AI music is forcing a “high-stakes inflexion point” and presenting the greatest disruption to the legal underpinnings of the music industry’s economic model since Napster — but a revenue-halving overhaul and protracted, unpopular legal battles can be avoided if major music companies get out ahead of judges and lawmakers and negotiate with Suno, Udio and Anthropic, says industry veteran and investor Charles Goldstuck.

In a new paper for the Wake Forest University Journal for Business and Intellectual Property Law, Goldstuck — a former executive at BMG, HitCo Entertainment, Arista and Capitol Records and the architect behind the turnaround for digital jukebox company TouchTunes — writes that music companies don’t need to reinvent the wheel, arguing that licensing agreements with generative AI platforms are likely to closely mirror current licensing agreements with digital streaming platforms.

“Negotiated settlement should become the primary engine of progress … not the compromise of last resort,” writes Goldstuck, who currently runs the music rights investment firm GoldState Music. “If rightsholders and technologists embrace this … before judicial rulings codify blunt positions, they can architect a licensing ecosystem that secures creative labor, fuels responsible AI research…ensuring that the music economy evolves on solid legal and innovative foundations.”

Below are some highlights from Goldstuck’s paper. You can read the full report here.

The issue can’t be resolved in the courts.

Lawsuits are long, expensive and bruising, Goldstuck wrote, citing the $100 million YouTube spent on its seven-year legal battle with Viacom and the legal onslaught the music industry waged against piracy that ensnared teenagers and turned public opinion against the enforcement of copyright law. Judicial rulings also often result in inelegant solutions to music’s most perplexing rights attribution issues, he added.

If that weren’t enough, music companies can’t afford to win legal battles against AI companies, Goldstuck continued.

“The alignment of multiple leading generative AI music platforms with multinational tech conglomerates has provided them with the ability to outspend and out-litigate rightsholders,” Goldstuck wrote, citing AI company investments from Microsoft and Amazon, among others.

Goldstuck added, “The sheer time, cost, and uncertainty involved cast doubt on the long-term viability of resolving these disputes through litigation.”

Each new case seems to redraw the “contours of copyright enforcement.”

The concept of authorship is also evolving, and judicial decisions in two cases involving books — Bartz v. Anthropic and Kadrey v. Meta — signal that “rigid copyright protections” that were previously enforced are being rethought, Goldstuck wrote.

In UMG and Concord’s case against Anthropic, they asserted that Anthropic’s Claude model’s lyrics qualify as infringing derivative works. Anthropic countered that Claude’s “model training involves transformation rather than replication.”

“Collectively, these cases suggest that the jurisprudence of fair use is entering a period of reinterpretation, stemming from disruptive technologies that are not compatible with the existing fair use doctrine,” Goldstuck continued.

The takeaway, Goldstuck says, is that “litigation without the appropriate infrastructure or industry-wide, multi-stakeholder coordination cannot resolve structural technological disruption.”

Artists and creators can help

Goldstuck thinks activism like Elton John’s criticism of the U.K.’s controversial AI data bill is a powerful tool to raise public support and pressure AI companies and regulators to work toward a solution.

“Artists are no longer passive observers of technology regulation but are active architects of its ethical and legal constraints,” Goldstuck wrote. “This kind of creative activism may prove to be essential in ensuring that the future of music remains anchored in human authorship.”

Lessons can be learned from YouTube and TouchTunes

Though the music industry initially took a defensive stance with YouTube, it is now a dominant video streaming platform following a decade of change that included striking license agreements with labels and, in 2014, settling a protracted legal battle with Viacom, Goldstuck argued.

“By the time the Viacom suit was settled, YouTube’s Content ID system had facilitated $1 billion in payments to copyright holders, demonstrating how technological solutions combined with licensing partnerships created sustainable monetization far exceeding what litigation could achieve,” Goldstuck wrote.

The cost of litigation, pressure from advertisers and a realization that access to music was critical to its content during a period of rapid expansion proved to be powerful incentives for YouTube to reach agreements with music industry partners.

“Generative AI platforms can take [a] lesson from YouTube’s early business decisions,” wrote Goldstuck. “These platforms can work to proactively acknowledge rights, accelerate their investment in attribution technologies, and work with music stakeholders to create pathways for scalable monetization frameworks to be partners in good standing, rather than an adversary.”

Goldstuck continued that “stable, clear and long-established licensing regulations that set reasonable licensing agreement rates” were also a prerequisite that informed his experience raising $45 million from investors to grow TouchTunes.

“Licensing infrastructure was not merely a regulatory compliance requirement, but a fundamental business necessity enabling investor confidence,” Goldstuck wrote. He added that the experience suggests “that similar regulatory clarity around generative AI licensing could unlock significant capital deployment and innovation in the AI music sector.”