Exploration Weekly - Artist Rights Alliance Addresses AI Developers In Open Letter / ICMP Launches Rights Reservations Portal / BMI Members to Receive $100M Bonus From New Mountain Sale

There is a lot of video content out there, and much of it uses music! Synchronization licensing is the process by which production companies of audiovisual works clear the rights for outside music to use in their videos. Synchronization is a burgeoning corner of the music industry, and for a musician, a placement in a major television show, film, advertisement or video game can boost their career in innumerable ways.

Our guide has been written to provide a comprehensive overview of the world of synchronization licensing.

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In this newsletter:

• Artist Rights Alliance Addresses AI Developers & More In Open Letter
• ICMP Launches Rights Reservations Portal Setting Out the Legal and Moral Obligations of AI Companies
• BMI Members to Receive $100M Bonus From New Mountain Sale. How Will It Be Split?
• Spotify’s 1,000 Streams Royalty Limit Now In Effect
• Michele Ballantyne Promoted to President and COO at RIAA

The Artist Rights Alliance (ARA) has penned an open letter, backed by over 200 artists, urging AI developers and tech entities to cease utilizing AI in ways that compromise the rights of human creators.

A new portal has been launched by the music publishing sector collating ‘rights reservations’ from music publishers which clearly state that those companies’ rights have been reserved from any data and text mining exceptions in copyright law, in particular the exception in European law.

BMI, recently acquired by New Mountain Capital, has informed songwriters and publishers that its previous owners, including radio and TV stations, have distributed a $100 million bonus from the sale proceeds, which reportedly exceeded $1 billion. Each songwriter and publisher was notified of their individual payout.

Now, the details...

Exploration Weekly - April 5, 2024
Compiled by Ana Berberana

Artist Rights Alliance Addresses AI Developers & More In Open Letter

The nonprofit, artist-led education and advocacy organization Artist Rights Alliance (ARA) has addressed artificial intelligence (AI) developers, technology companies, platforms and digital music services in an open letter, supported by more than 200 artists, urging them to stop using AI to “infringe upon and devalue the rights of human artists.” This follows the global discussion on the responsible use of AI in music as well as the Ensuring Likeness Voice and Image Security (ELVIS) Act signing in the state of Tennessee. The ELVIS Act establishes protections for every person’s unique voice and likeness against unauthorized AI deepfakes and voice clones. Similar legislation is being discussed in the U.S. Congress and in several other states. In the letter, ARA highlights the use of musical works by AI developers without permission to train and produce AI “copycats” as well as the use of AI “sound” to dilute royalty obligations. “Working musicians are already struggling to make ends meet in the streaming world, and now they have the added burden of trying to compete with a deluge of AI-generated noise,” explains Jen Jacobsen, ARA Executive Director. “The unethical use of generative AI to replace human artists will devalue the entire music ecosystem—for artists and fans alike.”

ICMP Launches Rights Reservations Portal Setting Out the Legal and Moral Obligations of AI Companies

The International Confederation Of Music Publishers has launched a new online portal where music publishers and collecting societies can log their ‘rights reservations’. These are basically statements via which copyright owners formally opt-out of text and data mining exceptions that exist in some copyright systems and which many AI companies rely on when using unlicensed content to train generative AI models. The new portal, ICMP Director General John Phelan says, “is a digital resource for music companies worldwide to reaffirm that artificial intelligence must respect real rights. There is no legal, commercial or moral excuse for using the world’s music without respecting copyright. As an industry, we remind AI companies - of all sizes, everywhere - to work with us and do all they must to secure a truly legal, secure and innovative AI marketplace”. The music industry is adamant that any AI company using existing recordings or songs to train a model must first get permission from the relevant copyright owners. However, many AI companies argue that they do not need permission because AI training is covered by some kind of exception in copyright law. Either a specific exception covering commercial text or data mining - such as in the EU, Singapore or Japan - or the more general concept of ‘fair use’, in the US in particular, but also Israel. In the main, the music industry would argue that neither the data mining exceptions nor fair use actually apply in this context, the exact legal arguments depending on which copyright system you’re talking about. However, European law also provides an opt-out - or, technically speaking, a ‘right to reserve’ - which, when employed by a rightsholder, removes any ambiguities over whether or not the data mining exception applies. Because it does not. In the words of the 2019 EU Copyright Directive, the European data mining exception “shall apply on condition that the use of works ... has not been expressly reserved by their rightsholders in an appropriate manner, such as machine-readable means in the case of content made publicly available online”. Various rightsholders in the music industry have already reserved their rights in this way, with French collecting society SACEM making a big statement to that effect last year. The new ICMP portal will allow rightsholders to log their rights reservations in one place, making it easier for AI companies to see what rights have been reserved.

BMI Members to Receive $100M Bonus From New Mountain Sale. How Will It Be Split?

BMI, which was acquired by New Mountain Capital in February, last night notified songwriters and publishers that its previous owners, mainly radio and TV stations, have followed through on their commitment to disburse a $100 million bonus from the undisclosed amount received for the sale — which sources say was over $1 billion — to songwriters and publishers. What’s more, it disclosed to each songwriter and publisher how much they will be receiving. Songwriters and publishers expressed gratitude for the payout — after all, the sellers were under no legal obligation to share any of the sale price with BMI members. In fact, some consider it a very generous reward from the prior owners. However, other sources have suggested that morally, the previous owners should share something, considering it was songwriters’ and music publishers’ rights that generated all the licensing revenue and created the value for the sale price to be achieved. In any event, publishers and songwriters contacted by Billboard Thursday (March 28) said they were engaging in mathematical analysis to try and figure out what their payment represented, even though BMI laid out on its website some details on how it arrived at each individual payout. According to the website, BMI looked at the most recent five years of payouts (2019-2023) and used that as a basis to determine how much each payout should be — after taking into consideration whether the songwriter’s catalog was there for all five years or is still there even if the songwriter has left. Then, it apparently divided songwriters into tiers based on undisclosed parameters and paid every songwriter or publisher in that tier the same amount according to the website. Only songwriters or publishers that had received over $500 in royalties were eligible for a bonus distribution. BMI didn’t provide any information on how it calculated allocations other than to say it split the bonus payouts evenly between songwriters and publishers — and that sold catalogs’ bonuses would be pro-rated between the new owners and old owners. But it did disclose that the method it used “is different from how we calculate our quarterly distributions,” according to the letter signed by BMI president/CEO Mike O’Neill that accompanied news of the allocation. “We thought very carefully about how we determined this allocation and made every effort to be as inclusive as possible and have it applied to the greatest number of earning BMI affiliates,” O’Neill’s letter stated. “Your allocation is truly well deserved, and I’m very pleased to deliver it to you on behalf of BMI’s former shareholders. Moving forward, your future with BMI is brighter than ever.”

Spotify’s 1,000 Streams Royalty Limit Now In Effect

Spotify’s payout to the music industry has topped $40 billion and counting. Now royalty changes announced by the DSP have gone into effect as of April 1st. Spotify says it found three drains on the royalty pool that “reached a tipping point” — demanding changes to how royalties are distributed. The idea behind these changes is to deter artificial streaming, better distribute small payments to artists, and rein in bad actors attempting to game the system with noise. Spotify says it expects these changes to drive an additional $1 billion in revenue toward emerging and professional artists over the next five years. Spotify hosts well over 100 million tracks, with tens of millions of them streamed between 1 and 1,000 times. On average, tracks that generate less than 1,000 streams per 12 months generate around $0.03 per month. With distributors requiring a minimum amount for artists to withdraw their earnings—these small payments often get left behind. As of April 1, tracks must have reached 1,000 streams in the previous 12-month period in order to generate recorded royalties. “There is no change to the size of the music royalty pool being paid out to rights holders from Spotify; we will simply use the tens of millions of dollars annually to increase the payments to all eligible tracks, rather than spreading it out into $0.03 payments,” Spotify says.

Michele Ballantyne Promoted to President and COO at RIAA

The Recording Industry Association of America (RIAA) has elevated Michele Ballantyne to President. Ballantyne will continue to serve as Chief Operating Officer overseeing daily operations while leading the 56-member team, the RIAA said Monday (April 1). Prior to joining the RIAA in 2004, Ballantyne has worked in senior US government positions including as a former Special Assistant to President Bill Clinton, Special Counsel to then-White House Chief of Staff John Podesta, and as General Counsel for Senator Tom Daschle. At the RIAA, Ballantyne has worked closely with Chairman & CEO Mitch Glazier, leading daily operations and representing the association at policy and industry events. She promoted legislative initiatives to celebrate artists’ biggest moments, support creators and protect their rights. Ballantyne was appointed COO in 2019. Under her leadership, the RIAA also embraced the challenges and opportunities presented by artificial intelligence in the creative sector. She has addressed the implications of AI-generated content at industry events, including at the ‘AI Generated Content and the Music Industry’ panel discussion at Music Biz. RIAA, as a founding member of the Human Artistry Campaign, continues to lead on the AI issue. The association also supports Tennessee’s landmark ELVIS Act, and drives federal protections such as the No AI FRAUD Act and NO FAKES Act proposal. “As a music fan who’s also had a front-row seat to the Washington policymaking, I’m grateful to spend my days connecting these communities – helping them understand and work with each other,” said Ballantyne. “This expanded role leading RIAA alongside Mitch [Glazier] will allow us to continue fighting for a diverse industry that innovates, creates and thrives. Music has always had the power to shift perspectives and drive culture forward. I look forward to what our label partners and talented artists dream up next – and we will be here to champion it!”

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