The US National Music Publishers Association has struck template licensing deals for its members with AI platforms Udio and Klay, providing a model agreement for American independent music publishers who want to license their catalogues to either of the AI businesses.
And, according to NMPA boss David Israelite, songs and recordings are being treated equally in these deals - so AI licensing income will basically be split 50/50 between the two music rights - something, he says, the trade body has “always demanded”.
That’s very different to the prevailing model for music streaming, where recordings get the lion’s share of revenue, being paid more than three times what songs get.
Udio - like many other AI companies - originally launched its generative music platform without any licensing deals in place, arguing it didn’t need them because it regards AI training as fair use under US copyright law.
But then, partly in response to litigation from the majors, it started agreeing deals with labels and publishers, including Universal Music and Warner Music, as well indie label repping Merlin and independent music publishing firm Kobalt.
Klay, however, has taken a different approach, as the NMPA noted when announcing its AI deals yesterday. “Klay is unique”, it said, in that it is “one of very few companies to secure licences prior to launching its platform”. It already has deals in place with all three majors, so Sony Music as well as Universal and Warner, and the new NMPA deal will be formally launched “later this summer”.
Speaking at the NMPA’s Annual Meeting in New York yesterday, Israelite confirmed that the trade body’s Udio agreement is not only “the first ever industry-wide licensing deal with a major AI music company”, but also “the first that will value songs and sound recordings equally when it comes to AI training”.
That’s key for many songwriters and indie publishers, who have repeatedly called for AI licensing deals to treat songs and recordings equally when it comes to sharing out the revenue, unlike with streaming. So, basically, songs will earn the same as recordings when exploited by AI companies.
Last year IMPF, the global organisation for independent music publishers, urged its members to “say with conviction that they will not accept Al licensing agreements that do not allocate 50% of proceeds to songwriters and publishers”. And the European Composer & Songwriter Alliance also demanded that “any AI licensing deal should involve parity” between recordings and songs.
The distinction between recordings and songs - which are separately protected by copyright and generally managed separately within the music industry, by record labels and music publishers respectively - is key to any company making use of recorded music, including those copying recordings to train AI models.
In practical terms, it means - as AI companies start to do licensing deals with the industry - they need to secure licences that cover both recordings and the songs contained in those recordings, which can sometimes be done via a single deal with one music company, although it’s rarely that simple.
Udio’s deals with Universal and Warner cover both the recording and publishing catalogues of each major. However, many Universal and Warner recordings will contain songs owned by other publishers, which is why also getting deals in place with Sony and the indie publishers is very important.
And once you move beyond Anglo-American repertoire, deals will also be required with the collecting societies, because - in many countries - it’s the societies not the publishers that control the ‘mechanical rights’ that are exploited when AI models are trained. And to that end, Udio is also busy negotiating deals with at least some of the music industry’s collecting societies, including in Europe.
Quite how these AI licensing deals will work in practical terms remains something of a mystery, despite Israelite’s confirmation that songs and recordings will be treated equally.
AI platforms like Udio exploit music copyrights in various different ways, including during the initial training process, when derivative works are created by a model, and whenever those derivative works are streamed. It’s unclear how money paid by Udio will be split between those different uses before being allocated to individual works, and how that will impact how money flows to songwriters.
Presumably indie publishers will get a little clarity when they see the template deals negotiated by NMPA, which will start next week for the Udio agreement, and later in the year with the Klay licence. Quite how much of that information will then be shared with songwriters remains to be seen.