In a recent Bloomberg Tech Summit interview, Michael Huppe, President and CEO of SoundExchange, discussed the evolving role of AI in the music industry. SoundExchange is a nonprofit organization that represents the recorded music industry, acting as an intermediary between streaming radio services like Pandora and Sirius XM and the artists and record labels. The organization collects and distributes digital performance royalties, having paid out over $13 billion to more than 800,000 music creators to date. Huppe highlighted the steady growth in royalties over the past 15-20 years, driven largely by the rise of streaming and mobile consumption.
Huppe explained how SoundExchange operates by collecting royalties from non-interactive streaming services and distributing payments to artists and labels. For example, when a song by an artist like Taylor Swift is played on Pandora, SoundExchange ensures that the artist and their label receive their respective shares. Although the per-stream payout is a fraction of a penny, the cumulative royalties amount to over a billion dollars annually, representing a significant portion of the U.S. recorded music revenue.
The conversation then shifted to the impact of AI-generated music on the industry. Huppe acknowledged AI’s potential to create new revenue streams and innovative products for consumers but emphasized the need for careful regulation to protect human creators. A major concern is the flood of AI-generated tracks being uploaded to streaming platforms—some estimates suggest that over 80% of new daily uploads are AI music. This influx raises issues around streaming fraud, where bots use AI tracks to siphon royalties away from genuine artists, a problem that the industry is actively working to combat.
One critical legal point Huppe made is that purely AI-generated music is currently not copyrightable under U.S. law, meaning SoundExchange does not pay royalties for such works. This legal framework underscores the importance of protecting human creativity and ensuring that AI companies, which often build their models using content created by human artists, fairly compensate the original creators. Despite concerns, Huppe noted that AI music quality has improved significantly, with some AI-generated songs even including vocals and sounding impressively good.
Ultimately, Huppe expressed a balanced view on AI in music, recognizing both its risks and opportunities. Unlike the disruptive Napster era, the recording industry is now actively collaborating with AI companies, licensing technology, and seeking ways to integrate AI responsibly. He concluded by drawing parallels to past technological innovations in music, such as autotune, suggesting that AI, if managed properly, could be another tool to enhance creativity and industry growth.
