The American Federation Of Musicians says that the major record companies are trying to interpret a ‘new use’ clause in their Sound Recording Labor Agreement in a “nonsensical” way that would “swallow” a bargain made between the US musicians’ union and the record industry all the way back in 1999.
That new use clause is in the spotlight because AFM reckons it requires Warner Music and Universal Music to share the money generated by their respective Udio licensing deals with any musicians who were hired under the union’s agreement. Plus the majors have an obligation to tell AFM members about those deals and any other AI licensing partnerships they enter into.
So far neither major has communicated with or compensated AFM members in connection with their big Udio partnerships. Which prompted the union to file a lawsuit against both record companies in the New York courts. Sony Music isn’t being targeted at the moment, but only because it hasn’t got round to agreeing a licensing deal with Udio yet.
Earlier this month both Warner and Universal wrote to the court claiming that it’s the AFM that is incorrectly interpreting the new use clause, and that that clause definitely doesn’t apply to their lovely new AI deals, and therefore the judge should quickly kill off the lawsuit.
AFM says that the new use clause is quite straightforward: if a sound recording is used by a record company in a new way that is not covered by the Sound Recording Labor Agreement - or SRLA - there is still an obligation to compensate the musicians who appear on that recording.
The majors argue that the clause is actually a little more complicated than that. Basically, the clause says that - if and when a recording is used in a new way not covered by the SRLA - a musician should be paid as if they were brought back into the studio to record music specifically for that use, based on whatever standard agreement would cover that kind of recording session.
However, there is no standard agreement for musicians relating to AI training - at least not yet - and that renders the new use clause redundant as far as the majors are concerned. In its letter to the court, Warner wrote, “where no agreement exists covering the new medium”, the new use clause “has nothing to point to” and therefore “there is no entitlement to payment”.
But that’s just not true, says AFM in its own letters to the court. The new use clause “applies to all new uses”, it insists, and “not simply those with a rate already established in another AFM agreement”. Not least because, “given how quickly technology reshapes”, a “contrary reading” would be “nonsensical”.
Looking back to 1999, it says the new use clause was added for the benefit of the labels, because it “opened the door to reusing recordings for purposes not known at the time”. But “the bargain struck was that the companies would have to compensate musicians for that reuse”.
By seeking to reduce the scope of the new use clause now - basically so it almost becomes redundant - would “swallow the bargain, letting companies profit from licensing recordings to AI companies while avoiding payment to musicians”.
Just in case the judge isn’t swayed by that argument, AFM’s letters make two further points.
First, while there isn’t currently an AFM agreement covering AI training, music generated by Udio and other AI platforms may be subsequently streamed or synchronised into videos, and there are agreements covering those uses. So if there needs to be existing agreements for the new use clause to point to, in this scenario it could probably point to the streaming or sync agreements.
And second, even if AFM has to concede that the new use clause is “ambiguous and susceptible to more than a single interpretation”, that ambiguity means the judge shouldn’t dismiss the union’s lawsuit at this stage, meaning the case should be allowed to proceed.
As record companies and music publishers announce more and more AI licensing deals, there is an increasingly vocal debate within the music community about how those deals will work.
First, should the consent of artists and songwriters be sought before allowing their music to be included in deals negotiated by labels and publishers? And secondly, how will all the different music creators - including session musicians and studio producers - share in the money generated?
For some musicians, especially some session musicians, union agreements are part of that debate, making this dispute between AFM and the majors very interesting.