Exploration Weekly - Record Industry says AI Training With Existing Music Not "Fair Use" / The MLC Launches New Supplemental Matching Network / CISAC President Urges EU for AI Act Transparency

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In this newsletter:

• The MLC Launches New Supplemental Matching Network
• CISAC President Björn Ulvaeus Calls on EU to Keep Clear Transparency Obligations in AI Act
• Impala Has Questions for Spotify Over New Royalties Model
• Record Industry Tells US Copyright Office Training AI With Existing Music is "Rarely, if Ever, Fair Use"
• Uruguayan President “In Talks” with Spotify to Prevent Departure

The MLC has introduced a Supplemental Matching Network, comprising five companies (Blokur, Jaxsta, Pex, Salt, and SX Works) to provide data matching services enhancing The MLC's existing processes.

CISAC and its President Björn Ulvaeus have called on European lawmakers to ensure that clear transparency obligations remain in the EU AI Act, ahead of crucial talks in Brussels this week to agree on a final version of the AI regulating legislation.

Spotify's recent announcement of changes to its royalty calculation and payout system, aimed at generating an additional $1 billion in revenue for emerging and professional artists over five years, has received mixed reactions from European indies represented by Impala.

Now, the details...

Exploration Weekly - December 8, 2023
Compiled by Ana Berberana

The MLC Launches New Supplemental Matching Network

The Mechanical Licensing Collective (The MLC) has launched a Supplemental Matching Network initially consisting of five companies that will provide data matching services to complement and enhance The MLC’s existing matching processes and capabilities. The services offered by the participating vendors will supplement The MLC’s existing internal capabilities as well as the resources already being provided by The MLC’s existing vendors. The MLC may adjust the scope of services in the Supplemental Matching Network as needed to meet future and evolving needs, including engaging additional vendors if appropriate. The Supplemental Matching Network will initially include Blokur, Jaxsta, Pex, Salt and SX Works, a SoundExchange company. To select these vendors, The MLC completed an assessment that included both qualitative evaluations through a Request for Information (RFI) and subsequent quantitative testing through pilot programs. This comprehensive selection process aligned with the approach The MLC has implemented when evaluating other strategic vendors. “We conducted an extensive due diligence process to select the initial set of vendors for our Supplemental Matching Network,” says Andrew Mitchell, Head of Analytics & Automation, The MLC. “These vendors bring complementary technologies and capabilities that can be effectively leveraged to serve our members. This network reflects our ongoing commitment to evolve in innovative ways to best achieve The MLC’s mission.”

CISAC President Björn Ulvaeus Calls on EU to Keep Clear Transparency Obligations in AI Act

CISAC is the latest music industry organization to urge European lawmakers to ensure that clear transparency obligations remain in the final version of the European Union's AI Act. The call came on Friday ahead of crucial talks in Brussels this week. "We are writing on behalf of more than five million creators of diverse repertoires and from different regions across the world to ask the European Union to ensure proper transparency principles are laid down in the EU AI Act", it said in a statement. CISAC’s membership includes all the song right collecting societies, plus societies representing literary and artistic works. The EU's AI legislation is not specifically focused on generative AI - the kind of AI of most interest to the music industry - but it does include some regulation of it. In particular, transparency obligations for AI companies, something the music industry has been demanding. The act is in the very final stage of negotiation, where the European Commission, European Parliament and EU Council try to agree on a final text. Some EU countries are seeking to relax the rules at this final stage following fierce lobbying from the tech sector. The music industry is keen to ensure that that doesn’t happen and that the transparency obligations remain. CISAC President Björn Ulvaeus, of Abba fame, added on Friday: "Transparency obligations are now the focus of intense discussion of the draft EU regulation. I hope it is understood what is at stake here, and that those countries with the strongest and proudest cultural traditions have the greatest interest in protecting their own creators and culture sectors in the AI-impacted future”. "I hope that those countries will understand", he concluded, "that transparency rules in the AI age will help them protect their own songwriters, artists and other creators and can be adopted without fear of stifling technology or innovation".

Impala Has Questions for Spotify Over New Royalties Model

Spotify recently announced plans to change the way it calculates and pays out royalties, claiming that this would drive around $1bn more revenue towards “emerging and professional artists” over the next five years. The plans included fining labels and distributors for artificial streaming detected on their music; new restrictions on ‘functional’ music including white noise, nature sounds and machine noises; and only paying recordings royalties for tracks once they have been streamed more than 1,000 times. This morning, European indies body Impala has published its response to the plans, after gathering views from its members across the continent in the last week. Impala is pleased about two of the measures being taken, welcoming the crackdown on fraud and the new restrictions on functional content, although it warned that it wants to see “checks and balances in place” for the first of those. However, it has some concerns about the royalties threshold. “The Impala board agrees with the aim of tackling revenue dilution, but opposes the principle of a ‘blunt instrument’ that demonetises repertoire altogether to the benefit of more popular tracks,” said the body in a statement. “They feel that the data for any change must show that smaller and less established labels and artists do not lose out, as well as deep catalog repertoire and of course smaller territories, specialist genres and longer tracks.” Read the full list of questions here.

Record Industry Tells US Copyright Office Training AI With Existing Music is "Rarely, if Ever, Fair Use"

The use of music to train a generative AI model "will rarely, if ever, be fair use". Or so say three organizations representing the US record industry which have again hit back at arguments made by tech companies that training generative AI models with existing content constitutes fair use under American law, meaning they don’t need permission from copyright owners. The first principle of copyright - say the Recording Industry Association Of America, American Association Of Independent Music and Recording Academy - is "to promote human creative endeavors”. "That purpose is served", they go on, "by protecting human creators from having their works used to develop generative AI models that threaten to displace human creators by producing outputs that do not embody human creativity while supplanting works of human creativity in the marketplace. Such uses will rarely, if ever, be fair uses”. The three organizations were responding to the US Copyright Office's ongoing inquiry into the impacts of AI on copyright. Thousands of submissions were made to that inquiry by both AI companies and copyright owners. Among other things, they set out in black and white the core disagreement between the AI sector and the copyright industries, i.e. whether or not consent must be sought before existing content is used in AI training or whether such use is fair use. Following the first round of submissions, interested parties were able to submit 'reply comments'. The deadline for doing so was yesterday. In their reply, the record industry groups also dispute the idea that tech companies having to navigate copyright and secure licenses to make use of existing content will stop the potential of AI from being realized. They say the Copyright Office should reject “the false and dangerous dichotomy posed by some of the tech companies and their supporters … suggesting that humanity and, by extension, the Office and Congress, is faced with a binary choice to either reap all the benefits that AI promises or respect the long-established legal rights of human creators”.

Uruguayan President “In Talks” with Spotify to Prevent Departure

Spotify announced it would cease service in Uruguay in February 2024 following the passage of a new music copyright bill requiring “fair and equitable remuneration” for authors, composers, performers, and artists in the country. In October 2023, the Uruguay parliament voted for Article 285, initiating the changes. Spotify says if the costs are passed on to streaming platforms, it would have to pay twice for the same music. “Spotify already pays nearly 70% of every dollar it generates from music to the record labels and publishers that own the rights for music, and represent and pay artists and songwriters”, a statement to MBW confirmed. “Any additional payments would make our business untenable.” Following those comments, local news in Uruguay reports that President Luis Lacalle Pou is in direct talks with the platform to resolve the conflict. “You have to be balanced. We understand that [Spotify] is a very important platform. You have to somehow take care of the interpreters, the authors. We are in talks. Let’s go ahead, I hope we are going to agree,” Lacalle Pou said in comments made to the local press. Spotify began informing its customers in Uruguay about the pending changes in the form of a notification upon opening the application and by email. The message says “Spotify will begin to gradually withdraw its service in Uruguay as of January 1, 2024 and will completely cease service in February.” Uruguay officials say they are in continued talks to prevent Spotify from leaving the country in that timeline.

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