Universal Music Group CEO Lucian Grange says his major music label goes both on offense and defense to protect the intellectual property rights of its artists and songwriters, led by Taylor Swift and Lady Gaga, from illegal generative artificial intelligence infringements.
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“We recognize potential threats early and defend against them. I suppose it’s akin to carrying a stick when we consistently take industry-leading action to advance our artists’ interests and create new creative and commercial opportunities,” Grainge told an analyst call after the release of his company’s second quarter financial results.
UMG has been an early adopter of AI tools and technology — which includes deals with YouTube and Deezer — to advance an artist-centric model for royalty payments. That’s as the impact of generative AI has been more readily seen in music than in other entertainment industries.
Grainge argued UMG as a record label would not tolerate alleged mass theft of copyrighted works to teach AI systems. His company was recently part of lawsuits filed in federal courts in New York and Massachusetts also backed by Sony Music Entertainment and Warner Music to stop AI start-ups illegally powering their systems by using massive troves of copyrighted recordings.
“These cases are based on the mass infringement of copyrighted sound recordings, which had been copied and exploited without anyone’s permission, no one’s permission,” Grainge told analysts.
During its second quarter, UMG saw overall revenue rise 8.7 percent to €2.93 billion (US$3.18 billion). The adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 10 percent to €649 million (US$704.5 million).
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Recorded music subscription revenue grew 5.8 percent to €2.2 billion (US$2.39 billion), into which subscription and streaming revenue at 3.8 percent up to €1.48 billion (US$1.61 billion) accounted for the bulk of that category.
With UMG highly dependent on global music streaming trends, the music label’s CFO, Boyd Muir, pointed to “variable” performances by leading audio streamer platforms, especially when it came to ad-supported streaming revenue. He pointed to Spotify and Youtube this week reporting “slowdowns” in ad revenue growth.
Michael Nash, chief digital officer at UMG, overseeing digital business development, echoed other company execs in urging patience by investors as the audio streaming and subscription businesses evolve, and after Spotify pointed to slowing user growth this week. “It’s important to keep in mind that the perspective about the evolution of the market is something that doesn’t necessarily on a quarter by quarter basis, but we are confident about the overall trajectory of the market viewed in the long term,” he told investors.
On Tuesday, Spotify revealed its total number of monthly active users grew 14 percent year-over-year to reach 626 million, but came in under its prior guidance of 631 million. “We can’t do anything than think in multi-year cycles in the long term,” Grainge added, even as investors measured the performance of UMG quarter-by-quarter as the company is impacted by ongoing pricing and subscriber growth trends facing audio streaming services.
During prepared remarks, Grainge also reiterated his wonder for the massive sales of Taylor Swift for the major music label. “What can I say? A phenomenon. Unique. Extraordinary,” he said before praising her latest studio album, Tortured Poets Department .
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