📑 CMU Digest: Apple spatial rules benefit majors; Copyright Office explores AI licensing

Every Saturday CMU sends a summary of five key music business stories from the past week.

This week: Apple's 10% Spatial Audio bonus skews in favour of major labels; US Copyright Office will investigate AI licensing that could benefit music creators; Hipgnosis slanging match continues with "cherry picking" accusation; latest on music publishers vs Anthropic; if you were going to order a Notorious BIG shower curtain you might be out of luck.

🍎 Apple's new royalty boost for Spatial Audio will favour major labels

Apple Music told its label and distribution partners late last year that it would change its payment model to give a 10% 'bonus to tracks that are ‘spatial available’. An update this week confirmed that the new model will start this month.

While the new 'spatial bonus' offers clear benefits to artists and labels that can afford to master their music in Spatial Audio it will likely disadvantage those who cannot. To qualify for the 10% bonus a licensing partner will need to reach a ‘trigger’ where 50% of its streams in a month are from spatial available recordings. Once this happens the uplift will apply going forward. 

However, as most independent artists and labels do not have their own direct agreements with Apple Music they are reliant on their distributors meeting that threshold. This means artists and labels may face the prospect of missing out on the bonus even if they provide all their music in Spatial Audio. Even if they do qualify for the bonus, the way the it is calculated means major labels will likely benefit the most.

🤖 The US Copyright Office will investigate AI licensing models that could benefit music creators said its top lawyer

Suzy Wilson, the Copyright Office's General Counsel, was speaking about the government body's ongoing consultation on AI. Although most AI companies say training AI falls under 'fair use' and so a licence would not be needed many copyright owners disagree. And so the Copyright Office is considering how AI licensing might work, especially where large amounts of content are being used.

One proposal could be a compulsory licence, which would probably mean the Copyright Royalty Board would set the framework and royalty rates. Wilson admitted that the music industry in particular had expressed concerns about that approach. "We have already heard from the musicians and songwriters who have experience with the licensing model in other contexts," she said, "and they raise a number of questions about whether or not that would be appropriate".

🍒 Yet another spat in the slanging match between Hipgnosis Songs Fund and its investment adviser Hipgnosis Song Management

The new board of the publicly listed investment fund known as ‘SONG’ said that HSM “cherry picked” particularly high performing songs to be sold to another Hipgnosis entity, Hipgnosis Songs Capital. That sale was subsequently abandoned when shareholders voted against the proposal at the SONG AGM in October. 

The increasing tensions between the two companies are causing many - including City analysts - to question why they are conducting such a public airing of dirty laundry.

More filings from both sides in the music publishers vs Anthropic legal battle over AI training copyright infringement

The music publishers accuse AI firm Anthropic of copyright infringement for training its chatbot Claude with their lyrics without licence. In its new legal filing Anthropic fully set out its fair use defence for the first time. Insisting it doesn’t need licences because AI training constitutes fair use under US copyright law the company said “to train an AI model is a classic fair use”. 

Previously Anthropic called for the music publishers' lawsuit to be dismissed on jurisdiction grounds. The legal action has been launched in Tennessee rather than the AI firm's home state of California. However, the publishers said in their new filing, Anthropic has employees and customers in Tennessee, meaning the courts there have jurisdiction.

🛹 It's (shower) curtains for Notorious BIG skateboard sales as artist's estate settles publicity rights lawsuit

The estate of photographer Chi Modu owns the copyright in a number of photos he took of the late rapper, real name Christopher Wallace, back in 1996. However, the Wallace estate's lawsuit argued that the use of those images on merchandise products also exploit the rapper's publicity rights, and therefore its approval is required. 

In 2022, a judge said Wallace's publicity rights likely were being infringed by the products that featured Modu's photos, including the skateboards and shower curtains. The case was due to get to trial next month, but has now been settled. A legal rep for the Wallace estate said, “pictures of Christopher cannot be commercially exploited without a licence from our client".

🎙️ Setlist Podcast: Apple Music's "spatial audio bonus" favours major labels

On this week's show we discuss how Apple Music's "spatial audio bonus" will benefit major labels to the detriment of independent labels and creators; the report finding that on average two grassroots music venues per week closed down in the UK in 2023; and more. Click here to listen - or find Setlist wherever you get your podcasts.

ICYMI:

🇪🇺 The European Parliament voted to adopt a report​ published last year by its culture committee that calls for reform in the music streaming market. Issues highlighted in the report, which was spearheaded by MEP Ibán García Del Blanco, include how streaming revenues are shared, as well as issues around data and transparency, stream manipulation, and the power of algorithms. Depending on what happens next, this could mark the beginning of EU legislative reform to strengthen creator rights.

🤡 Spotify has used the introduction of the EU’s Digital Markets Act to take a series of potshots at Apple. In a blog post trumpeting the “freedom from gatekeepers” that the DMA brings, Spotify repeatedly swipes at Apple’s “ridiculous rules” which it says are “pretty nuts”. The new rules will allow Spotify more freedom to send promotional messages to EU users, different monetisation offers and superfan clubs. Whether users will appreciate more promo messages and paywalled content remains to be seen.

🧟‍♀️ The promoter of a Las Vegas tribute show ‘MJ Live’, billed as “the number one Michael Jackson tribute concert in the world”, has sued the late musician’s estate after a series of US venues set to stage the production received cease and desist letters. The estate argues its trademarks and Jackson’s publicity rights are being infringed, but the ‘MJ Live’ promoter wants a court to rule otherwise.

🪧 The chorus of the London Coliseum’s English National Opera - known for taking all those difficult foreign operas and translating them into good old plain English - will join a strike planned by orchestra members and other music staff for early February. This follows a plan by ENO to make them redundant and then rehire them for just six months each year.

😱 The US Mechanical Licensing Collective has warned a long list of streaming services that it intends to carry out a detailed audit to make sure they've been paying royalties correctly. Sounds dramatic, but actually it's not - and represents a huge leap forward in transparency. Of course, should it turn out that any of the DSPs being audited has significantly misreported royalties due to the MLC 'no drama' might turn to 'epic drama' in the blink of an eye.

🦇 Swedish black metal band Ghost has announced a “final” opportunity to get your hand - or, indeed, other parts of your anatomy - on some top notch merchandise. The band has gone to extreme lengths to give superfans the ultimate way to feel the very closest of connections with frontman Papa Emeritus with a limited edition “silicone adult toy”. Lucian Grainge would be proud.