- 13 hours ago
What does it take to steer the world’s largest music company through one of the most disruptive eras in music history? Michael Nash, Chief Digital Officer and executive VP, Universal Music Group, joins Kristin Robinson on Billboard On The Record to discuss how UMG is navigating AI, platform power and artist rights at a critical turning point for the industry. Nash reflects on when generative AI first landed on his radar and revisits the pivotal Grammy Week moment two years ago when Universal pulled its catalog from TikTok, following a company-wide stance led by CEO Lucian Grainge. He breaks down the negotiations, the risks of AI-generated content diluting artist royalties and why UMG drew a hard line that reshaped its platform deals. The conversation expands to AI-driven fraud, discovery overload, copyright challenges and how Universal is working to embrace innovation, offering listeners a rare inside look at how one of music’s most powerful companies is helping define the rules for the industry’s next era.
Love what you hear? Follow Billboard On The Record on Instagram, Apple Podcasts, Spotify and Youtube @billboard so you never miss an episode.
Billboard On The Record is a podcast in partnership with SickBird Productions.
Host:
Kristin Robinson
Executive Producers:
Diona DaCosta
Jade Watson
Produced By:
Kayla Forman
Mateo Vergara
Edited By:
Rachel Derbyshire
Love what you hear? Follow Billboard On The Record on Instagram, Apple Podcasts, Spotify and Youtube @billboard so you never miss an episode.
Billboard On The Record is a podcast in partnership with SickBird Productions.
Host:
Kristin Robinson
Executive Producers:
Diona DaCosta
Jade Watson
Produced By:
Kayla Forman
Mateo Vergara
Edited By:
Rachel Derbyshire
Category
🎵
MusicTranscript
00:00:00How is the world's biggest music company thinking about AI?
00:00:04What about TikTok?
00:00:05Or streaming services?
00:00:07Or gaming?
00:00:08Luckily, I have the perfect person.
00:00:10To ask all my burning questions to you today.
00:00:12My special guest this week is Chief Digital Officer.
00:00:15Officer of Universal Music Group, Michael Nash.
00:00:20Michael Nash, welcome to On The Record.
00:00:24Thanks so much for being here.
00:00:25Great to be here.
00:00:25So, for those who are not familiar with Michael, who are tuning into this show, he's the
00:00:30Chief Digital Officer at Universal Music Group, which is the largest company in the music
00:00:33business.
00:00:34I think that...
00:00:35There's a lot of people who might not know the names of the executives behind these companies
00:00:39past, like...
00:00:40the CEO, but really, you are architecting...
00:00:45so many of the major deals that define the music business, from TikTok...
00:00:50to Meta, to all the streaming services, Spotify, Apple, Amazon...
00:00:55and now all the AI stuff.
00:00:56So, and y'all have been very early on announcing a lot of deals.
00:01:00So, I'm super excited to have you here.
00:01:01Thanks for coming.
00:01:02I'm very excited to be here.
00:01:03That's a kind...
00:01:05and flattering framing of the work that I'm fortunate enough to be able to advance on behalf...
00:01:10of our artists and our labels and publishing company, but it is a very exciting time.
00:01:15Right now, with respect to the digital ecosystem, because so much is going on with the...
00:01:20advent of AI technology.
00:01:21Yeah.
00:01:21I mean, okay, so I'm curious, like, when you...
00:01:25first had generative AI on your radar, like, when were you realizing, oh, man...
00:01:30for my job, I need to be watching out for this.
00:01:32What year was that?
00:01:32Do you remember when it hit you?
00:01:35We were thinking in terms of the impact of AI, more machine learning, you know...
00:01:40kind of middle of last decade, but we started really thinking about generative AI and...
00:01:45and its implications towards the end of the last decade.
00:01:48We actually had brought some Gen...
00:01:50AI companies to company conference in 2019, and...
00:01:55we're playing output of music models for our executives who...
00:02:00at the time were saying, that doesn't sound very good.
00:02:02I'm not really sure where this is going, but we...
00:02:05but we believe that there were significant implications going back at that point.
00:02:10So, you know, we were following along the development of technology, I think part of why we were in a...
00:02:15position to focus in on the opportunities and we hope establish the...
00:02:20right position in defense of our artists' interests was because we had started...
00:02:25following it in the last decade.
00:02:26Yeah. I feel like the first moment for me when I...
00:02:30really had generative AI on my radar.
00:02:32I was originally hired at Billboard just as publishing.
00:02:35reporter. So that was all I was covering at that time, songwriters, publishers, and some...
00:02:40someone pitched to me this startup that was running songwriting camps using this generative AI...
00:02:45and it could only do instrumentals at the time.
00:02:48It's right around the time that, like, chat...
00:02:50GPT came out.
00:02:51Mm-hmm.
00:02:52So I think that's, like, late 2022.
00:02:54Um, and they...
00:02:55they played me a demo and it was actually good.
00:02:58And that's when I was like, okay.
00:03:00this is not some fad.
00:03:02I had seen stuff before where people had toyed around with it, but it just...
00:03:05sounded foreign and alien.
00:03:08And so I...
00:03:09I didn't really pay too much attention...
00:03:10until that moment.
00:03:11And now it's, like, most of my job.
00:03:13And I'm sure it's most of your job now, too.
00:03:15Quite a lot of that.
00:03:16There's a number of other things that we're excited about and engaged in.
00:03:20You know, streaming 2.0, you know, emphasis in...
00:03:25areas like health and wellness.
00:03:26Um, you know, looking, you know, broadly at, you know, the evolution.
00:03:30Of social, you know, thinking about immersive environments like Roblox.
00:03:34So, um...
00:03:35Mm-hmm.
00:03:35There's a...
00:03:36There's a broad spectrum of, uh, exciting, uh, areas where technology innovation is changing
00:03:40the business...
00:03:40But AI is, you know, definitely the epicenter.
00:03:42So, this episode, it's gonna air during Grammy.
00:03:45Every week.
00:03:46Which is...
00:03:47Just...
00:03:48Essentially, if you're not in the music business, it's just, like, a week where...
00:03:50Everyone has a party at the same time, and then you have to decide where you're gonna go.
00:03:55Um, for the week.
00:03:56Um, it's absolute madness.
00:03:58But I'm excited that this episode is...
00:04:00...airing then, because Grammy week this year will mark, like, the two-year anniversary...
00:04:05...of, like, the big showdown of Universal Music Group removing its music from...
00:04:10...TikTok, which was such a big deal when it happened in 2024.
00:04:14I remember when...
00:04:15...that letter came out, Lucian Grange, CEO of Universal Music Group, wrote a letter to...
00:04:20...artists and songwriters explaining that he was going to pull the music from the platform.
00:04:25I was at a Grammy party when I got that letter, and so I had to leave and go home and write that...
00:04:30Apologies for that timing.
00:04:31Yeah, thank you, thank you.
00:04:32I was about to get my glass of wine, and then...
00:04:35...and I had to redirect, go home, get on my laptop, but I'm wondering, like...
00:04:40...if you could set the scene for me...
00:04:42...for...
00:04:43...you.
00:04:44Like, where were you?
00:04:45Were y'all, like, in a war room deciding whether or not to pull the...
00:04:50...trigger on this big move at that time?
00:04:52Like, what was the lead up to that big decision?
00:04:55Well, something that was developing over the holiday season, and there's something about the holiday season and the end of the year where there's...
00:05:00...unfortunate timing where very often you're in the middle of something you don't want to be in the middle of...
00:05:04Yep.
00:05:05...while you...
00:05:05...then rather be taking a break.
00:05:06We were in a process of trying to sort out...
00:05:10...what direction we were going to take in the negotiation, and...
00:05:15...the negotiation kind of fell apart, and...
00:05:18...importantly, there were...
00:05:20...economic principles that we were very focused on, but related to what we were just talking about...
00:05:25...at the same time, there was a proposal that...
00:05:30...the service would use AI music in a way that went...
00:05:35...far outside of what we thought really made sense for us to support in the...
00:05:40...interest of our artists, and...
00:05:41...specifically, what they were proposing is that creators would have...
00:05:45...access to tools and be able to generate AI content, and that AI content on the TikTok platform...
00:05:50...would get paid on the same basis as artists' content. It would dilute...
00:05:55...the artists' royalty pool.
00:05:57Yeah.
00:05:58And we felt like that was...
00:06:00...a hill we would die on. We felt like that...
00:06:02...that was kind of a drop-dead issue.
00:06:05...in the evolution of AI, if we get to a point where...
00:06:08...artists' royalties are being displaced...
00:06:10...by pure AI-generated content, that that was going to...
00:06:15...lead to a completely unacceptable outcome. So we...
00:06:20...took a very, very strong position, and...
00:06:23...the...
00:06:25...the...
00:06:25...standoff...
00:06:26...you know...
00:06:27It was three months.
00:06:28...materialized, and...
00:06:29...
00:06:30...
00:06:30...you know...
00:06:31...looking back on that, it was so important...
00:06:32...the...
00:06:33...criticality of...
00:06:34...that position on...
00:06:35...
00:06:35...issue.
00:06:36...you know...
00:06:37...from that time forward, it's been a focal point...
00:06:39...of so many...
00:06:40...of our DSP agreements, and we recently...
00:06:43...announced...
00:06:44...I mean, just...
00:06:45...
00:06:45...this week, agreement with NetEase that includes AI...
00:06:48...protections...
00:06:49...in NetEase...
00:06:50...is a Chinese streaming service?
00:06:51...yes...
00:06:52...the Chinese streaming service, there's Tencent...
00:06:53...and NetEase are the two big...
00:06:54...services...
00:06:55...along with Apple Music...
00:06:57...services like Roblox...
00:06:58...that you would think would not be in that category...
00:07:00...but issues...
00:07:01...you know...
00:07:02...around...
00:07:03...AI content there...
00:07:04...and then very importantly with YouTube...
00:07:05...something we announced in October...
00:07:07...when we completed our renewal agreement with them...
00:07:09...having the AI...
00:07:10...protections...
00:07:11...so...
00:07:12...what we derived...
00:07:13...in terms of the importance of taking...
00:07:15...
00:07:15...that stand...
00:07:16...and then using that kind of as a platform...
00:07:17...and deal-making going forward...
00:07:19...you know...
00:07:20...that...
00:07:20...that for me is kind of the most important takeaway...
00:07:22...of...
00:07:23...what happened two years ago...
00:07:25...on the nature of the standoff...
00:07:26...I mean I would say this...
00:07:27...that...
00:07:28...it precipitated a lot of conversations about...
00:07:30...how we execute against the platform...
00:07:32...what our labels and artists really need...
00:07:35...there were a lot of things that were...
00:07:37...you know...
00:07:38...developed...
00:07:39...in the New Deal...
00:07:40...that really...
00:07:40...facilitated that...
00:07:41...since...
00:07:42...reaching that...
00:07:43...new agreement...
00:07:45...tiktok's been a great partner...
00:07:47...and...
00:07:48...we've benefited a lot from...
00:07:50...being able to partner with them...
00:07:52...on their platform...
00:07:53...and for...
00:07:54...you know...
00:07:55...our artists...
00:07:55...and labels to...
00:07:56...you know...
00:07:57...to have access to...
00:07:58...to the audience there...
00:07:59...we came out of it in good shape...
00:08:00...it's...
00:08:00...the only time...
00:08:01...I think...
00:08:02...Lucian told me...
00:08:03...only time in his ten...
00:08:05...that he's ever reached a point...
00:08:07...in a negotiation...
00:08:09...where there was no...
00:08:10...to go forward...
00:08:11...the...
00:08:12...business under...
00:08:13...like his management...
00:08:14...has had to go dark...
00:08:15...on a platform...
00:08:15...certainly the...
00:08:16...you know...
00:08:17...the only time...
00:08:18...that happened...
00:08:19...in my tenure...
00:08:20...with...
00:08:20...universal music...
00:08:21...so a very unusual situation...
00:08:22...yeah...
00:08:23...okay...
00:08:24...that's so interesting...
00:08:25...to actually get the back...
00:08:25...story on that...
00:08:26...because...
00:08:27...I...
00:08:28...I don't think a lot of people...
00:08:29...understood at the time...
00:08:30...exactly why you're making...
00:08:31...the letter...
00:08:32...it noted three things...
00:08:33...that TikTok wasn't willing to pay...
00:08:35...what you...
00:08:36...to consider the fair value...
00:08:37...for music...
00:08:38...but then also...
00:08:39...AI and artist safety...
00:08:41...but I think...
00:08:42...a lot of people...
00:08:43...attached themselves...
00:08:44...to the idea of just...
00:08:45...money...
00:08:46...and weren't thinking too much...
00:08:48...about the AI...
00:08:49...and the artist safety...
00:08:50...aspect of it...
00:08:51...so it's interesting...
00:08:52...to hear you...
00:08:53...explain kind of...
00:08:54...what was really happening...
00:08:55...behind the scenes...
00:08:56...ultimately...
00:08:57...when you got to the place...
00:08:58...where three months later...
00:08:59...you guys announced...
00:09:01...that you did come to an...
00:09:02...agreement with TikTok...
00:09:03...and the UMG music...
00:09:04...would come back to the platform...
00:09:05...did you get...
00:09:06...what you wanted...
00:09:07...as far as...
00:09:08...forbidding...
00:09:09...kind of TikTok...
00:09:10...from using that...
00:09:11...AI creator content...
00:09:11...in that way...
00:09:12...yes...
00:09:13...we got the best...
00:09:14...protections...
00:09:15...that we...
00:09:16...had been able to obtain...
00:09:17...to that point...
00:09:18...and they remain...
00:09:19...you know...
00:09:20...some of the best...
00:09:21...protections...
00:09:21...that we have...
00:09:22...in any agreement...
00:09:23...with the music service...
00:09:24...in terms of...
00:09:25...AI protection...
00:09:26...and...
00:09:27...what we call...
00:09:28...anti-dilution...
00:09:29...meaning...
00:09:30...the artist royalties...
00:09:31...won't be diluted...
00:09:31...the pure AI content...
00:09:32...that's so...
00:09:33...interesting to hear this...
00:09:34...um...
00:09:35...at the time...
00:09:36...
00:09:36...because I was reporting...
00:09:37...on this issue...
00:09:38...um...
00:09:39...as it developed...
00:09:40...I have to admit...
00:09:41...like...
00:09:41...towards...
00:09:42...the tail end...
00:09:43...of...
00:09:44...UMG's...
00:09:45...kind of...
00:09:46...boycott...
00:09:46...if you could even...
00:09:47...call it that...
00:09:48...of TikTok...
00:09:49...um...
00:09:50...it felt like a lot of...
00:09:51...UMG artists were...
00:09:51...starting to break ranks...
00:09:52...with...
00:09:53...the company...
00:09:54...and the stance to...
00:09:55...remove the music from there...
00:09:56...you saw like...
00:09:57...for example...
00:09:58...Olivia Rodrigo used...
00:09:59...some UGC remixes of...
00:10:01...of her songs...
00:10:02...that hadn't been removed...
00:10:03...that weren't supposed to be on there...
00:10:04...to keep promoting her music...
00:10:05...and then...
00:10:06...Taylor Swift was a really big turning point...
00:10:08...from the outside...
00:10:09...for me...
00:10:10...um...
00:10:11...in that standoff...
00:10:12...because...
00:10:13...she somehow...
00:10:14...found a way to put her catalog...
00:10:15...back on there...
00:10:16...um...
00:10:16...to support...
00:10:17...the upcoming release...
00:10:18...of Tortured Poets Department...
00:10:19...so...
00:10:20...I...
00:10:21...I'm wondering like...
00:10:22...when...
00:10:23...artists started to...
00:10:24...find ways to get back on...
00:10:26...tick-tock...
00:10:27...while you were still doing...
00:10:28...the standoff...
00:10:29...did that hurt...
00:10:30...your negotiating position...
00:10:31...as a company...
00:10:32...that's...
00:10:33...a very...
00:10:34...interesting way...
00:10:35...of...
00:10:36...you know...
00:10:36...packaging up...
00:10:37...the different developments...
00:10:38...that were happening at the time...
00:10:39...I mean...
00:10:40...I would say...
00:10:41...ultimately...
00:10:41...the fact that we got...
00:10:42...a really good deal...
00:10:43...going forward...
00:10:44...and we were able...
00:10:45...to see...
00:10:46...secure...
00:10:47...the single most important...
00:10:48...strategic principle...
00:10:49...and...
00:10:50...a better...
00:10:51...
00:10:51...and...
00:10:55... базив...
00:10:56...aventstation...
00:10:57...the...
00:10:58...work…
00:10:59...to see...
00:11:00...and...
00:11:01...to see...
00:11:02... serve...
00:11:03...the...
00:11:04...the...
00:11:05...in...
00:11:06...in...
00:11:07...loved together...
00:11:08...not...
00:11:09...in...
00:11:10...in...
00:11:11And that's why we worked really hard to secure a new agreement.
00:11:13I would say, by and large.
00:11:16The strong level of support in the music community around the position that we . . .
00:11:21took was very helpful in enabling us to secure the right deal going forward.
00:11:26Now TikTok has sold its U.S. branch and . . .
00:11:31and things are going to change there.
00:11:32Do you think that that will impact the platform and its relationship?
00:11:36To music discovery and the music industry, do you think that it'll still have as much power?
00:11:41As it has previously had under new leadership?
00:11:44It will be really interesting to see there . . .
00:11:46There are still some elements of the equation technologically with the platform, with the algorithm . . .
00:11:51all that's going to play out.
00:11:52Yeah.
00:11:53The new management structure will be put in place . . .
00:11:56You know, a lot of changes for the company . . .
00:11:58And I can't comment too much because, you know, obviously the ongoing . . .
00:12:01negotiations . . .
00:12:02You have confidential nature in place . . .
00:12:03But I think that having . . .
00:12:06a U.S. TikTok entity with the importance of music in the U.S. . .
00:12:11market and, you know, what we feel, you know, with Universal Music . . .
00:12:16the importance we bring to partnership in, you know, a U.S.-centric conversation . . .
00:12:20Mm-hmm . . .
00:12:21. . .
00:12:21is a good position to be in.
00:12:22So we're looking forward to engaging in conversations to try to figure out what the next . . .
00:12:26win-win looks like.
00:12:27Yeah.
00:12:28I'm super interested to see how the algorithm changes, personally.
00:12:30Because, I mean . . .
00:12:31. .
00:12:31artists are, like, living and dying by this algorithm . . .
00:12:34trying to chase it and all of its changes . . .
00:12:36over time.
00:12:37So I'm very curious to see how that shapes up.
00:12:39But I wanted to . . .
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00:13:25. . .
00:13:26people criticize the music business for its treatment of file sharing and Napster and the
00:13:30advent of.
00:13:31So I'm wondering if you could compare and contrast that time period and how the music business
00:13:36reacted to what you're seeing now.
00:13:38It's a good setup to talk about the.
00:13:41Previous era because some lessons were definitely learned.
00:13:44You know, I refer to it as reality therapy.
00:13:46There were probably some perspectives in the industry at the end of the last century wondering.
00:13:51If it would be possible to just turn the internet off, obviously the disruption that came.
00:13:56Was profound and, you know, it halved industry.
00:14:01Revenues on a global basis and a lot of adjustments needed to be made.
00:14:06To reconcile, you know, how you address disruptive technology.
00:14:11You know, I think in terms of, you know, how this played out in management circles, I mean, the way that.
00:14:16Sir Lucian, our CEO, you know, puts it, you know, it's not only futile to.
00:14:21To oppose the evolution of technology, it's counterproductive because if you think back over.
00:14:26The last century, you know, going back to the advent of recording technology and radio and you think about everything.
00:14:31It happened with developments, with technology, you know, with synthesizers, with the digital transition.
00:14:36You know, initially, you know, downloads with streaming every single technology.
00:14:41This sort of disruption over the last century has been really good for the music industry ultimately.
00:14:46when the reconciliation is achieved
00:14:48and you understand how to surf the wave.
00:14:51How to ride the changes.
00:14:53And a lot of that is because our artists are in
00:14:56and our artists are essential to culture and technology.
00:15:01And, you know, music come together in media culture
00:15:04in unique...
00:15:06In important ways it creates a lot of value.
00:15:08So, you know, because of the greatness of what our...
00:15:11Our artists create and its importance
00:15:13to the cultural life of the planet,
00:15:15we're bringing...
00:15:16We're bringing a lot into the conversations
00:15:18about how you manage technology disruption with the...
00:15:21We're bringing a lot of tech platforms
00:15:23to figure out, you know, how to get to the win-win,
00:15:25to the other side where...
00:15:26You're putting artists in a position
00:15:27where they can take advantage of technology change.
00:15:30But I think that...
00:15:31You're quite right to set the question up as,
00:15:34you know, now with AI...
00:15:36And people leaning in...
00:15:37Is that based on what's been...
00:15:40What was...
00:15:41We learned in the previous generation about...
00:15:43Mm-hmm.
00:15:44About...
00:15:45Um...
00:15:46Maybe not a complete recognition of how quickly...
00:15:49It was, you know, necessary to move.
00:15:51To be able to incorporate technological change into strategy.
00:15:56Instead of the...
00:15:57You know, the strategy basically being...
00:15:58To try to oppose technological change.
00:16:00So...
00:16:01So far, UMG's announced a lot of different partnerships
00:16:04with different AI companies.
00:16:05I think the...
00:16:06The most important one so far from my vantage point,
00:16:08and correct me if you think I'm wrong,
00:16:10is the...
00:16:11To deal with Yudio.
00:16:12That happened...
00:16:13Late 2025.
00:16:14That was one that I've been...
00:16:16Waiting on for a really long time.
00:16:18So...
00:16:19Because back in the summer of 2020...
00:16:21Before...
00:16:22I think...
00:16:23The big bombshell after the UMG TikTok thing.
00:16:26Was the Universal, Sony, and Warner banded together...
00:16:29Sued...
00:16:30Uh...
00:16:31UD...
00:16:31Studio and Suno in similar lawsuits for...
00:16:34Widespread copyright infringement.
00:16:36Essentially.
00:16:37Alleging widespread copyright infringement.
00:16:38So to see that there was a...
00:16:40There was a...
00:16:41Chance that you guys could find a way to settle.
00:16:43And to make a deal that everyone was happy with.
00:16:46Was really...
00:16:47Interesting.
00:16:48I'm wondering why...
00:16:49Your settlement with Yudio came first.
00:16:51Tell me about...
00:16:52Coming to the table with Yudio and why you felt like...
00:16:55A week...
00:16:56You can find a deal with these people.
00:16:57Let me set the scene a little bit with the strategic backdrop.
00:17:00So...
00:17:01Yeah.
00:17:01At the beginning of this inflection point and the evolution of...
00:17:06Uh...
00:17:07Generative AI.
00:17:08Say end of 20...
00:17:09Um...
00:17:102022...
00:17:11Like 2023...
00:17:11Yeah.
00:17:12We established a core philosophy which sounds kind of...
00:17:16Simplistic almost to the point of being trite.
00:17:17But...
00:17:18It really is the North Star.
00:17:19Like center the conversation on artists.
00:17:21Defend their rights.
00:17:22Protect their interests.
00:17:23And from that foundation build out your creative...
00:17:26And commercial opportunities.
00:17:27So...
00:17:28The predicate there of defending the artists...
00:17:31Um...
00:17:32You know rights.
00:17:33And they're advancing their interests.
00:17:34Establishes this playbook that's...
00:17:36Defense into offense.
00:17:37I mean if you don't establish that you have a seat...
00:17:41At the dinner table.
00:17:42You're probably gonna wind up on the menu.
00:17:43We're fond of saying.
00:17:44So...
00:17:45Of course we have...
00:17:46We had to vigorously defend our artists' rights.
00:17:48You know we had to defend the principle of copyright.
00:17:51And...
00:17:52You know we had to advocate broader sets of interests for our artists.
00:17:54In terms of...
00:17:55You know...
00:17:56Their name and likeness rights.
00:17:57Their right of publicity.
00:17:58You know...
00:17:59The associated rights.
00:18:00Um...
00:18:01That...
00:18:01That...
00:18:02We're being infringed upon.
00:18:03You know at that point in the evolution of AI.
00:18:06But...
00:18:07Always the perspective was defense into offense.
00:18:09You know we're looking to build creative...
00:18:11Opportunities for our artists.
00:18:12You know we're looking to establish new revenue streams.
00:18:15We're looking for the win...
00:18:16Win partnerships.
00:18:17In the evolution of technology.
00:18:19So...
00:18:20I would say specifically...
00:18:21With Udio.
00:18:22Um...
00:18:23I give their CEO Andrew Sanchez a lot of credit for...
00:18:26And...
00:18:27For me I will answer that.
00:18:28Let's feel comfortable with that.
00:18:29For me today I will answer that as for people.
00:18:30These are our speakers who will network.
00:18:31But...
00:18:32I will answer that...
00:18:33And...
00:18:34It...
00:18:35It...
00:18:36It...
00:18:37I will go ahead and answer that.
00:18:39And it seems to be a...
00:18:40Yes, I will answer that.
00:18:41Anytime you went on.
00:18:42Now you take your hand...
00:18:43And you...
00:18:45And they're fans.
00:18:47So the concept that they had around...
00:18:50...developing, you know, superfan product that would enable hyper-personal...
00:18:55...you know, a level of customization of the experience...
00:19:01...interaction with the music.
00:19:02And I can't go too much further because the product hasn't launched...
00:19:05...yet and plans are still confidential.
00:19:07But philosophically...
00:19:10...what Andrew and Udia wanted to focus on really...
00:19:15...closely aligned with how we saw the evolution of...
00:19:20...of the space as a commercial opportunity.
00:19:23Almost all the value in the music...
00:19:25...ecosystem is established by two things.
00:19:27One, artists connecting with bands...
00:19:30...to love them.
00:19:31And...
00:19:32...bands participating in music culture.
00:19:33So...
00:19:34...concepts of...
00:19:35...of products that deepen the artist-fan relationship...
00:19:37...and that allow fans to participate in music culture.
00:19:40...you know, really appealed to us...
00:19:41...as, you know, kind of hitting that sweet spot...
00:19:43...of how value is created.
00:19:45So...
00:19:46...you know, credit to...
00:19:47...you know, Udia and Andrew and the management...
00:19:50...of the company...
00:19:51...working really hard...
00:19:53...to develop a compelling proposition.
00:19:55...you know, working with us to resolve the litigation...
00:19:58...and establishing this path forward.
00:20:00So...
00:20:00...you know, we're happy to be in business with them...
00:20:02...and we're excited about their product development plans.
00:20:04That's so interesting.
00:20:05I honestly don't think I would have guessed...
00:20:07...that Andrew came to you guys with this idea.
00:20:10...I kind of, from my outsider perspective...
00:20:13...just looking at press releases...
00:20:15...and making my own conclusions...
00:20:16...I kind of assumed that UMG being...
00:20:19...the biggest...
00:20:20...company in the music business...
00:20:21...and Udia still being a start-up...
00:20:23...a very powerful one, but still a start-up.
00:20:25I kind of imagined the way that it went was...
00:20:27...UMG's like, we can settle...
00:20:29...but...
00:20:30...here's what we want.
00:20:31...this is the platform we want to build.
00:20:33And then Udia said yes.
00:20:34I didn't realize...
00:20:35...that it was the other way around...
00:20:36...where Udia comes...
00:20:37...with the idea intact.
00:20:39And it...
00:20:40...happened to align...
00:20:41...well.
00:20:42That's...
00:20:43...it's interesting to hear.
00:20:44Well, I think it's possible to...
00:20:45...you know, insert in that narrative...
00:20:47...you know, litigation is the mother of invention.
00:20:49...
00:20:50...you know, a degree of necessity.
00:20:52There was a very collaborative dialogue...
00:20:54...and early on...
00:20:55...you know, it was...
00:20:56...the five ideas...
00:20:57...and which ones...
00:20:58...seemed to be the most interesting.
00:21:00And, you know, we did have...
00:21:01...some very, very clear principles...
00:21:03...that are now manifest...
00:21:04...in what they're...
00:21:05...their plans are.
00:21:06The walled garden construct...
00:21:08...is probably something...
00:21:09...that's worth talking about...
00:21:10...for just...
00:21:10...just a minute...
00:21:11...because...
00:21:12...that's...
00:21:13...that's not something that...
00:21:14...you know, all the services...
00:21:15...going forward are...
00:21:15...are planning on offering...
00:21:16...but the ones that we're supporting...
00:21:18...are planning on offering that...
00:21:19...and Clay...
00:21:20...is also in that category.
00:21:21Can you explain what a walled garden is...
00:21:22...for those who might not know?
00:21:23Yeah, so...
00:21:24...and...
00:21:25...and...
00:21:25...apologies for speaking...
00:21:26...the music industry jargon...
00:21:27...but...
00:21:28...the...
00:21:29...I'll tell you that...
00:21:30...when I need to.
00:21:30The concept is to set up through AI a component.
00:21:35It's a component of the service for deep interaction with the artists and the content.
00:21:40But not to create derivatives that you then take off of the platform.
00:21:45Post all over your socials and post on Spotify and Amazon Music and Apple.
00:21:50To effectively use artists' content and their brand to create...
00:21:56Where you're going to compete with the artist on other platforms.
00:21:59We don't think that made any...
00:22:00We didn't feel like going to artists for their support to opt into these services.
00:22:05It was going to be a very compelling pitch.
00:22:07From our perspective, it didn't make...
00:22:10It didn't make business sense.
00:22:11It didn't make sense in terms of what we thought was in the best interest of our artists.
00:22:14So, you know, that...
00:22:15That was a key principle and that's something that Udio and...
00:22:20Andrew Sanchez understood and aligned with.
00:22:22So, you know, there were some fundamental...
00:22:25concepts that then wind up being expressed in the product development plan.
00:22:30Do you think that the lawsuit against Suno and Udio was...
00:22:35Impossible to avoid?
00:22:36Like, was it always going to end up being this way where the majors did have...
00:22:40to resort to litigation?
00:22:41That's absolutely an instance of don't claim a seat at the dinner table, why not?
00:22:45Right up on the menu.
00:22:46I mean, we had to take a position about the...
00:22:50wholesale ingestion as the training set...
00:22:55of our entire library of copyrights on which the value of our...
00:23:00company is predicated.
00:23:01And the rights and interests of our artists that were not being consulted.
00:23:05That were not...
00:23:06No consent was sought.
00:23:08No model around their compensation was being offered.
00:23:10We had absolutely no position.
00:23:12But again, the defense into offense, you know...
00:23:15a plan, you take a position around, you know, your rights and your interests.
00:23:18And then you sit down and work out what...
00:23:20what the win-win looks like on the other side of settling litigation.
00:23:23Mm-hmm.
00:23:24And soon...
00:23:25Even after UMG announced its deal with UDO, Warner followed suit also did a deal with...
00:23:30UDO.
00:23:31So it seems like things are starting to wrap up over there.
00:23:33Sony is still pursuing.
00:23:34It's part of the lawsuit, but...
00:23:35it seems like there's, you know, a path forward for UDO.
00:23:39And then...
00:23:40soon after that, Warner also announced that they came to a deal with Suno.
00:23:45But...
00:23:45the deal with Suno, I think a lot of people who don't read past the headlines
00:23:48and don't have their Billboard Pro subscription...
00:23:50might not realize that below the headline of Warner does deal with...
00:23:55Suno, Warner does deal with UDO, Universal does deal with UDO, that these deals are quite different.
00:24:00Warner's deal with Suno does not have any pivot to the service.
00:24:04So Suno's just...
00:24:05making, uh, new songs that are original songs.
00:24:09Um...
00:24:10and there's no walled garden...
00:24:12as well...
00:24:13and so basically...
00:24:14uh...
00:24:15the only change is that...
00:24:17now you need to pay for Suno...
00:24:20and...
00:24:20and then you get a...
00:24:21a limited number of downloads of those songs that you have from that platform.
00:24:24Um...
00:24:25.
00:24:26.
00:24:27.
00:24:29.
00:24:30.
00:24:31.
00:24:32.
00:24:33.
00:24:34.
00:24:35.
00:24:36.
00:24:37.
00:24:38.
00:24:39.
00:24:40.
00:24:41.
00:24:42.
00:24:43.
00:24:44.
00:24:45.
00:24:46.
00:24:47.
00:24:48.
00:24:49.
00:24:25.
00:24:34.
00:24:35.
00:24:30or wherever they wanted to put it.
00:24:31I'm wondering, why have you guys not done a deal with Suna?
00:24:35Is it about the walled garden?
00:24:37Could you give us any insight on that?
00:24:39So first...
00:24:40First of all, I have to be careful because we're in the midst of ongoing litigation,
00:24:43and so that's one of those things that typically...
00:24:45You know, means that you have to abbreviate your responses and stay really general.
00:24:50I think that if I treated your question as a rhetorical question, I would say...
00:24:55Yes.
00:24:56And having articulated the...
00:25:00The walled garden distinction and its importance, you know, that's kind of a hat hanger.
00:25:05In this discussion, every single deal that we've announced has very, very...
00:25:10strong foundation of ethicality, and that runs all the way through to...
00:25:15the new partnership with NVIDIA that we just announced earlier this month.
00:25:19Mm-hmm.
00:25:20And...
00:25:20You know, their very direct commitment to the interests of the creative community...
00:25:25So...
00:25:26If you're looking at what is the...
00:25:30point of differentiation with respect to the deals we've done...
00:25:33Mm-hmm.
00:25:34And...
00:25:35The part...
00:25:35The partnerships that we haven't entered into, you know, foundationally, it's really about ethicality.
00:25:40And...
00:25:40By that, I mean that the training of the model is based on...
00:25:45On licensing, that the interests of the artists are foremost in the product development...
00:25:50... plans, that concept of not enabling creation of derivatives...
00:25:55... that compete directly with the artist.
00:25:57And then even, you know, in terms of, you know, artists...
00:26:00... creative tools and...
00:26:01... partnerships that we've announced with companies like Stability AI...
00:26:05... with Splice, you know, other plans that are ongoing there.
00:26:09It's very important...
00:26:10... that those tools are also developed...
00:26:12Mm-hmm.
00:26:13... with high principles of ethics...
00:26:15...
00:26:15... medicality.
00:26:16So...
00:26:17I would say to...
00:26:18... to...
00:26:19... be safely general about...
00:26:20... this, if you're trying to understand what deals we've done, it means we've been able
00:26:24to reach agreement...
00:26:25... on...
00:26:26... you know, core principles...
00:26:27... of ethicality...
00:26:28... and...
00:26:29... the deals that we haven't...
00:26:30...
00:26:30... done...
00:26:31... we haven't arrived at a point where, you know, we believe that...
00:26:34...
00:26:35...
00:26:35... the platform is operating responsibly...
00:26:37... and then there are the commercial considerations.
00:26:40... around what we think is in the best interests of our artists.
00:26:42Yeah.
00:26:43And I'm wondering...
00:26:44...
00:26:45...
00:26:45... between Universal and other music companies that are exploring these deals right now...
00:26:49... have you started to see...
00:26:50... a difference in how everyone is thinking about AI?
00:26:54I imagine different companies...
00:26:55...
00:26:55... are reaching different conclusions about what their non-negotiables are.
00:26:58I think that there was a...
00:27:00... probably a wider diversity of perspectives as things evolve...
00:27:03... and then as deals get done...
00:27:05... and then there are reference points in the marketplace...
00:27:07... you know, create some clarification...
00:27:08... because there's, you know, always the issue for...
00:27:10... these companies regarding...
00:27:12... how am I going to get the support of the creative community?
00:27:14How am I going to get the...
00:27:15... you know, the music companies on board?
00:27:16How am I going to get the...
00:27:17... you know, the publishers on board?
00:27:18What's going to serve the interests of songwriters?
00:27:20... and recording artists?
00:27:21So I think clarity is achieved...
00:27:23... as...
00:27:24...
00:27:25... as...
00:27:26... models are developed and new deals are announced...
00:27:28... that creates...
00:27:29...
00:27:30...
00:27:30... some directionality there.
00:27:31I think you're going to see a diversity in terms of products...
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