There Is Too Much Music Out There (Part 2)

Hello, readers. It was wonderful seeing folks at the Water & Music Summit earlier this month and also catching folks at Music Biz this week. I’m here till tomorrow afternoon if you’d want to try and say hey. Earlier this month, I published my first piece in Music Business Worldwide in nearly five years that dove into the slowing growth of ad-supported music streaming revenue. Last, I’ll be off for a couple of weeks to recharge, so the next newsletter will come out on June 7th. Before then, if you’re in New York City, a couple of friends and I will be hosting hula hoop our second party at Mood Ring on May 31st. Now, let’s get into the topic the industry cannot shut up about: Artificial Intelligence.

The sudden arrival of hype around “artificial intelligence” is easy to clock. ChatpGPT-3, a large language model chatbot built by OpenAI, arrived late last November while the broader tech industry saw rolling news of tech layoffs, stock prices cratering, and the fall of FTX, a major blow to tech’s previously hyped cycle of crypto. All of that would point towards the fact, the technology industry, particularly executives and investors, was in desperate need of a new story to tell. WebWhat 3? AI is the new future.

That gloomy outlook necessitated some pivot and the fact ChatGPT and other generative AI models produce easily shareable content to clutter social media feeds used to build potential hype or fear. (White-collar job security suddenly became an ongoing concern.) Right now still in the middle of the hurricane of lofty expectations, the financial press finally clued into this fact by observing that companies at this point just saying the phrase “AI”, watching their stock prices (and wealth) recover, or decline in the case of Chegg, even without a fully articulated business plan towards higher productivity to justify the stock jump. The music industry followed a slightly different path.

The topic of artificial intelligence and music isn’t at all new. Around five years ago there were a number of pieces on the subject that contextualized machine-created music in a decades-old history, identified many potential legal concerns, and plenty of startups are already experimenting in this space. Unsurprisingly basically all of that prior knowledge was thrown out the window over the last six months. Instead, we’ve swung between paranoid headlines in a cacophonous frenzy. There is a good reason for that because there’s been a real breakthrough in generative AI technology that allows for the increasingly easy creation of audio, images, and text. And similar to ChatGPT the rush to get these various tools into the hands of consumers is how you’re able to find numerous “AI” remakes of songs on platforms like YouTube, or the entire controversy that arose because of a novelty Drake-soundalike track that was quickly purged from the internet.

Yet, while there are these efforts buzzing around social media firms across the music industry are all taking different views. According to the Financial Times, Universal Music Group sent out a letter to the major streaming platforms telling them to be careful of what AI content they’re allowing on their platforms and if any UMG work is being used to train these programs. This is certainly a different tone than what can be seen from platforms like Anghami or Tencent Music that actively lean into stating they’re using AI content or Spotify that announced an unimaginative “AI DJ” tool, which is basically just Siri for playlists. Douyin, the Chinese version of TikTok, recently announced a few steps it’s taking to address generative content. Then Deezer, talking from both sides of its mouth said it would work with labels to stop generative music from flooding its platform and is also using “AI” tooling for Zen, its wellness app. The split use cases are indicative of the fact that what “AI” even means right now is so fluid that making declarative statements is likely foolish. Still with all these different use cases it would appear that the legality of these works and projects, and the role of government, is clearly something that’ll be up in the air.

The previous issue of this newsletter focused on 2023’s oversaturated media environment, because the rush of attention suddenly backgrounded the economic viability of these works, absorbing so much attention. I’d like to stipulate, the potential of these technologies for scientific discovery and research may be exciting, but that’s well beyond the scope of this newsletter to say. Instead, I’d argue that nearly all works using generative AI, or even thoughtful exercises of the technology, are derivative, unimpressive, digital slurry that I’m saddened to see impress people at all. The willful ignorance to witness low-effort works, extrapolate a future that isn’t here, and begin prepping for it, is disappointing. But, my personal feelings aside, there are plenty of other concerns around AI beyond what’s hitting music headlines.

What’s remarkable about the sudden hype cycle around “AI” is that because of the proliferation of consumer-facing products, many actors typically that might be slow-moving jumped into a higher tier of engagement. Italy for instance banned Chat-GPT for violating privacy concerns and subsequently reallowed it after some conditions were met. The United Kingdom Competition and Markets Authority announced it would look into the “foundation models” of large language models, and this comes on the heels of the authority, which conducted a recent study on the UK music industry, getting more power to punish particular tech firms. (The European Commission is also inching towards some regulation at the moment.) Lina Khan, the head of the US’s Federal Trade Commission, earlier this month penned an op-ed on artificial intelligence technologies for the New York Times that took a similarly expansive view of what the regulator can do to reign in this technology.

The fact that most of the initial chatter around “artificial intelligence” is centered around public-facing mashups of previous works by Google, Microsoft, and now Facebook and Amazon may only intensify the level of potential regulator scrutiny. Matt Stoller in his newsletter BIG, suggested that Google is ready to hype AI as a way to further skirt potential regulations over its digital advertising monopoly, which likely will incorporate this technology. Then there are already a number of previous legal cases over name, likeness, and image that may be brought up as folks try and understand what the limits of this may be. The century-plus of legal lawsuits over songwriting, then recorded music, would say that despite what boosters may say, there’s no technology so fundamentally different that it cannot face the concerns of music copyright holders when rulings have been made on these topics prior to the invention of recorded music. This is important to establish because the music industry is one where established powers will actively mold what they think would make sense for how this new technology may or may not be used. Even saying that there is already a market emerging for artists ready to jump headfirst into this hype cycle.

Grimes, an ever-shrewd marketer, released her own AI product that allows for the usage of AI reproductions of her voice. She’s offering for $9.99 a year the ability to use her AI voice in place of 50% of the royalties, while also saying “copyright sucks”. (Let’s not forget Grimes helped spark early hype around music NFTs.)  The music industry’s preoccupation with novelty gave Grimes numerous headlines around this stunt but it felt like a clear example of some limits of AI music in an era of streaming. If an artist uses GrimesAI, then it still is forced to go through the existing pipes of digital music distribution that both may not be interested in hosting this music and will be quickly lost in the shuffle of thousands of songs uploaded every day. Beyond the novelty of saying you used the GrimesAI, or the inverse of you’re now within an AI voice model, it’s hard to see that breaking through in a meaningful way. Just another tool with a highly political-cultural context.

Even an artist's voice model would be pretty tied into the previously established works of that artist. There’s a reason that artists like Lil Uzi Vert, Playboi Carti, and Pi’erre Bourne can see fan bases clamoring for unreleased tracks and new music, even with ample amounts of leaks, remakes, and even AI remakes of their works floating out there. People are fans of the artist, not replications of their work. Even Holly Herndon, an artist, who has done quite a bit of work with AI versions of her own voice is heeding some warning to artists potentially signing deals that allow voice models. The concern is over not fully understanding the ramifications of where the technology might go. The buzz and attention shouldn’t make people forget the industry’s already existing structures.

In the last couple of weeks, Boomy, a startup that allows for generative music creation, saw numerous tracks pulled from Spotify over concerns of fraud. The company’s “claim” of 13% of the world’s music, if true, would certainly advise a closer inspection of what is being uploaded to any platform, no matter the origins. (The value of that celestial jukebox is likely diminished if one firm can claim that remarkable market share of recorded music.) That concern could be seen in Believe stating they’ll be trying to limit generative works distributed via Tunecore. The level of legal uncertainty combined with resource strain on firms that are all doing a closer examination of their budgets may prevent the floodgates of AI content from hitting a streaming service near you.

To return back to the thought that kicked off my initial newsletter on the topic: digital music altering of the music industry wasn’t simply one of piracy and music becoming free. Instead, the industry squeezed too tightly on its customers and figured out that one can extend copyright far enough to basically encompass nearly all forms of digitally mediated musical expression. Artificial intelligence tools may further streamline parts of music production but that’s a century-long process that will still funnel into a streaming model that may be at a tipping point to absorb all this content. Add in the likely intense legal and regulatory battles that would suggest the future of this technology is likely less in the hands of its creators but rather than the same industry power players.

Unheard Labor

A coalition of groups in New York including the Union of Musicians and Allied Workers, Music Workers Alliance, unions Secretly and Bandcamp workers, and other local groups are holding a protest of Penske Media, a 50% owner of SXSW to improve the pay of musicians at the festival. I’m gonna try and make it out there, if folks are around. The Writers Guild of America remains on strike at the moment, with more shows shutting production and even the Tony Awards no longer being televised. As said before, solidarity to all of the writers on strike to get the contract they deserve.

Government Rhythms

Today, I finally broke out labor and governmental news. Probably should’ve done this years ago but such is life. Canada passed a bill requiring streaming platforms to fund Canadian media, better promote Canadian works within their platforms, and also place these companies under the Canadian Radio-television and Telecommunications Commission. As I mentioned last issue about the French streaming tax, it makes sense that these platforms are being folded into already existing government institutions, rather than starting from scratch. Facebook is mad at the Federal Trade Commission because the FTC proposed pushing back on the company’s ability to profit off of children’s data. The company responded saying this could cause the United States to fall behind China. Absolutely drivel coming from Facebook, who is increasingly ready to hit the nationalist button whenever receiving any government scrutiny.

A Note of Financialization

Duetti, a music finance start-up, raised $32 million from Presight Capital, Viola Ventures, Viola Credit, Untitled Capital, and perhaps most curious to me Roc Nation. Two of the founders came from Tidal, so the Roc Nation investment isn’t shocking but still caught my eye. In international deals news: blackx (?!) bought the catalog of the Taiwanese songwriter Frances Wang; and Pythagoras Music (excellent name) purchased the rights of Dominic Bugatti, who I learned co-wrote one of my favorite songs (“The Music Sounds Better With You”). Iconoclast also bought the publishing catalog of Switch, perhaps best known for his work with M.I.A. back in the 00s. Then, in our Securities and Exchange Commission filing corner: Anghami is below the minimum valuation ($50 million) to remain the NASDAQ, and the company also appears to have still not reported financials from last year. Great look!

6 Links 2 Read

The Boomy/Spotify Streaming Fraud Debacle Proves ‘Pro-Rata’ Must Go – Urgently - Music Business Worldwide

Tim Ingham makes the quick case that pro-rata streaming is hitting a breaking point and something must change. Luckily for Tim, UMG and WMG are already on board with this line of thought and I expect more, not less, consternation over streaming models. The increased government interest in streaming we’ve seen the last couple of years and musicians standing up for themselves with the ‘Justice at Spotify’ campaign and Copyright Royalty Board hearing would say, this struggle is in its early days.

Mixtape Platform Spinrilla to Pay $50M for Copyright Infringement - Billboard (Subscription)

Back in 2015, I wrote that the golden age of rap mixtapes might’ve been over, and yeah that appears to be the case. Spinrilla, a lesser mixtape site to be honest, was forced to shut down, Datpiff is basically gone, and I guess we can only hope Livemixtapes doesn’t go down. Back in the mid-2010s, I could sense that the rise of streaming put a clear target on the backs of mixtapes sites, because beyond potential copyright infractions, the sites offered a more compelling product to streaming at the time (downloads and streaming for free). Just another instance to never take a digital moment for granted because nothing is permanent, certainly not involving digital files.

The Great Music AI Contradiction (Live at Wavelengths Summit) - Money 4 Nothing

I’m bummed I missed this panel at the Water and Music Summit, but this is a great parallel conversation to what I’ve covered in my most recent newsletters. Already existing power structures shouldn’t be so underestimated in what shapes new technologies.

Between Two Webs Australian Music & NFTs - Ian Rodgers, Benjamin A Morgan, Dave Carter

This academic study on NFTs, co-authored by Penny Fractions reader Ben, basically says the technology is too opaque, the self-selected audience is too small, and no one knows what they are for. Certainly not unfamiliar concerns for this newsletter.

The Case for Keeping Music Streaming Prices Where They Are (Guest Column) - Billboard / Is SiriusXM streaming’s unsung hero? - Hypebot

Russ Crupnick, the managing partner of the research firm MusicWatch, wrote a couple of pieces that piqued my interest. Both center on the insight that music’s untapped demographic is older users and that keeping prices low right now could be helpful in luring these people over to streaming. This is why Crupnick gave a bit of praise to SiriusXM, as a potentially overlooked part of the industry. Certainly, the company’s financial contribution to the industry is notable but it's odd to harp on SiriusXM’s own subscription product where Q1 2023 was lower than the last three years. If there is potential in this older audience it would appear SiriusXM, even if well positioned, isn’t doing much to capture that fact.

Fandom's Erotical Illusions - Exiled Fan

Monia teases out the ways that AI could interact with fandom communities, and I think a great point made is that it’s a little bizarre AI is arriving when so much entertainment consumption is geared towards the superfans, “community”, and things that basically ask more, financially and of one’s time, of someone; while there’s a paranoia over a flood of derivative works. That contradiction is one this topic will continue to tie and untie.