By Chris Cooke 

AFM

Universal Music, Warner Music, AI, Legal 

As the music industry announces yet more big AI licensing deals, the legal dispute continues between the American Federation Of Musicians and Universal Music and Warner Music over what the majors’ obligations are to AFM’s members in relation to those deals.

AFM, one of the main musician unions in the US, sued Universal and Warner in June claiming that they had both failed to meet their obligations under the union’s Sound Recording Labor Agreement in relation to AI licensing deals with Udio and, in Warner’s case, Suno. Both the union and the majors have made new filings with the court this month as the record companies try to get the lawsuit dismissed. 

It all swings on how you interpret a ‘new use’ clause in that Sound Recording Labor Agreement – or the SRLA if you prefer. AFM interprets it one way, the majors another. The majors also argue that their interpretation is the only sensible interpretation and on that basis the judge should kick out AFM’s case. 

In its new filing. Universal insists that the disputed SRLA clause is, in fact, “clear and unambiguous”, and favours the majors. And, having failed to counter that position, AFM has instead made “a scattershot series of arguments that obscure rather than confront what the contract makes clear”. Needless to say, AFM does not agree. 

Ever since record companies, music publishers and music distributors started entering into deals with generative AI companies, there has been much debate over whether or not those corporate rightsholders will seek explicit consent from individual artists and songwriters before opting their music into each deal.

And then there’s the separate debate over how any money generated by those deals will be shared between all the rightsholders and music creators. 

Different labels, publishers and distributors are taking a different approach when it comes to these things, though in the main nobody is currently talking about consulting or paying session musicians, despite AI models learning from and then competing with those performers. It seems likely session musicians getting paid from AI deals will rely on a combination of union negotiations and copyright law reform.

Which brings us to the big dispute over AFM’s SRLA and the new use clause. The SRLA sets out terms for how musicians hired under the agreement are paid and how recordings on which they appear are used. 

Under the new use clause, if a sound recording is used by a record company in a new way that is not anticipated or covered by SRLA, there is still an obligation on the label to compensate any musicians who appear on that recording. It should also inform the union about the new use. 

So far neither Universal nor Warner have done either of those things in relation to their AI deals. But that’s because they reckon that the new use clause does not apply here, even though AI training is very clearly a new use of recorded music. That’s based on the argument that the SRLA new use clause only applies if there is another separate union agreement covering the new use. 

That’s because the new use clause says that – when a recording is used in a new way – the musician should be paid as if they were brought back into the studio to record music specifically for that use, based on whatever standard agreement would cover that kind of recording session. But there is no standard agreement covering AI, at least not yet. So, the majors say, the new clause does not apply. 

In its latest filing, Universal insists that the new clause “is susceptible to only one meaning” – when a label “uses a covered recording for a purpose not covered by this agreement it must pay ‘an amount equal to all payments that would be required under the AFM agreement that would then be effective if the recording were originally made for the purpose set forth under that agreement’”. 

The new use clause “does not state a rate”, Universal adds, instead it “imports one from the separate AFM agreement governing the new purpose”. But AFM has “conceded that no such agreement exists for the AI use”, including during a meeting to discuss the majors’ motion to dismiss. 

In its filing with the court, AFM insists that there is no need for a separate AI agreement to exist for the new use clause to apply. “The text imposes a mandatory payment obligation when a signatory company puts a covered recording to a purpose not covered by the SRLA”, it says.

And while there is no specific AI agreement to dictate what that payment should be, “existing provisions of the SRLA, including session rates, streaming rates and sampling rates, supply objective measures from which damages can be determined”. 

Unlike the majors, AFM concedes that the new use clause is “reasonably susceptible to more than one interpretation”. The union can afford to be slightly more flexible on that point, because providing the union can convince the judge there is some ambiguity, but its interpretation is “plausible”, then that should be grounds for allowing the case to proceed and declining the majors’ bid for dismissal. 

AFM is adamant that its reading of the new use clause is at the very least plausible. 

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