The ChatGPT Moment for Music

Venture Capitalists are out way over their skis with music copyright. They don't know the first things (overview below) about the history and complications, and compare this to just copying a blog post. Almost every Tier-1 investor I've polled thinks the lawsuits are an easy settlement, and doesn't understand how the music labels play the game and consider their long-term economics. One investor I talked to laughably invested in a founder that said he could design an algorithm to clean-room the training. Whereas experts know that licensing is all you need.

I know a product manager who went back into music after AI because they could see that the music industry is a decade ahead of others in the sophistication of its Intellectual Property regime. Music missed out and grew less quickly than movies and games in the last generation, but it is already AI-ready and planned and responsive to more changes in this new generation of AI.

VCs need a trusted advisor, a back-country tour guide, who understands the ins and outs of the music industry and its future, and the only people they have access to are lawyers (who bill by the hour where incentives are misaligned) and infringing founders who are obviously also misaligned. They need someone who has been successful in navigating these rights, who knows the slopes and off-piste routes, and who isn't burned out by the industry.

The music industry itself sees the long term future clearly, and is largely unified in asking for what it needs, as this recent rant by Benji on the excellent Unlimited Supply podcast represents.

So first, let's cover the graveyard of recent music infringers:

• Napster (2001): 9th Cir. affirmed injunction; contributory/vicarious infringement. Napster never recovered; assets sold in bankruptcy.
• Aimster (2003): 7th Cir. found contributory infringement; encryption didn't save them.
• Grokster / Morpheus (2005): U.S. Supreme Court: inducement liability; service shuttered, paid to settle.
• Kazaa (2006): Paid $115M global settlement with labels; promised content filters.
• MP3.com (2000): Summary judgment for labels over "Beam-It"; paid large settlement, business gutted.
• LimeWire (2010): Liability on summary judgment; $105M settlement; shut down.
• Turntable (2011): My own Turntable got restricted almost immediately in 2011 due to lack of licensing.
• Grooveshark (2015): Consent judgment; site closed, domains/IP handed to labels.
• ReDigi (2018): "Used MP3 resale" loses on reproduction right; first-sale didn't apply.

The Tier-1 Venture Capitalists I've polled about this think that it's fine to infringe and they don't recall the graveyard. They see Youtube, a special case, and Tiktok, an even more special case that only survived by the weight of the entire Chinese state behind it (which itself is causing it to get divested at 90% off, coming back to bite it). It's important to note that AI founders who want to push this risk personal, even criminal penalties: the Limewire founder was found personally liable.

Music is different from text or photos or videos. It has a much more complicated set of rights built up over decades. And any time there has been a gray zone, that just creates the opportunity for more rights to be added, and Congress is deeply amenable to that, even as recently as 2018 during a grid-locked Congress. It's the music labels' main business to ensure their rights continue and they are very, very effective at that kind of lobbying.

Universal used Udio to show the creation of a separate, controlled market with fair licensing. This undercuts the arguments of the anti-copyright crowd, saying licensing isn't possible. This is a checkmate for anyone still pushing for a destruction of music copyright. Read below to understand just how much you don't know about music, which is itself an expensive multi-year education if you choose to embark.

Why is Music different from Photos, Videos, and Text?

• Concentrated rights & turnkey licensing. Three majors control most commercially valuable masters + publishing admin—and there are efficient collectives (ASCAP/BMI/MLC/SoundExchange). Courts like licensing practicability; music has it.
• Long, consistent enforcement history. From Napster to Grooveshark, courts and settlements have rewarded the rights-holders' theory of harm. Judges have muscle memory here.
• New statutory hooks. The 2018 MMA standardized digital mechanicals and federalized pre-'72; DMCA-1201 gives labels a powerful lever even before you reach fair use. State Name, Image, and Likeness laws now speak directly to voice clones.
• Market evidence for training licenses. Once the majors ink AI training and AI-creation deals (UMG–Udio), the "we couldn't license it" argument evaporates.

The rights lattice for music gets denser and not simpler over time: compositions → performances → mechanicals → recordings → digital performances → anti-circumvention → neighboring rights → modern blanket licensing. Every new layer reduces "gray zone" arguments.

And the attribution and remuneration of AI music requested by the industry isn't much different from that requested during the sampling explosion that has become settled business.

Another engineer was arguing with me about how IP is dead, and then when we went into detail on music, he ended up writing a ten thousand word essay proposing yet another new kind of Intellectual Property right to add onto the existing ones! His other argument is that China doesn't respect copyright, and that AI music is already a hit there. But you know what, China has 0 global cultural relevance in music, and the US continues to increase its dominance. This important soft power goes hand in hand with supporting the artists with the industry.

US History

• 1831 – Musical compositions explicitly added to federal copyright.
• 1897 – Congress creates a public performance right for musical works, which is the seed of ASCAP/BMI.
• 1909 – The mechanical right and compulsory license schematic (player-piano era) become law, the foundation for "mechanicals."
• 1971/1972 – Congress creates federal copyright for sound recordings (the master) effective Feb 15, 1972. Until then, no federal protection for recordings.
• 1995 – Digital Performance Right in Sound Recordings Act adds a digital public-performance right for sound recordings (webcast/stream); SoundExchange later administers the statutory license. Terrestrial radio stays exempt.
• 1998 – DMCA §1201: anti-circumvention. You can't bypass access controls (e.g., YouTube's rolling cipher) even if you swear the downstream use is "fair." It's a separate cause of action which is itself a super fast slam-dunk case.
• 2018 – Music Modernization Act: builds the MLC for digital mechanicals; pulls pre-1972 masters into federal protection (CLASSICS Act) and harmonizes remedies.

International layer

• Rome Convention (1961) and WIPO WPPT (1996): "neighboring rights" for performers and phonogram producers: remuneration for broadcast/communication to the public. (U.S. is idiosyncratic, no terrestrial radio performance right for radio, but the international default is performer/producer remuneration.)
• EU DSM Directive (2019) Art. 4: TDM opt-out: rightholders can reserve rights to block text/data mining via machine-readable means (metadata/T&Cs). That matters for AI training.
• EU AI Act (2024/2025 rollout): transparency + training-data summary duties for foundation/GPAI models; "copyright compliance" is explicitly on the checklist. The EU is building a paper trail requirement the "scrape now, apologize later" crowd can't meet.

The stacks of rights, just scratching the surface

If one doesn't understand these and why it's different from text, why assert so strongly that you understand where this is going?

A. Musical work (song / publishing)

• Public performance (ASCAP/BMI/SESAC/GMR blanket licenses)
• Mechanical (reproduction/distribution) for phonorecords & streams (now centrally administered for digital by the MLC)
• Synchronization (sync) for A/V uses (always negotiated; no compulsory)
• Print (sheet, lyrics)

B. Sound recording (master / label)

• Reproduction/distribution of the master
• Digital public performance (webcasting/interactive distinctions; SoundExchange for statutory non-interactive)
• Master sync (paired with the composer's sync)
• Neighboring rights outside the U.S. (and U.S. digital via §114)

C. Identity rights

• Right of publicity / name-image-likeness (NIL) state law:
  • California §3344/3344.1 (living + 70-year post-mortem) and New York §50-f (including "digital replicas")
  • Case law: Midler v. Ford and Waits v. Frito-Lay: you can't imitate a well-known voice to sell things—identity can be in the sound itself. White v. Samsung and No Doubt v. Activision expand the contour of "identity" beyond name/photo to robot stand-ins and avatars. That's squarely relevant to voice clones/sound-alikes.
  • 2024–25 wave: Tennessee's ELVIS Act adds explicit voice-clone protections with civil/criminal teeth; California updated post-mortem law for "digital replicas." The trend line is hostile to unlicensed voice emulation.

We are on a knife's edge, things are changing week to week now. This is the ChatGPT moment for music. The deepest experts know that with the combination of all of these, licensing is the way to go for a sustainable business, to avoid becoming another bankruptcy, regardless of the current administration in vogue.