In an era where artificial intelligence is rapidly advancing, the protection of intellectual property in the music industry has become increasingly critical. Universal Music Group (UMG) CEO Lucian Grainge has underscored the company’s commitment to safeguarding its artists and songwriters from AI-related copyright infringements. This commitment was evident during an analyst call following the release of UMG’s second-quarter financial results, where Grainge detailed the company’s proactive approach to addressing potential threats posed by generative AI.
Legal Actions and Industry Leadership
Lucian Grainge emphasized UMG’s dual strategy of offense and defense in protecting intellectual property rights. The music label has taken a firm stance against unauthorized use of copyrighted works to train AI systems. “We recognize potential threats early and defend against them. 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 stated.
UMG, along with Sony Music Entertainment and Warner Music, has recently been involved in lawsuits filed in federal courts in New York and Massachusetts. These legal actions aim to stop AI start-ups from illegally using massive collections of copyrighted recordings to power their systems. Grainge explained, “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.”
Embracing AI for Positive Change
While UMG actively fights against unauthorized AI usage, it also embraces AI tools and technology to benefit artists. The company has forged deals with YouTube and Deezer to implement an artist-centric model for royalty payments. This approach ensures that artists receive fair compensation in the evolving digital landscape. Grainge highlighted that UMG’s adoption of AI is aimed at advancing creative and commercial opportunities for their artists.
Financial Performance and Market Dynamics
UMG reported an 8.7 percent increase in overall revenue for the second quarter, reaching €2.93 billion (US$3.18 billion). Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose by 10 percent to €649 million (US$704.5 million). The recorded music subscription revenue grew by 5.8 percent to €2.2 billion (US$2.39 billion), with subscription and streaming revenue accounting for the bulk of this category at 3.8 percent up to €1.48 billion (US$1.61 billion).
Boyd Muir, UMG’s CFO, noted the variable performance of leading audio streamer platforms, particularly concerning ad-supported streaming revenue. He pointed to slowdowns in ad revenue growth reported by Spotify and YouTube. Despite these fluctuations, UMG remains confident in the long-term trajectory of the market. “It’s important to keep in mind that the perspective about the evolution of the market is something that doesn’t necessarily change on a quarter-by-quarter basis,” Michael Nash, chief digital officer at UMG, told investors.
The Future of Streaming and Subscription Services
The evolving landscape of audio streaming and subscription services continues to shape UMG’s strategies. Spotify recently revealed a 14 percent year-over-year growth in monthly active users, reaching 626 million, though this fell short of their prior guidance of 631 million. Grainge emphasized the need for a long-term perspective, stating, “We can’t do anything other than think in multi-year cycles in the long term,” even as investors scrutinize quarterly performance.
During his remarks, Grainge also praised the exceptional sales of Taylor Swift’s latest studio album, Tortured Poets Department. “What can I say? A phenomenon. Unique. Extraordinary,” he lauded, reflecting on the significant impact of Swift’s work on the major music label.