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What is a Record Label?

Record labels have been around nearly as long as recorded sound. For years, being signed to a label was thought to be synonymous with “making it” in the music industry. While the internet and digital technology have made it easier for artists to succeed without record labels, they still play major roles in the industry. However, many individuals lack a basic understanding of record labels’ responsibilities, structure, or history. Our guide explains just what a record label is and does.

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In this newsletter:

Universal Music Publishing, Concord and ABKCO have sued AI company Anthropic for copyright infringement, claiming that the tech firm has copied and exploited lyrics they control without license.

French song rights collecting organization SACEM demands authorization for AI data mining and machine learning of its catalogs, having opted out of a data mining exception under European law.

BMI's CEO, Mike O'Neill, has confirmed ongoing discussions with a potential partner regarding a company sale, though no deal has been finalized. While the partner remains unnamed, there are indications that private equity firm New Mountain Capital may be involved.

Now, the details...

Exploration Weekly - October 20, 2023
Compiled by Ana Berberana

Music Publishers Sue AI Company Anthropic for Copyright Infringement

Music publishers Universal Music Publishing, Concord and ABKCO have sued AI company Anthropic for copyright infringement through the US courts, accusing the tech firm of copying and exploiting lyrics that they control without license. The publishers reckon that, while Anthropic's technology may be "complex and cutting edge", the copyright arguments in their lawsuit are super simple. Indeed, they say, a cursory glance of the Statue Of Anne of 1710 - which kickstarted English copyright and went on to influence other Anglo-American copyright regimes - will demonstrate how Anthropic is liable for copyright infringement. “A defendant cannot reproduce, distribute and display someone else’s copyrighted works … unless it secures permission from the rightsholder”, they state. “This foundational rule of copyright law dates all the way back to the Statute Of Anne in 1710, and it has been applied time and time again to numerous infringing technological developments in the centuries since”. "Anthropic builds its AI models by scraping and ingesting massive amounts of text from the internet and potentially other sources", it goes on, using "that vast corpus to train its AI models and generate output based on this copied text”. Crucially, "included in the text that Anthropic copies to fuel its AI models are the lyrics to innumerable musical compositions for which publishers own or control the copyrights”. "As a result of Anthropic’s mass copying and ingestion of publishers’ song lyrics", the lawsuit goes on, "Anthropic’s AI models generate identical or nearly identical copies of those lyrics, in clear violation of publishers’ copyrights".

SACEM Demands Authorization for AI Data Mining and Machine Learning of Its Catalogs

SACEM, the French Society of Authors, Composers, and Publishers of Music, has issued a statement that prior authorization from the rights organization is required for any training of AI using its members’ music. The statement follows SACEM’s formal opting out of a data mining exception existing under European law. While the society specifies that it does not “oppose the development of artificial intelligence,” which it admits offers a wealth of potential opportunity for music creators, it seeks to “establish a sustainable and virtuous balance” between the creator and publisher rights it represents and the “ambitions of the players in the artificial intelligence field.” The European Union’s 2019 copyright directive introduced an exception for text and data mining that AI companies could cite when training their artificial intelligence models. But it also enables copyright owners the means to opt out. By exercising its right to opt out, SACEM “intends to restore the exclusive rights of creators by making data-mining operations subject to prior authorization.” “Entities that use SACEM’s works to feed their training databases and carry out data mining activities based on them will have to request prior authorization from SACEM and expressly negotiate the conditions of use,” SACEM explains. “Our aim is not to ban AI, or to slow down its development, but to make it more virtuous and transparent,” says SACEM CEO Cécile Rap-Veber. “Our members’ creative works must not be used without their consent to enrich and train AI tools.”

BMI CEO Confirms ‘Discussions With a Potential New Partner’

BMI boss Mike O’Neill has provided the latest response to the swirl of speculation about a potential sale of his company. “I can confirm that we are engaging in discussions with a potential new partner, and while our conversations are ongoing and have been very productive, no deal has been signed at this time,” wrote O’Neill in his introduction to BMI’s latest annual report. He did not name the potential partner, but recent reports suggested that private equity firm New Mountain Capital was the company concerned. O’Neill also responded to another recent question around BMI’s business: its profit margins. He confirmed that the company plans to retain a higher percentage of the royalties that it collects for its members. “As we look at the next three years of our business, our goal is to distribute 85% of licensing revenue to our songwriters, composers and publishers and retain approximately 15% to cover our expenses overhead (which have historically run around 10%) and a modest profit margin,” wrote O’Neill. “For context, this is well below the margins taken by comparable for-profit businesses in our industry.” However, BMI’s main rival, Ascap, is not a for-profit business. Its most recent annual report said that in 2022 it was “delivering 90 cents of every dollar back to its members as royalties”, and given its recent public jabs at BMI, it’s likely to see the latter’s 15% news as another opportunity to be seized.

Music Health Alliance Offers Free Open Enrollment Assistance to Music Community

The MHA says its advocacy work has saved more than $120 million in healthcare costs and helped musicians secure live-saving resources for medical procedures, mental health care, senior care support, diagnostic tests, prescriptions, and more. Currently, the MHA is offering free appointments for individuals, groups, and seniors across the country to ensure they get the healthcare coverage they need. The service is open to any person who has worked in the music industry for three years or more. Spouses, legal domestic partners, and dependent family members may also qualify. Medicare open enrollment dates begin October 15 through December 7, while the Healthcare Marketplace’s open enrollment period begins November 1 through January 15. During the open enrollment period, MHA healthcare advocates will meet by phone or Zoom with clients, advising and enrolling members of the music industry and their families in the best healthcare or Medicare plans that meet their needs and budget. If there has been an income change, a change in coverage, or simply a need to help navigate the complicated health insurance landscape, MHA will help. Considering booking an appointment? You should do so quickly as to have coverage by January 1 the enrollment process must be completed by December 15. MHA is funded entirely through grants and individual and corporate donations. Every $1 donated equals $30 in live-saving healthcare and mental health services to help heal the music community.

Spotify Rolls Out Personalized In-App ‘Merch Hub’ Based on Users’ Listening Habits

Spotify has launched a personalized Merch Hub in the Spotify app. The new feature provides personalized recommendations based on users’ listening habits, according to a blog post on Monday (October 16). Previously, users could only access artist merch through individual profiles, the ‘Now Playing’ view, and release pages. Now, with Merch Hub, all artist merchandise is consolidated in one place. To access the new feature, users can search for “Merch” or head to the Merch tile on the search page. The hub will allow users to browse and learn more about various merch items. When ready to make a purchase, the process is facilitated through the artist’s Spotify store, powered by Shopify. The new feature arrives two years after Spotify partnered with e-commerce platform Shopify to let artists sell merch through their artist profiles on the streaming platform, but the pair have now expanded their alliance, launching a dedicated and personalized Merch Hub in the Spotify app. Spotify says the new initiative follows last year’s “highest-grossing merch sales week” for artists in Spotify after seeing users’ Wrapped results. This year’s Spotify Wrapped is slated to be unveiled in the final week of November. “The new merch hub on Spotify is the first-ever merch shopping experience that is tailored to an individual’s listening habits and fandom. Spotify pulls personalized recommendations for you, specifically, into your merch hub experience, so offerings from your favorite artists find you – not the other way around,” said Heather Ellis, Product Marketing Manager, Fan Monetization at Spotify.

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