Category: Music

Udio Answers Record Labels’ Complaint in Gen AI Lawsuit

As mentioned in my last post about the record labels’ lawsuits against GAI companies Suno and Udio, I will generally focus on the latter case. Both cases are almost identical, but because UMG et al. v. Ucharted Labs Inc. is at the SDNY (in the Second Circuit), those proceedings may be followed by other courts with considerably less copyright law precedent.

Udio’s answer filed on August 1 relies substantially on the premise that there is no cause of action whatsoever. The developer intends to show that “This lawsuit…seeks a genuinely unprecedented result: a ruling that it is actionable copyright infringement, not fair use, to have copied Plaintiffs’ works as part of the process of developing a new technology, even though the ultimate outputs of that new technology are themselves non-infringing.”

The list of counter-factual evidence Udio forecasts is too long to summarize, but the heart of its legal argument at this juncture is that 1) statute explicitly bars protection of musical style; 2) its AI training process entailed learning about music rather than copying protected sound recordings; and 3) because the product’s outputs are largely (or entirely) non-infringing, the purpose of producing “new” music is “what copyright law is designed to encourage, not prohibit.” The defendant also alleges that the recording industry’s claim is invalid on the basis that it has “misused copyright law” as part of a longstanding tradition of stifling competition. So, we have a ballgame that’s going into extra innings, and there will be plenty to say about the details as they emerge.

For now, I take issue with a few premises inherent to Udio’s answer. The first, which I have already stated a few times, is that even if every song output by Udio is “new” as a matter of law, the fact that none of these outputs is a work of “new authorship” as a matter of law militates against Udio’s implication that its product expands the purpose of copyright in general. And as stated, if that is correct, this should militate against a finding of fair use.

Second, despite the fact that Udio can and does point to uses of its product by creators who are plausibly engaged in authorship is, at best, a difficult basis on which to argue that the primary purpose of the product advances authorship. For one thing, the business model appears to be based largely on providing a music toy for consumers, not a tool for creators. Next, even where Udio may be used by professional music creators, the extent to which this fosters new authorship is a case-by-case consideration—one that relies on still-developing doctrine around the use of AI and authorship.

Third, even if Udio could prove allegations of relevant, anti-competitive practices among all the record labels (and I do not mean to suggest they can), the court must remain focused on the interests of individual creators—especially the next generation of music makers. The labels’ argument that the outputs compete with demand for existing sound recordings could be read as protectionism of existing catalogs but should be considered as to whether Udio competes with, or even obviates, the need for new human authorship in music. If so, this is categorically not what copyright law is designed to foster.

As stated in a few posts, and in comments to the Copyright Office, the unique challenge presented by GAI is that rather than pose a threat to the interests of specific authors’ works, it poses a potential threat to authorship itself. In this light, Professor Jane Ginsburg, in a new paper about the state of fair use jurisprudence, discusses two points that stand out for me at the moment. First, she describes the nature of a use-based fair use analysis (as applied in Warhol), which should not “untether” the fair use protection for a use other than the one narrowly ruled on by the court. Second, she notes that the courts may look beyond the “explicit direction” of the fair use statute to consider a factor like broad effect on authors’ careers—or even the potential for other unlawful uses like forgery or fraud.

With regard to use-based analysis, Ginsburg forecasts the uncertainty in adopting a per se fair use rule for machine learning because the consideration of fair use of the inputs may turn on the nature of the outputs. “If an AI system ingests multiple images of apples, including Cézanne’s depictions (let’s assume Cézanne’s works were still under copyright) its training data will enable the system to “know” both what an apple looks like, and what a Cézanne apple looks like. The fair use inquiry may depend on whether the user asks for an apple, or for a Cézanne apple,” Ginsburg writes.

Perhaps more directly applicable to the labels’ case against Udio, Ginsburg states in regard to image-generating AIs and fair use factor four, the effect of the use on market value:

… even under a solely work-based interpretation of section 107(4), one may observe that the wholesale copying of an artist’s works into training data in order to enable stylistically similar outputs jeopardizes not only the artist’s future employment or commissions, but also devalues the actual works copied, because the image-generation program can produce outputs that compete with already-created works as well.

That same rationale would seem to apply to the labels’ evidence that Udio can output sounds which are substantially similar to famous and protected sound recordings. So, while the defendant is correct to say that copyright does not protect style and that music production relies substantially on mixing and matching a finite combination of styles, arrangements, etc., that premise, both statutory and judicial, is derived from a copyright history that has only ever included human artists in “competition” with one another. Consequently, the courts have latitude to find that it is in fact the AI developer who is seeking the novel conclusion that its machine furthers the purpose of copyright law.

As I say, there will be plenty of details to follow and plenty of considerations to nerd out on, if one is so inclined. And for better or worse, I am so inclined. Stay tuned (pun intended).

Senate Resolution asks Congress to Promise it will Keep Ignoring Musical Artists

musical artist

A little-known Senate resolution called the Local Radio Freedom Act (LRFA) is a clever move by whoever thought of it. It has no force of law but instead asks Congress to sign a pledge to enshrine an unfair and unfounded policy whereby terrestrial radio broadcasters shall never pay royalties to musical artists. Why? Because that’s how it’s always been.

In copyright law, music generally entails two separately protectable works—the underlying composition and the sound recording. Sound recordings are created by performing artists, and many compositions are naturally recorded by different artists at different times. Quintessential examples include Whitney Houston’s “I Will Always Love You,” and Jeff Buckley’s “Hallelujah,” originally written and performed by Dolly Parton and Leonard Cohen respectively. But if you ever turned up the radio when one of these cover songs came on, you might not know that although Parton and Cohen received royalties, Houston and Buckley did not.

This omission in the royalty scheme has come before Congress many times over many decades, and most Members know the status quo doesn’t make sense. Public performances of musical sound recordings pay artists royalties in every other commercial context, and in every democratic nation in the world, except for American terrestrial broadcast radio. But what is music radio without music?

The answer from the National Association of Broadcasters (NAB), and which is parroted in the LRFA, is that radio “promotes music,” and it does. But that’s only half the story. The other half is that music draws listeners to radio networks, which sell billions of dollars in advertising. Members of Congress know this is the only equitable consideration, yet to watch the last hearing on the issue, one might get the idea that the IP Subcommittee is still at the investigative stage of the decades’ old problem. If Congress seeks an equitable arrangement, it’s in the text of the American Music Fairness Act (AMFA), which was introduced in 2021.

For smaller stations (under $1.5 million/year), the AMFA caps royalties between $10/year to $500/year depending on revenue and status as either a public or private station. For larger stations and networks, rates would be set, as they for the rest of the performance licensing market, by the Copyright Royalty Board (CRB). Under the provisions of AMFA, the CRB must consider station size and revenue when setting rates and must also consider the station’s promotional value to recording artists. It’s hard to imagine how the deal gets more fair than that.

In addition to the half-true “promotion” argument, LRFA also echoes NAB talking points about the many free services radio stations provide to communities—from local news and emergency information to community outreach and charity. The implication is that these services would be curtailed or lost if they had to pay performer royalties, but this claim is neither supported nor well-reasoned. The stations’ good works continue while they pay talk show performers and news reporters—and no doubt, buy coffee and electricity, too.

Notably, when witness Eddie Harrell, Jr., representing the conglomerate Urban One, was asked at the hearing about the CRB, he did not seem to know what it is. This is not to mock Mr. Harrell, but instead to observe that if he was there to claim that his company cannot afford royalties but does not know about the rate-setting court, how does he know what he can’t afford? I think the answer is not that Mr. Harrell is careless or unable to do the homework, but that he anticipates not needing to present those numbers because the NAB has told him to expect that Congress will once again default to the tautological absurdity of “because that’s how it’s always been.”

Members of Congress know it is the large networks and conglomerates lobbying against AMFA and that they are not saying anything new in defense of the status quo. Because this issue has been on and off the table for about eighty years, any reference to further negotiation or study at this point is either a stall tactic or a pocket vote against AMFA. Meanwhile, signing onto LRFA is an explicit statement that, once again, the artists will be ignored right after their representatives tell them how much they are a treasured and respected part of the American tapestry.

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The American Music Fairness Act Gets a New Hearing

American Music Fairness Act

Tomorrow afternoon, the House Judiciary Committee IP Subcommittee will hold a hearing entitled Radio, Music, and Copyrights: 100 Years of Inequity for Recording Artists. The subject of the hearing is—at least ostensibly—to compare and contrast the royalty granting American Radio Fairness Act (AMFA) against the royalty denying Local Radio Freedom Act (LRFA). Witnesses to testify include recording artist Randy Travis; National Association of Broadcasters (NAB) president and CEO Curtis LeGeyt; SoundExchange president and CEO Michael Huppe; and Urban One Regional VP and General Manager Eddie Harrell, Jr.

As discussed in other posts, AMFA would, for the first time since radio was invented, require terrestrial stations to pay royalties to the artists whose sound recordings draw audiences and drive ad revenues. The United States is the only major radio market in the world that does not pay royalties to recording artists, and as a result, American artists are likewise not paid royalties when foreign radio stations play their music. And the only reason this unfairness has persisted is the lobbying power of NAB.

When AMFA was introduced in 2021 by Reps. Ted Deutch and Darrell Issa, the latter stated in a Capitol Hill press conference, “The broadcasters have become experts in muddying the waters.” Indeed. As we often see with the behemoths of Silicon Valley, the NAB is very adept at using the “little guy” to obfuscate and maintain the status quo of multi-billion-dollar advertising conglomerates that would rather not share even a fraction of revenue generated by the music they play. And although Mr. Travis is a star, the Subcommittee must remember that many of the beneficiaries of AMFA would be “little guys,” including studio musicians, producers, and engineers.

Granted none of the witnesses testifying tomorrow are “little guys,” though the presence of Mr. Harrell representing Urban One is interesting because I am hopeful that he does not conflate Black-owned with small. As the media conglomerate’s website states, “For more than 40 years, Urban One has been the leading voice speaking to Black America. First, as the largest local urban radio network. Then, as the largest syndicator of urban programming.”

Note the word largest appearing twice in two short sentences. And good for Urban One. They should be proud of their scope, reach, depth, and diversity of programming. But if Mr. Harrell testifies that Urban One cannot afford to pay royalties to musical artists—or worse, implies that AMFA would harm Black enterprise in media—that’s a moment to raise a skeptical eyebrow. And not just because more than a few of the musical artists drawing audiences to Urban One’s stations are also Black. As the company’s 2022 annual report states…

While a core source of our revenue has historically been and remains the sale of local and national advertising for broadcast on our radio stations, our strategy is to operate the premier multi-media entertainment and information content platform targeting African-American and urban consumers. Thus, we have diversified our revenue streams by making acquisitions and investments in other complementary media properties.

I wouldn’t want to take on new expenses either. But Urban One is a media giant looking to become a bigger media giant complete with television networks and, most notably, development of new and original content with licensing value. Content creators denying other content creators a fair deal is not a great look. As the above statement from the report makes clear, broadcast advertising remains foundational to the business, and the Subcommittee should not lose sight of the fact that musical artists continue to underwrite that revenue without any say or compensation in the arrangement.

Local Radio Freedom Act is the Missing the Fairness

As to actual little guys, while large broadcasters like Urban One would be subject to rates set by the Copyright Royalty Judges, the statutory “small broadcaster protections” of the AMFA should be sufficient to reject the central premise of the LRFA sponsored by Senators Hassan and Barrasso. On Sen. Hassan’s web page, NAB’s LeGeyt is quoted thus: “A new job-crushing performance fee on local radio stations would hurt stations’ ability to provide their free, essential service in communities across the country.”

In addition to the too-cute-by-half contrasting “freedom” against “fairness,” the LRFA simply ignores the fact that small, independent stations would pay fees that would not qualify as job affecting, let alone “job crushing.” A non-public, independent station with revenue between $100k and $1.5mm would pay $500/year; a public station with the same revenue range would pay $100/year; and a station with revenue under $100k would pay $10/year. Specifically, 72% of the 220 Black-owned radio stations (as of October 2021) generate less than $1mm in annual revenue and would be capped at the $500 annual fee.

Yet, despite these facts, the language of the LRFA is so replete with worn-out rationales for the status quo that it’s hard not to assume the NAB wrote every word of the bill. For instance, this one is rather long in the tooth:

Whereas local radio stations provide free publicity and promotion to the recording industry and performers of music in the form of radio airplay, interviews with performers, introduction of new performers, concert promotions, and publicity that promotes the sale of music, concert tickets, ring tones, music videos, and associated merchandise.

The “free publicity” argument was weak 20+ years ago, but today it is simply unsupportable. The Subcommittee knows, or should know, that music discovery occurs in a complex landscape that includes every platform from traditional radio to Instagram. The broadcaster cannot reasonably claim that, in general, they provide more value by promoting music than that music provides them value by drawing listeners. Speaking anecdotally, what is the frequency of remaining tuned to a radio stations playing music one already likes versus waiting to discover something new?

Nevertheless, AMFA includes a provision under which the royalty judges may consider “whether use of the station’s service may substitute for or may promote the sales of phonorecords or otherwise may interfere with or may enhance the sound recording copyright owner’s other streams of revenue from the copyright owner’s sound recordings.” Thus, where a station can provide some evidence to support the “promotion” argument, that can be taken into account when calculating the royalty payment. But this would require the broadcasters to put their money where their rhetoric is—and nobody can blame them for not wanting to put their money anywhere they don’t have to. But that doesn’t make it fair. “100 years of inequity” is right. It’s long past time to make it wrong.