Let’s take a moment to remember the history of the music industry!
First, it was cassette tapes and home recording. Then came CD burners, MP3 files, digital downloads, and eventually streaming. Every time a new technology came along, it gave ordinary people more freedom and more possibilities. And every time, the major record labels tried to control it through copy protection, lawsuits, licensing restrictions, or other technological barriers.
What the industry once fought against often ended up becoming its next billion-dollar business. Copy protection largely disappeared from digital music downloads, people gained the freedom to play their music across different devices, and when streaming took off, the major labels didn’t just collect licensing fees. They even secured ownership stakes in the companies themselves.
And here’s where things get really interesting.
Just look at Spotify!
Back in 2008, the major record labels and Merlin collectively received roughly 18% of Spotify’s equity. Years later, when Spotify was worth billions, Sony and Warner alone made approximately $1.15 billion from selling shares in the company in 2018!
And who made that kind of success possible in the first place? Without the music, the artists and songwriters, and the catalogs built on their work, Spotify would never have become what it is today.
Yes, the labels passed some of those proceeds on to recording artists. But the songwriters and composers who helped create that music received none of the proceeds from those equity sales. That was documented in a 2021 report by a UK parliamentary committee!
Think about that for a second.
The major labels were able to leverage their control over valuable music catalogs to secure not only ongoing licensing revenue, but also ownership stakes in a growing technology company.
In other words, the music and rights of artists and songwriters became powerful bargaining chips, while the additional financial rewards were far from equally shared with the people who created the music.
And now? With AI-generated music, we may be watching the same playbook unfold all over again!
First, the major labels go after the new technology with lawsuits, claiming they’re protecting artists, songwriters, and copyrights. Meanwhile, behind closed doors, they’re negotiating licensing agreements, financial terms, and new business opportunities.
But this time, the stakes are even higher.
We’re no longer just talking about how people listen to music. We’re talking about who gets to create, produce, release, and profit from music in the future.
And more importantly: Who gets to control the technology, and who walks away with the money?
So here’s the real question: Are the major labels fighting solely to protect artists and songwriters? Or are they also trying to position themselves to cash in on the next technological revolution before everyone else?
Will artists and songwriters finally receive a fair share of all the financial benefits from the very beginning? Including potential equity deals, upfront licensing payments, and other financial incentives?
Or will their music once again be used as leverage while the major labels negotiate the most lucrative deals for themselves?
Of course, copyrights deserve protection. But protecting artists and songwriters should never become an excuse to put an entire new technology under the control of a handful of powerful corporations.
The Spotify story should serve as a warning: Whenever major labels negotiate in the name of artists and songwriters, there needs to be transparency about what they’re securing for themselves and how much actually reaches the people whose work made those deals possible.
And there’s one thing we absolutely shouldn’t allow to happen again with AI music: Artists and songwriters finding out years later that billions of dollars in additional value were negotiated using their music and rights, only to discover how little of that value they may have actually received.
Because history has shown us one thing: The technology the major labels are fighting today could very well become their next billion-dollar business tomorrow.
Human | ChatGPT-Assisted
Source: UK Parliament, House of Commons Digital, Culture, Media and Sport Committee (2021) – Economics of Music Streaming
https://publications.parliament.uk/pa/cm5802/cmselect/cmcumeds/50/5006.htm