The American Federation of Musicians (AFM) has opposed dismissal arguments from Universal Music Group (UMG) and Warner Music Group (WMG) in a United States lawsuit over generative AI licensing deals, arguing that the labels’ reading of a contract clause would erase liability before the case can proceed.
The dispute centres on Article 21(a) of the current Sound Recording Labor Agreement (SRLA). The AFM contends that licensing deals with Suno and Udio constitute a “new use” under that provision.
The licensing arrangements at issue are:
- UMG and WMG: Udio
- WMG only: Suno
- Sony Music: no deals with either platform, not a party
The AFM argues that musicians who contributed to the licensed recordings are entitled to a share of the resulting compensation. UMG and WMG counter that the new-use provision does not extend to mediums such as generative AI that are not already covered by standalone agreements, meaning the AFM is owed nothing for the AI pacts.
“At this stage, the AFM need not show that its interpretation is the most persuasive; it need only show that the contract is ambiguous and its reading is plausible,” the plaintiff stated.
What Article 21(a) says#
Article 21(a) states that when a recording is used “for a purpose not covered by this Agreement, the Company shall pay to those musicians who rendered services in the recording.” Compensation would be “an amount equal to all payments…that would be required under the AFM agreement that would then be effective if the recording were originally made for the purpose set forth under that agreement.”
The AFM acknowledged as possible the labels’ position that the contract depends on adjacent agreements, or the main SRLA, to supply rates for new uses, with no rates meaning no compensation is due.
“[T]he second ‘purpose’ can refer to the agreement that sets the rate for the work, not the agreement covering the distribution platform. … A recording made for an AI platform’s use would still be a ‘phonograph record’ under the SRLA, and the musician who made it would still be covered. The SRLA therefore qualifies as ‘the AFM agreement that would then be effective’ for the musician’s work, even if no separate agreement governs the AI platform,” the AFM said.
Dismissal arguments challenged#
The AFM argued that whether the referenced provision supplies the final measure is at most a question of interpretation and damages, not a basis to erase liability at the pleading stage. “Defendants’ suggestion that a nonexistent agreement necessarily reduces the amount to zero simply assumes its construction of Article 21(a) and cannot justify dismissal,” the plaintiff stated.
On calculating any payments, the AFM said that despite the absence of a precise formula for generative AI, the SRLA contains objective measures, including session, streaming, and sampling rates, that can inform the calculation.
The union also cited prior video game compensation rates and said Article 21(a) can address emerging uses as a disputed interpretive question, as the general new-use provision, before precise terms are negotiated.
Next steps#
The AFM’s filing also covers downstream uses such as on-demand streams of AI outputs. The court has not yet ruled on the dismissal motion, and separate negotiations over a new Sound Recording Labor Agreement continue to address AI-related issues.
