Picture Credit score: Alexander Krivitskiy
Common Music Group’s momentous take care of Udio actually appears like a game-changer — however what are the foundations and royalties of this new recreation? Should you’re perplexed and befuddled with questions surrounding this deal, be part of the trade membership.
Contentious litigation, a groundbreaking settlement, mutiny amongst die-hard customers, and calls for for solutions from artists and rights house owners… this has all of the bits for an additional juicy trade chapter. However now that the ink has dried on UMG’s earth-shattering take care of generative AI music platform Udio, what are the concrete particulars for artists, IP house owners, and different stakeholders?
And what a couple of revolting group of supergeek gen-AI creators on Udio itself?
For these simply tuning into this fast-moving drama, Common Music Group — led by UMG chairman Lucian Grainge and chief digital officer Michael Nash, amongst others — settled a contentious authorized battle with Udio final week, whereas concurrently saying a groundbreaking strategic licensing settlement.
Grizzled vets of the music enterprise know this scorched-earth technique effectively: it begins politely sufficient with an ask, then shifts right into a hardcore authorized warfare earlier than ending with a bro-hug partnership deal. After that, UMG’s top-down deal framework typically guides related offers amongst different main labels, MERLIN, and equally located platforms.
After all, it doesn’t all the time finish that neatly — however we’ve seen this dance sequence earlier than.
However now that UMG has hugged it out with Udio, what does this imply for trade income flows, taking part artists, different litigating labels and AI platforms, in addition to indies, rising artists, AI-savvy creators and followers themselves?
The core of the partnership facilities on the dedication to launch a totally revamped Udio platform in 2026. This new, subscription-based service might be a “walled backyard,” educated solely on approved and licensed music property—each recorded music and publishing—on an opt-in foundation for UMG artists and songwriters.
The settlement guarantees to create a brand new income pipeline, compensating opt-in artists not just for their music used to coach the mannequin but in addition when subscribers use their works to generate new songs. However as soon as an artist pulls the opt-in lever, what sort of money will come out?
At current, Grainge & Co. have solely provided high-level deal parameters, with little concrete phrases or guidelines. Additionally lacking is a crop of A-list artists opting in — in actual fact, we do not know who’s in, who’s out, or who’s on the fence.
Then there’s the matter of the AI artistic class itself.
Whereas the trade at giant, together with Digital Music Information, has loudly praised the deal’s blueprint for accountable AI, Udio’s current consumer base erupted in instant protest.
No sooner was the settlement introduced than Udio abruptly disabled the obtain performance for all customers, together with paying month-to-month and annual subscribers. This swift and abrupt change—a seemingly direct demand from UMG to transition the platform right into a walled backyard—eliminated the flexibility for customers to export and distribute music they’d already created and paid for.
The backlash was extreme, with indignant subscribers flooding social media and threatening authorized motion, arguing the transfer amounted to fraud for the reason that sole goal of their subscriptions was to create exportable content material. In response to the “mutiny,” Udio CEO Andrew Sanchez shortly moved to mood the outrage.
The corporate introduced a 48-hour window, scheduled to start at the moment (November third), permitting customers to obtain all current creations below the platform’s authentic, pre-settlement phrases of service, which granted customers full possession rights.
Whereas arguably a obligatory concession, the incident underscored the precarious place of platform customers who have been caught off guard by the sudden shift from an unregulated AI service to a strictly regulated, licensed company entity.
However simply what number of of these customers/creators will stick round below the UMG+Udio order?
The scary risk for Udio is that customers could shortly swap to a different AI platform unfettered by copyright restrictions, resulting in a contemporary twist on the age-old ‘whack-a-mole’ downside.
In the meantime, again within the bat caves of the music trade, the UMG-Udio deal instantly drew intense scrutiny from key artist advocacy teams — with ferocious fighter Irving Azoff and the Music Artists Coalition (MAC) main the cost with a strong assertion demanding “artistic management, truthful compensation, and readability” for artists whose catalogs kind the muse of the AI’s coaching information.
Whereas MAC expressed cautious optimism concerning the opt-in construction, the group emphasised that “participation with out truthful compensation isn’t partnership.” UMG portrayed the deal as a panacea for managed creativity and compensation, however Azoff and MAC have questions.
The Coalition went on to pose a collection of vital, basic questions that outline the following battlefront within the AI music area:
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- Management Mechanism: How will artists exert significant, granular management over which particular makes use of of their work they authorize?
- Dispute Decision: What’s the protocol when a number of rights holders (e.g., co-writers or performers) on a single track disagree about opting in?
- Monetary Transparency: What precise proportion of the income generated by the brand new platform will circulation to the artists, in comparison with the label and Udio?
- Settlement Distribution: On condition that the deal included a compensatory authorized settlement, how will that undisclosed cash be distributed, and can artists see visibility into the payout?
- Recoupment: Will an artist’s earnings from this new AI income stream be utilized to historic, unrecouped label balances, successfully shielding the label from paying artists new cash?
- Knowledge Visibility: Will artists be granted ongoing, detailed visibility into how their music is being utilized throughout the AI system?
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So many questions requested — and so many questions unanswered (for now). If something, MAC’s ’21 query’ manifesto highlights the grueling work required to construct a good business AI ecosystem.
Certainly, this feels groundbreaking, but in addition very ‘model 0.1’.
Seems like the best time for Lucian Grainge to drop some nuggets of data on how this partnership, artist opt-ins, and compensation schemes will work?
Keep tuned…
