Profit or Piracy? How AI Disrupts Industries

0:00The AI breakdown you're about to hear first came out as a YouTube video on Tuesday, April 25th. In this episode, we talk about how AI is going to disrupt every industry, starting with music, it seems, and how for legacy industries, the question is really whether to profit from it or to force it into piracy.

0:23So there's a story going on right now that I think a lot of people are kind of writing off as just about music or just about culture and maybe sort of nominally about AI, but not really something they're that interested in. And that's the story of this new AI generation of music that can actually take and spoof artists' voices and turn it into something that is an extremely compelling, convincing replica of the artist. Now, this is something that's been around for a while in terms of the technology, but has gotten a lot better. And for the first time, we've had a moment where it wasn't just a novelty, right?

1:07When you heard this track that came out that we're going to talk about today a couple weekends ago, it wasn't something where you thought, oh, that's so crazy. It was something where you thought to yourself, that's a chart-topping hit that happens to not actually be Drake and The Weeknd on it. So what I'm going to try to convince you is that this is much more significant than just the music industry, and that it shows a pattern of what we're going to see across a lot of different industries and creative spaces in the months to come. So our story starts a couple weekends ago with Ghostwriter977.

1:42That's this person's name on TikTok and on Instagram. And they dropped this song, Heart on My Sleeve. Now, they were explicit that this was an AI Drake and Weekend track. It was not meant to be a trick. It was clear. In fact, AI was part of the sale. Now, this ghostwriter put this track not only on TikTok and Instagram and all these social networks, but also uploaded it to Spotify. And within about 48 hours, this thing had tens of millions of streams and downloads. Now, it wasn't long before the entire recording industry of America came and sent all of their lawyers after all of the platforms making sure this song got off there.

2:28but it was already too late in many ways. You had so many comments like this. AI music is here. This is the first example of AI-generated music that really wowed me. This is from McKay Wrigley, an AI developer. This guy, Ghostwriter977 on TikTok, he writes, made a Drake X The Weekend track that's actually kind of insane. You'll soon be able to make unlimited music by your favorite artists on demand with AI. Litquidity says, honestly, this AI-generated Drake x The Weekend x Metro boom and track slaps. They'd be smart to capitalize on it and record it professionally with some creds to Ghostwriter 977.

3:07Unfortunately, it might just be litigated to death by labels and lawyers. Now, from the music industry's perspective, they honestly didn't know what to do necessarily. Troy Carter, who now runs Venice Music and was formerly the manager of people like Lady Gaga, writes, This is crazy. Fake Drake featuring The Weeknd. How will the industry respond? There's no trademark protections for voice. He also added Ghostwriter is the new Banksy. He should never reveal his identity. Now, of course, the lawyers got their way really quickly. Universal Music Group said AI music was a fraud and it went on the offensive, trying to ban it from streaming platforms.

3:48Semaphore interviewed Mark Austro, who's a New York-based entertainment and copyright lawyer, who got into the ways in which a copyright holder or an artist might actually go after an AI creator. One of the questions they asked was, does AI music infringe on copyright? And he says the RIAA thinks so. It said last year that AI platforms that train their algorithms on existing songs infringe on the rights of artists who wrote and recorded them. Also said that they might have legal standing to sue AI creators around rules that protect the likeness of celebrities. Now, what you would expect in the short term is that the streaming services are not going to mess with the music industry lawyers in this case.

4:29That's what we've seen so far. So again, going back to Universal Music Group, which covers like something like a third of the music industry. They wrote a ton of these urgent letters to streaming platforms like Spotify and Apple Music. and it wasn't just about trying to take down this ghostwriter track. It was also just in general trying to build a movement to block AI platforms from both not only from uploading but also from training on the melodies and lyrics of songs that have copyright that belong to artists and labels. UMG says that they have a quote moral and commercial responsibility to our artists to work to prevent the unauthorized use of their music and to stop platforms from ingesting content that violates the rights of artists and other creators.

5:10We expect our platform partners will want to prevent their services from being used in ways that harm artists. Which is as thinly veiled a threat as you can get in collegial language, right? The National Music Publishers Association has also voiced concern. The head of that group wrote to Senate Majority Leader Chuck Schumer and said AI platforms should not be given a free pass. The letter said if left unchecked, AI will, quote, pose a threat to human creativity. Now, this comes following an announcement from Chuck Schumer's office that he's trying to launch a, quote, major effort to get ahead of artificial intelligence.

5:46And I think anyone who lived through Napster is not at all surprised that the music industry is raising their hand to be first to the legal battle against what they perceive as a threat, right? Now, while the music industry was freaking out, reasonably so, or at least expectedly so, the tech space was thinking about what they might do or what one could do to build something on top of it. So Ryan Hoover here, who's the founder of Product Hunt and an investor, writes, free startup idea that will likely get you sued. AI Spotify, how it works? AI Spotify hosts AI generated music of your favorite artists.

6:24Anyone can submit music and the best songs surface based on listens and likes. Music with the most listens earns a pro rata share of subscription revenue reserved for the original artists. For example, Drake could claim money generated from his likeness on the platform. Artists that do not want to participate can opt out entirely banning any music that uses their likeness, or individually allow songs they endorse. Of course, there are many ethical and legal issues with this model, especially with labels, but maybe this is a germ of a shower thought that has potential. This is of course an extremely artist-centric idea and a fan-centric idea, and that's potentially the problem with it.

7:01But the music industry isn't just labels and lawyers, and it didn't take long for one artist to say, this is kind of an interesting development. So perhaps not unexpectedly, Grimes retweeted the New York Times article about how this Drake and Weekend track had really rattled the music world and said, I'll split 50 % royalties on any successful AI-generated song that uses my voice. Same deal as I would with any artist I collab with. Feel free to use my voice without penalty. I have no label and no legal bindings. And this went super viral. You can see 4.2 million views, 24 ,000 likes, 4 ,000 retweets.

7:41Lots and lots of people were talking and Grimes kept following through. The next day, Grimes started to get into the details of whether there were in fact some limits of what she wouldn't allow using her voice and likeness. And then she took it a step farther and started talking about using smart contracts to pay out royalties automatically, right? She says the future really is now. This is so cool. A lot of people got very excited about this. Nick Carter says this is the coolest. The artist gets upside in the entire world of creatives that might want to use their vocal style and timbre. Insanely high leverage.

8:16Other artists also got excited. Producer Justin Blau said, I'm down to try this out and produce a song with Grimes trained vocals. Should I give it a shot? And by the way, Grimes then came back over to Ryan Hoover's post and says, I like this idea a lot. I feel like it's almost wealth redistribution if people can earn off creating from their favorite artists and benefit from creativity in an otherwise overly gatekept attention economy. Plus, artists who opt out will be a more exclusive artisanal thing. I imagine withholding art only increases traditional human brands too. I feel like both teams benefit from leaning into this.

8:48Now Blau, you could tell, got even more excited. You could almost see his wheels turning. He writes,

9:08So to try to understand where this all lands, let's talk about and try to sum up who the stakeholders are. You have the AI creators. You have the musicians. You have the labels and the music industry establishment. You have the lawyers. You have other industries and you have fans. I creators want to be able to create. This is an entirely new creative medium. And many of them are just musicians who haven't gotten famous yet. They're songwriters who haven't gotten famous yet. They're producers who haven't gotten famous yet. And being able to design or think around the style of their favorite artists and create with those inspirations is for them pretty remarkable.

9:46And I think that the reality is, is that this group, even if this is beaten into legal submission from the standpoint of where it can be heard, they're going to keep doing it. Even if people can only create these tracks in the safety of their bedrooms to learn how they might want to create tracks in the future, it's absolutely going to happen. Next up, we have the musicians themselves. These are the artists and they do have to consider what it means to be an artist in this new world. And I don't think any of us should minimize how big and how complex that's going to be. It's going to involve a lot of reimagining of where people sit in culture and what it means for them to create versus be an inspiration for creation.

10:30Not everyone is going to be as comfortable as Grimes. And so whatever comes out of this, we do have to recognize that musicians are going to have a real diverse set of perspectives on it. And probably there's going to be diverse perspectives within even individual musicians, right? Now, the labels in the music industry establishment feel like probably the last to get on board with this. These are the folks who, in the wake of Napster, fought to establish some of the strongest control from a legacy industry moving into the new web-enabled version of that industry. And I don't anticipate that changing anytime soon.

11:01Lawyers are whatever. They're going to do whatever they're going to do. They're going to rack up their bills. Frankly, for the lawyers, it's probably better if this is long, contentious, and drawn out in court. Other industries, I include them as a stakeholder because they're all going to be watching what goes on in this space to see what legal precedent might be set for their version of creativity, whether it's film or TV or art or something else. But then finally are the fans. And it's really these two categories at the end, the AI creators on one hand and the fans on the other, which is why I'm completely convinced that this is just absolutely inevitable.

11:35I do think that fans will always put a premium on the art that comes directly from the musicians they love most. That is certified, verified, from the horse's mouth, from the brains of the people they love. But you have to think that given the option between less of the art that they love and more, they're going to choose more. Can you imagine how batty people would go right now for a new Nirvana song featuring Kurt Cobain? What about a collaboration between John Lennon and his grown-up son? These are things that now possible people will want. And at the end of the day, those AI creators who are using these new tools who may be aspiring musicians are probably fans first.

12:19And they're going to create these things because they want to see what it would be like and whether they can. The reason I called this episode Profit or Piracy is that I think that this type of creation, now that it's technologically possible, is a genie that is totally impossible to get back in the lamp. It's just going to happen. And I think that that leaves the folks in the middle of this set of stakeholders, the musicians, the labels, the music industry establishment, and their lawyers, to have to determine how they are going to fight it or interact with it. I don't know that Ryan's version of this idea is perfect, But is it crazy to think about an entirely siloed app or experience that's just for AI creations, that gives musicians power to opt out if they so choose, but which also gives them completely passive revenue for doing nothing other than being who they are if they don't?

13:09I'm sorry, but it's kind of a money pit. And I don't believe that music when it comes to the streaming model, which is based not on people deciding to spend money specifically buying music, but based on just giving their attention where advertisers and sponsors are funding the whole exchange. I don't think that having more AI music is going to diminish how much the musicians that inspire those AI creations have their original track spun as well. I also think that this is coming down the pipeline right now. And I think that this music example is one that's going to set a lot of precedent for a lot of other spaces and industries.

13:43So my friends, that's how I see this crazy world of AI music from where we are. I think probably every day, every week at least, we're going to see some interesting new evolutions and people lining up on different sides. And it is going to be a wild time. But for now, I appreciate you watching and listening as always. And until next time, peace.

14:18I'll see you next time.