One of the Gang – Jan 2026
Last month, the major music labels settled their litigation with the genAI music companies Suno and Udio [1]. AI companies will pay for using copyrighted music to train their models, music labels will acquire equity stakes in Suno and Udio, and new revenue sharing mechanisms will be defined. Instead of being on the menu of the AI revolution, the major labels have now acquired a seat at the table [2].
Problem solved? Not quite. Composers, publishers and performing artists are still on the menu of genAI companies, and they would like a seat at the table as well. To see how this could be brought about, we need to take a step back.
genAI enables new business models and threatens existing models. The first response of those whose business model is threatened by new technology is usually to protest against the use of the technology. And if they have sufficient financial means, as the majors do, they try to prohibit it.
But that is only the first step. The second step of the major labels has been to join the new kids on the block, so that they can profit from both old and new business models.
If we step back a bit further, we see that any business model is part of a network of business models in which economic entities generate revenue by delivering something of value to each other. Composers create music, performers perform, record labels produce, media broadcast, etc.
Adding a new business model to the network may impact the entire network. Cash flows will change, some entities will change their business model, some may go out of business, and new players enter the network. This happened in the music ecosystem when radio, vinyl, TV, tape recorders, CDs, DVDs, streaming were introduced, and it is happening now when genAI is introduced. Like the earlier revolutions, the genAI revolution is a revolution of the entire music ecosystem.
And as any transformation of a business ecosystem, it consists of three related processes: the transformation of business models, of governance, and of technology enablers.
- The core question in a network of business models is: What value is produced by who and for whom? Value production is the basis of revenue generation. In the Music360 project we have investigated the value of background music for venues and for musicians. In the AI economy this needs to be extended to assess the value of AI music, not only for venues, but also for game developers, streaming companies and consumers.
- Governance is about the rules of the game in an ecosystem. In the genAI transformation, IP law defines who owns which rights and can ask payment for granting a right. Current IP law stems from the 19th century and needs to be adapted to what is possible with genAI technology.
- Technology plays a dual role in any business ecosystem: It enables new business models and it enables enforcement mechanisms for governance rules. Technology for detection and attribution of AI music is rapidly improving. Further improvements will determine how stakeholders can generate revenue and how IP rules can be enforced.
The common factor in these three aspects is power. Business models create financial power to create value, to litigate against threats, and to lobby for or against legislation. Governance rules require normative power to issue and enforce rules that stakeholders must follow. Technology creates the power to perform actions, but also to prevent them or detect violations.
How do these powers operate to transform the music ecosystem? There are different mechanisms at play.
- Business models move forward by the entrepreneurship, or greed if you will, of economic entities.
- Technology evolves thanks to the curiosity of engineers and funding by government and economic entities.
- Governance rules evolve thanks to the effort of governments who feel responsible for the public interest, and also thanks to the effort of businesses who enable entire business ecosystems to generate revenue. Think of Alphabet (enabling the YouTube ecosystem) and Spotify (enabling a music streaming ecosystem of labels, publishers, composers, lyricists, performing artists, and others), who define the rules of the game for the business ecosystem they enable, and generate revenue from this.
Government-defined governance rules will remain outdated unless governments update them. This is the critical element in the further evolution of the music ecosystem. Will the rules of the music game be defined by large businesses only, in the interest of generating revenue, or also by governments that guard the public interest?
1 – https://neonmusic.co.uk/ai-music-major-label-settlements-suno-udio
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