Episode summary
How AI-generated Tracks are Exploiting Streaming Platforms’ Royalty Systems | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 8 min · Hosts: Carol Massar, Tim Stenovec · Guests: Michael Huppe
Summary
SoundExchange’s Michael Huppe says the organization sits in the middle of the non-interactive streaming economy, collecting and distributing royalties from services like SiriusXM, Pandora and iHeart to artists and labels. He says the system has grown from paying out about $25 million 15 or 20 years ago to more than $1 billion a year now, reflecting the shift of recorded music revenue toward streaming.
The main concern he raises is AI-generated music flooding streaming platforms. He says some services are seeing 75,000 uploads a day, with 80% or more potentially AI music, and argues that AI can both dilute royalties and enable fraud when bad actors use bots to siphon payments away from real creators. At the same time, he says fully AI-created songs are not copyrightable under U.S. law, so the immediate issue is less about SoundExchange collecting more money and more about protecting human creators.
Huppe also argues that AI is not purely a threat. He says it could create new products and revenue, and notes that the recording industry is increasingly working with AI companies on licensing and model development rather than repeating the Napster-era fight over unauthorized copying.
Key takeaways
- Michael Huppe says SoundExchange now pays out north of a billion dollars a year, up from about $25 million 15 to 20 years ago.
- The guest says some streaming services are seeing 75,000 uploads a day, with 80% or more potentially AI music.
- Huppe says streaming fraud using AI tracks and bots is a major issue because it siphons money away from real artists and labels.
- He says wholly AI-created songs are not copyrightable under U.S. law, so the fight is about protecting creators, not collecting more royalties.
- Huppe says the recording industry is now leaning in and licensing with AI companies instead of fighting them the way it did in the Napster era.
Notable quotes
“Sound Exchange is a company that represents the entire recorded music industry. All artists, all record labels”
“we pay north of a billion dollars a year. It's been pretty consistent growth uh due to a lot of reasons”
“there are services now that are reporting 75,000 uploads a day. A day of new recordings, 80% or plus of them are AI music”
“AI created songs actually this is going to be interesting. They actually don't merit a payment because they're not protectable under the law”
“the recording industry is leaning in. They're working with the AI companies. They're AI companies are licensing and they're trying to work together”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. — You're listening to Bloomberg Business Week with Carol Masser and Tim Stenc on Bloomberg Radio. — Uh Carol, you'll recall just last week at the Bloomberg Tech Summit, we sat down with Hit Boy. — Was it one week ago today?
It was one week ago today. Three-time Grammy awardw winning artist, producer. He's known for shaping the sounds of Jay-Z, Beyonce Nasdrake, and more. Check out his Instagram for some fun shots from last week behind the scenes. — It was a lot of fun.
Uh the topic of our chat was all about AI and using AI to create music. He's actually game. He says that it's music the same way he was using Fruity Loops earlier in his career. It's just you got to adjust with the times.
That is not in fact the AI problem with music that Michael Huppy, the president CEO of Sound Exchange, has identified. Sound Exchange is this nonprofit. It's owned by the radio industry.
Uh, it calls itself, the music industry, excuse me, calls itself the largest global neighboring rights organization in the world. It says it's collected and distributed more than 13 billion dollars in digital performance royalties to date on behalf of more than 800,000 music creators. Michael Hubby joins us here in the Bloomberg Interactive Brokers Studio.
It has been quite a bit since we've talked to you. I I want to get to the AI problem that you've identified. Before we do that though, Sound Exchange not a not a household name for a lot of people even though every day they're interacting with a product that it it touches.
Where do you sit? Remind everybody where you sit in sort of the artists get paid when you listen to the radio or when you listen to certain radio I should say.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai-generated music
- streaming royalties
- soundexchange
- music copyright
- american music fairness act
Companies and tickers mentioned
- SoundExchange
- Napster
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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