Suno is facing yet another copyright infringement lawsuit filed by the music industry, this time from production duo The American Dollar, who have sued via their company Poseidon Wave Media.
Although the legal arguments are more or less the same as in previous Suno lawsuits filed by both artists and labels, this one is notable because The American Dollar make the kind of ambient instrumental music that has traditionally been heavily licensed for use in TV shows, films and adverts, but which is now competing directly with AI-generated music in the sync licensing market.
While the production duo - made up of John Emanuele and Richard Cupolo - do decent streaming numbers, they admit in their lawsuit that “for almost 20 years” sync licensing was “the largest source” of revenue, because their “purely instrumental recordings” are ideal for that kind of licensing.
They then list the brands, film studios and TV shows that have made use of their music, including Apple, Colgate, Warner Brothers and TV programmes like ‘Keeping Up with Kardashians’ and ‘CSI Miami’.
They then claim that licensing revenue from the use of their music in audio-visual productions has “reduced by nearly 80% since Suno launched its service”, adding, “there is a clear line of demarcation in revenue fall-off dated from the public launch of Suno’s AI service”.
This slump in licensing income will be very important in the fair use debate that this legal battle will inevitably centre on. We know Suno basically scraped all the music off YouTube to train its generative AI model without getting permission from any creators or rightsholders. It will claim that AI training is fair use under US copyright law, meaning no permission was required.
Fair use is a tricky concept but there are various criteria for assessing if any one use of a copyright protected work is ‘fair’. One of those criteria relates to market dilution. If use of any one work is likely to negatively impact on the market value of that work, the use is less likely to be fair use.
Copyright owners have started to argue that generative AI models, like Suno’s model, will cause market dilution, because those models will output lots of new content that will then compete with the existing content that was used to train the model.
So, existing music was used to train Suno, it then spits out millions of new tracks, which can be uploaded to Spotify. Because music streaming services have a fixed royalty pool shared across the industry, if some of that royalty pool goes to AI-generated music, the human-created music will earn less.
Or, indeed, maybe some consumers will cancel their Spotify subscriptions entirely to just listen to AI-generated tracks. That may seem unlikely, but one of Suno’s own investors made an ill-judged social media post claiming she had done just that because Suno’s music was so great to listen to.
However, there are two potential problems for the music industry when it marks the market dilution argument, one of which The American Dollar’s lawsuit potentially overcomes.
The major labels are among those using the market dilution argument when tech companies claim AI training is fair use. But at the same time, Universal Music in particular is keen to tell its investors that AI-generated music isn’t getting much traction on streaming services, which means it isn’t actually taking much of the steaming royalty pool. A claim that seems to contradict with the market dilution argument.
However, the general consensus is that AI-generated music is much more of a short-term threat to the people and companies who make instrumental music that has traditionally been heavily licensing for audio-visual productions. Just like The American Dollar. Potentially making their market dilution argument much stronger.
That said, they still have to overcome the second problem with the market dilution argument. AI companies argue that in the context of fair use, market dilution only applies on a ‘micro’ basis, not a ‘macro basis’.
If an artist samples an existing recording in a new track, which then competes for listeners and revenues head on with that existing recording, that is the kind of specific market dilution that goes against fair use. That’s micro market dilution.
However, if a company uses a whole category of works - such as instrumental tracks - and then outputs new tracks which are entirely different, except that they are also instrumentals, that kind of general market dilution does not go against fair use, they argue. Because it is macro market dilution.
Emanuele and Cupolo’s lawyers will have to push back against that argument as this case proceeds. But, because sync licensing is such a big part of the duo’s business, and that is seemingly being hit in a major way by the rise of generative AI, this Suno lawsuit will be particularly interesting to follow.