights and tech titans who own streaming platforms, produce AI music and are heavily invested in AI ventures?

Interestingly, Black Sheep’s class action against Universal for distributing revenues from music streaming platforms could be a harbinger of similar lawsuits against other music companies for alleged “double dipping” practices. Universal turned down these claims, arguing it has “a well-established track record of fighting for artist compensation”. A few days later, Sir Lucian Grainge released a statement about the need for a new streaming payout module. 

The solution? MBW pointed out that previously proposed alternative streaming payout models – most notably the ‘user-centric’ or ‘fan-powered’ model adopted by SoundCloud and others – haven’t won UMG’s support. The pro-rata module that Sir Grainge rejects is standard practice when it comes to the distribution of ‘black box’ funds in the music industry. Is that going to change as well? Would it be applied to the money received as compensation from ISPs be distributed between copyright owners? What is the business model for the token-enabled playlists that have been announced between the cross-owned Universal and Spotify of the virtual band Kingship? How much of the profit do the human musicians get to keep?

One thing is for sure – the current models for income distribution are going to change. The question is: Will we keep old practices or will we create a new equator in the music industry? Check out Will Page’s Equitable Remuneration paper. The former Chief Economist of Spotify and PRS for Music has a few interesting ideas to empower creators. In light of the mayhem caused by ‘Fake Drake’, it seems there is only one thing that has to be changed: Everything.

Episode VII: The Tech Titans Strike Back  

As music companies turn to tech, tech titans are becoming owners of music labels and are set to become even more influential. 

The eyes of the music industry are on TikTok. It pays too little, it offers a distribution service, it signs artists, and lately, it has taken the majors out to the equation by removing their content in Australia to “see how it affects human behavior”. The company is using its power to break free from old rules and join other disruptors in the blockchain field, such as Snoop Doggy Dog and Audiou, to set new rules for how creators receive compensation for their music and challenge the traditional ways in which the industry has operated for years.

On the other side of the Pacific, Amazon, Apple, and Disney (via Fox) are already well ahead of TikTok in establishing distribution platforms and record labels. United Masters, a joint venture between all three tech and content giants, is in direct competition with all major record labels. It offers funding, brand and sync deals. In their own words: ”label quality resources without label nonsense”. They also offer playlist pitching. Their ties to Apple and Amazon’s streaming platforms may give them a head start. 

Could TikTok offer AI-based music creation generative tools to its users when it announces a partnership with Splice? United Masters’ Beat Exchange is also a good candidate for all its shareholders to harness AI to provide music for their TV and film productions. Tencent has already generated income from 100 million streams of recordings with artificially intelligent vocals that mimic human voices. Where does this leave the current players in the music industry?  

The biggest game changer of all is yet to come. Brainwave Entertainment: music with layers of mind-altering binaural beats and Isochronic tones, tailored to specific individuals based on bio-feedback. The result is “functional music” that could calm you down or help you focus, make love, work out… These beats and tones could also be added to an existing recording in a way that cannot be heard by human ears. I call it Meta Music. 

Imagine watching Avatar – Way Of The Water with Meta Music that was created on the fly to enhance your experience based on your music preferences and current biofeedback. Disney, the creator of Avatar, rendered it on Amazon’s cloud services. Add the Apple Watch biometer and Apple Music‘s listening history, and you have all the shareholders of United Masters accounted for.  

The first step of this thousand-mile journey has begun. Google is merging Fitbit accounts to Google’s, which could in the future suggest music from YouTube according to biometrics. Ednel, the creator of AI-powered sounds, has teamed up with Amazon and is available for users of Amazon’s Music Unlimited plan, operated via Alexa voice commands. Voice is itself a biometric parameter that could be factored in when using this service. Spotify has integrated voice-operated AI DJ technology and owns the ability to extract data points like emotional state, gender, age, and accent to hone its recommendations. 

Those that are cautious about data creep will warn that this is more than another value add used to sell premium streaming tiers. Mood management and emotional regulation are dangerous tools in the wrong hands. TikTok has already been banned from government devices and may be completely banned in the USA because of fears it is controlled by the Chinese government. 

Tencent has holdings across the value chain of the music industry, as well as its own version of Chat GPT and potential access to a lot of data. The Chinese government has a golden share that provides special rights over business decisions. The latter just released proposed new rules to regulate AI to conform with core values of socialism. Is there a possibility that Tencent are the next in line? The fact that Prosus NV, its largest shareholder, is downsizing its holdings by selling a portion of its shares could, according to Kay Hian, an executive director at UOB, “cause some concern”.

 Episode VIII: The Last Jedi 

So, what does it take to create a safe and fair environment for all sides, present and future, fighting for their own interests in these new music wars? 

It takes a champion.  

Coldplay is a singer-songwriter band that actively supports human rights, as evidenced by the motto of their current tour: “Everyone is an alien somewhere”. They have the potential to become the champions of a “new deal” for singers and songwriters that would aim to redistribute wealth between themselves and music companies. The disruptions I have described in Part 1 provide a brand-new arsenal for artists to gain power, but it will take a well-established champion with influence to do the work. Coldplay are exactly that type of artist. They could use these opportunities to make a statement, create new revenue streams for artists, set new rules around the relationship between creators and corporations, and redistribute wealth across the business. And they have a potential partner to help them achieve just that.  

Robert Kyncl, the new boss of WMG, home of Coldplay’s label, comes with a deep understanding of new technology and the economics of both tech and record labels. WMG has pioneered investments in Web3 and has ownership across the future ecosystem of music. Coldplay can be the voice of underpaid singers and songwriters alongside Kyncl and his newly appointed team from Google and Val Blavatnik who just joined his board. Together, they can lead the creation of a more equitable future for all members of the music industry, and fix streaming by changing the split of income between themselves and the tech titans. 

In the words of Max Lousada: “Technology is going to be one of Warner’s big differentiation in the coming years.”  

It takes a knight. 

Sir Paul McCartney’s name alone carries immense weight and influence, making him a formidable force in the music industry. He has experienced firsthand the struggles faced by songwriters who sign away their rights and receive inadequate compensation for their work. Additionally, McCartney owns a vast music publishing catalogue, giving him significant leverage in negotiations. He could be a knight in shining armour, taking the lead in emancipating his fellow musicians by using AI to create unique works from his catalogue, encouraging new splits between publishers, writers, and performers.

Nothing Is New” is an unapproved song that was created by AI based on the works of the “Beatles” complete with the AI generated voices of Lennon and McCartney. It can be squashed but it could also be used to create new income based on the voices and likenesses and released as a property of Apple Records.

One of McCartney’s potential partners is Mary Megan Peer, CEO of peermusic – the world’s leading global independent music publisher and home to its own vast catalogue of works and a neighbouring rights collection platform that can be developed as a likeness and image income tracking system for performers. Together, they could utilise their combined ecosystem to take bold action and facilitate all the business opportunities suggested in Part 1(Episode V), and create a new equation between writers, publishers and labels. Bring in a tech company like the DAW plugin creator Waves, which could power AI-driven recordings, and you would have a powerhouse. Add Concord, Kobalt, Primary Wave, Reservoir and Hipgnosis and you have a battle station that can fight on behalf of writers and performers to get a fair cut of the revenues.

It takes a dreamer. 

Mark Zuckerberg is a dreamer, and Meta is a hub of creation that has changed the world. Both are currently under scrutiny from authorities and the business community, and Gen Z is no longer in the house. This can change. Meta has all the tools needed to put together a new experience on its current Web2 platforms and create what I call a Nano Licensing Creation Marketplace to power his recently announced move into the Generative AI realm. 

A creator-centric ecosystem would allow artists to integrate fragments of other works into theirs and, subsequently, offer part of their own works to other creators for a fee. The system will also enable the licensing of image and likeness. AI can be used to integrate the works and monitor illegal use, and blockchain can create the ownership registration (blockchain sceptics – please follow Steve Cooper’s move to One-Of). This creates an Infinite Geometric Creation that can be traced back to its original owner(s). The beauty of it? Creators will be able to set the compensation of their choice. Meta could also adopt voice and image fingerprinting to prevent deepfakes and become a safe place for artists to operate in. 

The attraction of creators old and new back to Web2 Meta platforms will create a pool of artists that can migrate their creativity to power Zuckerberg’s vision in the metaverse. New partnerships with creators are his best, last hope. 

It takes a leader.  

As the leader of the No.3 market in the global music industry, Rishi Sunak’s moves will have ripple effects on the business worldwide. There is no major music company listed on the London Stock Exchange, and they have moved their European headquarters to Europe. The market share of UK music is constantly declining.  

Under his leadership, the UK can revert to its past glory and become a safe haven and a global hub for independent creators and entrepreneurs of the music industry. Why? Music is sexy and at the heart of AI, Web3, gaming, blockchain, and entertainment – win in music, and the rest will follow. Back in the day, as Chancellor, he suggested that “musicians should retrain and find other jobs” but, as PM, he can take contrary action.  

He can start reviewing the work that was done by The Department for Digital, Culture, Media and Sport (DCMS) report on the economics music streaming industry and gain personal insight into what is broken in the music industry. Meetings with the likes of Nigel Elderton, the champion of UK music for decades, and Merck Mercuriadis, who disrupts the music industry from London, can give him real insights and perspective. His government already corrected itself when the British Government announced plans to scrap the introduction of its broad copyright exception for text and data mining purposes.  

The Competition and Market Authority (CMA) conducted a market study into music and streaming services. They had a chance to create a real change but failed to do so. Sunak has an opportunity to drive streaming wealth distribution, limit the control of the labels on their music publishing companies, create a nano licensing law to regulate AI driven music, give tax benefits to creators… He can change the entire music eco-system from the top down and create a win for Britain, its economy and culture. 

There is a joker in the pack. If you haven’t already, take a look at the extent of Andreessen Horowitz’s vast portfolio. They have the ability to create ecosystems of their own in this space, setting new rules as they go. I play connect the dots with it from time to time. So many options. But that is for another op-ed. 

Episode IX – A New Hope 

 The working title of this op-ed, when I pitched it back in June of last year, was ‘How Everyone Can Fuck Everyone In A Web3 World’. Since then, I have re-written it countless times as reality chases my predictions. Nine months later, I know one thing for sure – it can only work if we work together. 

Imagine all of the people above sitting around a table, talking in good faith about building a world where everyone has plenty and realises that less is more.  

I am a late boomer and an early adopter who has lived in the land of the start-up nation all my life. I have lived in the future since an early age, reading science fiction. So much of it has become the reality of our daily lives. From personal knowledge, I can share that the technology that is out there, which is not accessible to the public, is far more advanced and has more abilities. 

During the 30 years that I have been in the music industry, I was lucky enough to witness many changes and be an agent of change. I argued for Napster to be licensed; brought a Nokia prototype mobile phone with polyphonic ringtones to the BMG offices in Fulham and declared it the future of the music industry; sued on, BMG’s behalf, a global manufacturer of mobile phones for breach of copyright, and won; opted out digital rights from a copyright society to force mobile companies to provide income transparency and got it; was part of the architecture’s income tracking system of EMI; and have worked with publishers of all sizes across multiple territories for over two decades. 

My own personal downfall came from wanting more. More market share, influence, territories, profit, and control over everything and everyone. My blind race to more, enhanced by the intoxication of the delusion of power (and other substances), led me to destroy everything I built and betray my partners who entrusted me with their faith and music. 

Eight years later, I can share with you that my personal journey has taken me to a place where I have plenty of enough. I don’t need to control anything, I share my experience and wealth of knowledge with others, and I have the ability to make amends for past transgressions. 

When I wrote the op-ed “Is Elon Musk going to save the music industry” I tried to start a conversation about what is wrong with our business and how we can make it better. Some argued that the industry does not need to be saved, and others named it the “foundation of insanity”. Some took the solution suggested and started developing it. 

We need to remember – music is a very small part in the AI wars. The real battle is between the tech titans that seek world domination. As I previously pointed out, the latter have used music as a loss leader in their battles. I hope that this op-ed will start a much-needed change driven by good leaders. 

 There are a lot of potential Jedi in the music industry, notably the leaders of the major players. The power of AI may hold the key to distributing wealth throughout the music industry. It could be the solution for justly compensating artists and writers in the current ecosystem. Everyone can have enough, and everybody would have more. But, like the Force, AI can be wielded for good or for evil. It is up to each of us to choose the path of the Jedi or the Sith. 

My thanks to Google’s algorithmic news feed for keeping me updated on my areas of interest; ChatGPT for being a creative wingbot; AI21s’ Wordtune for helping me to be more concise; Microsoft’s AI-powered Bing for helping with final fact-checking; Endel’s brainwaves entertainment for helping me focus; , Meta’s Horizon Workrooms that allowed me to work on a top of a skyscraper in space form my office in Tel Aviv; and Omer Luz, aka, Peter Spacy who shared with me his knowledge around AI-based music production and art generation. 

 Music Business Worldwide

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