Decoder with Nilay Patel
00:51:39 · Nilay Patel, Mitch Glazier
[00:51:39] S3: The Clash was very upset when Rock the Casbah was the soundtrack. I'm I'm just letting you know. [00:51:44] S4: I bet. Going back to securing the rights. We're bringing this case to make sure that the rights are secured. So then every company knows that you are not allowed to make reproductions of other people's music without consent or compensation. That's basically what we're trying to establish. And then once you secure the right, you let the marketplace develop from there. And I'm sure that the that the good people at Google and at other companies understand the risks. It's it's fascinating, Nilay. I don't know if you've read the SEC document that Anthropic just had to file Yeah. In order to have their IPO. But in the risk section, it's basically like, well, it could be that all this scraping that we've been doing actually violated all these laws. And that could, you know, if it's willful, put us in in a liability, you know, deficit of of x and share... People who are investing as new shareholders should sort of know that information. So they kind of acknowledge upfront like this could be a big cost of doing business going forward. And yet they're gonna have a spectacular IPO. Yeah. Right? Despite those risks. Which means that they're willing to bear them and they're also willing to accept the cost if and when that comes and it is secured.
00:53:07 · Nilay Patel
[00:53:07] S3: Oh, actually, I have a different view on that. And it's related to the beginning of our conversation, right? You said I think you gave a quote to the Los Angeles Times where said being the RIAA is more fun now because the consumers are on your side fighting the AI giants instead of you fighting consumers. I get that, like the valence of the RIAA and the culture may have changed. I'm sure we'll get some people in our comments saying it hasn't but in general it's changed, You're on the side of the artist fighting the giants. Google won all of those cases about fair use when it was a baby, right? They had slides in the office and they were a startup and no judge had ever used the internet before. And they're like, I love YouTube. And Viacom, you're posting your videos on YouTube because your people love YouTube and you know the audience is there. And there was something very happy about the tech industry at that time. Google as a company was a hero. I think these companies are villains now, but truly and if you look at the polling, are not beloved. AI is not beloved particularly with young people. The idea that AI is theft is not beloved with young people. That gives you an opportunity to actually turn the screws harder to say maybe you shouldn't bear these risks. Maybe the artists should be the ones getting rich, the AI companies. Are you putting that into policy or are you just trying to negotiate to an outcome?
00:54:22 · Mitch Glazier
[00:54:22] S4: No. We're putting into policy. You know, we're... Everything is an arc, as you know. But in the beginning of a disruption, you try to put into policy the basic rights that are going to allow the creators to control their creation, to charge what they want for their creation, and to develop the licensing deals that they feel they want to develop. And it's gotten to be even bigger now than in the Napster days because back then, as you said, the transition was from CDs. So the artist only made money in those days, like, during a few months after release. Right? And then some CDs still sold for years afterwards, but a lot of them ended up in warehouses and you kinda had this small window. Mhmm. The streaming revolution allows, you know, exploitation not in the negative sense, but in the positive sense. It allows it forever. That's why you have all these new investors coming into the music community because it's a little bit more like a commodity now. Right? That's why Goldman Sachs is buying catalogs. That's why all of these new companies are coming in and they're buying catalogs of music because music's evergreen. Right? It's water. People are gonna love it forever. And as an artist, you now have an opportunity you never had in the past. It's not just to like make this chunk on wholesale cost of CDs within a certain month period. It's, hey, now that I've built up this following and I might be... People might love these songs twenty years from now, guess what? I can now sell my catalog for a large amount of money to
00:55:52 · Nilay Patel, Mitch Glazier
[00:55:52] S3: an investor in the future. Here and say that the the baby punk rocker in me is... We could do another full hour on artists now have the opportunity to sell their catalog to Goldman Sachs. It's another hour, but It is. I I I know it's there. [00:56:07] S4: And listen, we all... The... We all we all... We're all 20 at some time, and then we're 50 at another time. Fair enough. It's it's, you know, it's the way that... Everybody wants to take care of their grandkids at some point. So... But but this is an opportunity that they have now that they didn't have before. And so I think that this disruption, I think there's more skin in the game for the actual creator than there was in the past when the revenue was just kinda more bifurcated or trifurcated. And nobody on the creative side of the equation thinks that it's right that, like, Suno will be making all the money from all of the music that has been created in the past. And that that substitutional effect is gonna deprive the artist or any one of their partners. Like, if the artist is in the middle in the sun and you've got all the folks around them from performing rights organizations to record companies to publishers to managers to producers to agents, etcetera. Like they're all sort of partners in a piece of that larger puzzle. And now the artist has more skin in the game than they ever had before, which is another reason why I think we're sort of rowing together a little bit longer.
00:57:27 · Nilay Patel
[00:57:27] S3: There are other outcomes here. I think it's Warner who's partnered with Suno, they made a model on Warner's music so they don't run into these issues. If that proliferates, then you don't get to sue the AI music companies because they made their models with licensed music. But you'll face a supply problem on platforms like Spotify, where suddenly you can just flood the platforms of music and your solution there, at least as I understand this conversation is labeling. Right? You're gonna put labels on the AI stuff so the fans can make a market decision and the bet is the fans will choose humans. Is there another solution to the glut of supply?
00:58:05 · Mitch Glazier
[00:58:05] S4: Yeah. I I I think sort of an immediate sort of solution for the now in the marketplace is labeling. But I also think that these licensing agreements, and I'm not privy to the licensing agreements that exist with Suno or any other AI company because I represent competitors, so they would never tell me. But I would imagine this sort of idea of dilution where you don't wanna put at risk on streaming platforms, artists, music because 90% of everything that they're competing with is AI slop, if I could use that term. The licensing agreement gives you the leverage and the ability if your rights are secured to say, I'm not gonna let you download all this stuff. I mean, it's rumored that in the Udio agreement, like, a walled garden had to be built Yeah. So that fans could make music within the network on their own Spotify like app. It wouldn't discourage them from also having Spotify or Apple. It increases the revenue for everybody, but we're not going to allow you to download from this platform and dilute that platform. I don't if that'll work. That seems to be one model. It it could be that the that the terms with Suno had a limit on it or considered supply. But I'm not a business person, I'm a policy person, but I think that there are plenty of ways if the rights are secured that through licensing arrangements and agreements creators could then have the leverage to affect the supply so as not to cannibalize the the work that they have in other platforms.