Universal Music and Warner Music have told a United States federal court that the “new use” clause in the American Federation of Musicians (AFM) Sound Recording Labor Agreement (SRLA) is “clear and unambiguous” and does not apply to their artificial intelligence (AI) licensing deals. The dispute centres on whether session musicians must be compensated when recordings are used to train generative AI models.
AFM sued Universal and Warner in June, claiming both companies failed to meet their obligations under the SRLA in relation to AI licensing deals with Udio and, in Warner’s case, Suno. Both sides have made new filings as the record companies seek dismissal of the lawsuit.
The new use clause#
The SRLA sets terms for how musicians hired under the agreement are paid and how recordings on which they appear are used. Under the new use clause, if a sound recording is used by a record company in a way not anticipated or covered by the SRLA, the label must compensate any musicians who appear on that recording and inform the union about the new use.
Universal and Warner have not done either in relation to their AI deals. They argue the clause does not apply because it only takes effect when a separate AFM agreement covers the new use. The clause states that a musician should be paid as if brought back into the studio to record music specifically for that use, based on whatever standard agreement would cover that kind of recording session. No standard agreement covers AI.
Universal’s argument#
In its latest filing, Universal argues the clause “is susceptible to only one meaning”: when a label uses a covered recording for a purpose not covered by the agreement, it must pay “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equal to all payments that would be required under the AFM agreement that would then be effective if the recording were originally made for the purpose set forth under that agreement”.
Universal says the clause “does not state a rate” but instead “imports one from the separate AFM agreement governing the new purpose”. AFM has conceded that no such agreement exists for AI use, including during a meeting to discuss the majors’ motion to dismiss.
AFM’s response#
AFM argues there is no need for a separate AI agreement for the new use clause to apply. “The text imposes a mandatory payment obligation when a signatory company puts a covered recording to a purpose not covered by the SRLA,” the union says in its filing.
While no specific AI agreement dictates the payment, AFM says existing SRLA provisions supply objective measures from which damages can be determined:
- session rates
- streaming rates
- sampling rates
Unlike the majors, AFM concedes the new use clause is “reasonably susceptible to more than one interpretation”. The union argues that if it can show some ambiguity and that its interpretation is “plausible”, that should be grounds for allowing the case to proceed and declining the dismissal bid. AFM is adamant that its reading is at the very least plausible.
