Copyright Variety
In a flurry of activity just hours before the company’s third-quarter earnings report on Thursday, Universal Music Group announced that it has settled its copyright-infringement litigation against the AI music platform Udio, and that it also has entered into a strategic alliance with Stability AI to develop “next-generation professional music creation tools.” The announcements arrive against a backdrop of complex legal disputes over whether AI companies can “train” their products on copyrighted music without authorization. Last year, the RIAA, acting on behalf of all three major record companies, sued Udio and the Suno platform for “mass infringement” of copyright; the majors’ legal action against Suno continues. The timing of the announcements — arriving at 830 p.m. ET Wednesday and 8 a.m. ET Thursday — suggests a last-minute rush to complete the deals (or strategic planning) in time for UMG’s earnings report, scheduled for 1:15 p.m. ET on Thursday. In the Udio announcement, UMG said the companies “will collaborate on an innovative, new commercial music creation, consumption, and streaming experience” launching next year. It also said that “in addition to the compensatory legal settlement, the new license agreements for recorded music and publishing will provide further revenue opportunities for UMG artists and songwriters.” UMG noted that Udio’s existing platform will remain available in the months before the new product launches, “with creations controlled within a walled garden and the service amended in multiple ways — including fingerprinting, filtering, and other measures — before the launch of the updated service,” allowing users to stream, share and customize music inside a “licensed and protected environment.” UMG chairman-CEO Lucian Grainge said, “These new agreements with Udio demonstrate our commitment to do what’s right by our artists and songwriters, whether that means embracing new technologies, developing new business models, diversifying revenue streams or beyond.” Andrew Sanchez, Co-Founder & CEO of Udio, added: “We couldn’t be more thrilled about this collaboration and the opportunity to work alongside UMG to redefine how AI empowers artists and fans.” In the Stability AI announcement, UMG said the new music-creation tools will be powered by “responsibly trained generative AI and built to support the creative process of artists, producers and songwriters globally.” UMG said that these tools will be powered by “responsibly trained generative AI and built to support the creative process of artists, producers and songwriters globally,” and that Stability AI’s research and product teams will “work closely with UMG and its artists to research artist needs and technical approaches for the next generation of music creation tools.” In this effort, Stability AI will work with UMG’s research and product teams to build software trained on licensed music catalogs. Significantly, the partnership effectively allows UMG into the creation and development process in an effort to create “fully licensed, commercially safe AI music tools” that “support both artists and rightsholders while preserving the integrity of the art form.” Stability AI is facing multiple copyright-infringement lawsuits, including one from Getty Images photography service that alleges the company illegally used 12 million images without permission or compensation. UMG EVP/chief digital officer Michael Nash said, “This agreement is an extension of our fundamental orientation that our artists and songwriters are the cornerstone of our business. With AI, as with everything else we do, we start with what best supports our work to help them achieve creative and commercial success and build from that foundation to forge new and better commercial and creative opportunities. “And as we’ve made abundantly clear,” he continued, “we will only consider advancing AI tools and products based on models that are trained responsibly.” Stability AI CEO Prem Akkaraju added, “UMG has long been a leader in technological innovation in music. This partnership marks the next chapter of music creation. At Stability AI, we put the artist at the center and build AI around their unique needs because real transformation has always come from a combination of art and science.” UMG has struck similar AI-related deals with YouTube, TikTok, Meta, BandLab, Electronic Arts and others. Universal Music Group’s third-quarter earnings report takes place Thursday afternoon. The company posted relatively small gains in the second quarter but stronger ones for the half year that ended June 30, with its publishing division seeing 11%-plus year-over-year gains in both categories. Overall for the quarter, UMG posted revenue of €2,980 million, up 1.6% year-over-year (4.5% in constant currency). For the first half of the year, revenue of €5,881 million increased 6.4% year-over-year, or 6.9% in constant currency.
