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European Union

The recorded music market in Europe is at risk of falling behind other global regions unless regulators enforce tougher protections for artists, creators and rightsholders, according to a new report from international labels trade body IFPI.
In Europe, music sales grew to over $8 billion in 2023, representing more than a quarter of global revenues (28.1%) and maintaining the continent’s long-held status as the second largest region in the world for recorded music sales behind the U.S. and Canada, according to IFPI data.

Europe’s prominent position is coming under threat, however, from other music markets that are growing at faster rates, states IFPI’s first-ever report focused specifically on recorded music in the European Union, published Tuesday (Sept. 10).

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Last year, music sales among the 27 members of the European Union trading block — which the U.K. exited in 2020 — grew by 8.7% to 5.2 billion euros ($5.7 billion), says IFPI. While that places the EU below only the U.S. in total revenue terms, several other international markets are significantly outpacing its growth rate thanks to the widespread global adoption of music streaming services.

Examples cited by IFPI include China, which grew music sales by more than 25% to 1.3 billion euro ($1.4 billion) in 2023; Sub-Saharan Africa, up 25% to 85 million euros ($93 million); Mexico, up 18% to 454 million euros ($500 million); and the Middle East and North Africa (MENA), which climbed 14% to 102 million euro ($112 million).

Although all of those territories are developing from far lower bases than mature EU markets such as France and Germany — and all have some way to go before they come close to surpassing EU music sales — IFPI said their rapid growth represents “warning signs” that the region is facing strong competition from its global competitors. Notably, some of those fast-growing music markets were virtually non-existent just over a decade ago.

The report, which is titled “Music in the EU: A Global Opportunity,” comes three months after European Parliament elections and ahead of the unveiling of the new European Commission, the EU’s executive branch, which is expected to take place later this month.

The new cohort of Brussels politicians will be responsible for monitoring and enforcing already passed EU legislation such as the Digital Services Act, Digital Markets Act and the AI Act, which all impact the music business to varying degrees, in some instances significantly.

“The EU is a vitally important place for music,” said IFPI CEO Victoria Oakley in a statement. “However, the data in this report shows us that other parts of the world are developing and growing rapidly and the EU risks falling behind.”

To ensure that the EU’s music market stays competitive, Oakley called on European policymakers to provide “legal certainty and protection for music rightsholders, supporting the development of responsible and ethical AI and creating a competitive playing field on which today’s dynamic music sector can evolve.”

“Today, European music faces great risk but also great opportunity,” Oakley continued. “How policymakers address these issues will help determine its future.”

An accompanying press release from IFPI said its research sets out how policymakers can help “secure a positive future for music at what is a pivotal time for music in Europe” amidst rising global competition.The report notes that when adjusted for inflation, recorded music revenue in the EU last year was only 61% of where they were in 2001, the music industry’s revenue peak.

Specific areas in which IFPI says policymakers can support creators and rightsholders include effective implementation of the EU’s AI Act, which passed earlier this year, and upholding existing EU copyright laws preventing the use of copyright-protected works and music from being used for training AI systems without prior consent. AI developers must also maintain and provide records of the materials used in training and developing generative AI models that enable rightsholders to exercise and enforce their rights, says IFPI.

When it comes to individual EU markets, the report highlights the continued strong performance of domestic acts in their home countries. In the 22 EU markets where IFPI collects yearly chart data, on average, 60% of the Top 10s were tracks by domestic artists in 2023, compared to only 47% in non-EU markets.

EU markets fared less well in terms of top 10 global chart exports, which were once again dominated by U.S. artists like Miley Cyrus, SZA and Taylor Swift last year, though Latin and Central American artists, most notably from Columbia and Puerto Rico, also performed well.

Spotify has been given the green light to include pricing and promotional details inside its app on iPhones for users in the European Union following a decision earlier this year by regulators to fine Apple for breaking competition laws over music streaming.
The European Commission fined Apple nearly $2 billion (1.84 billion euros) in March over its long-held policies preventing outside app makers from telling consumers about cheaper ways to pay subscriptions that don’t involve the iPhone app. [Apple appealed in May.] Spotify and other app makers have complained for years about Apple’s restrictions to outside developers and the up-to-30% fee it charges them on all purchases made through iOS apps.

The Digital Markets Act, a sweeping set of regulations for large tech companies across the 27-nation European Union, went into effect in March. Under the DMA’s provisions, app developers are supposed to be allowed to inform customers of alternative purchasing options and direct them to those offers.

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Starting today (Aug. 14), Spotify has opted into Apple’s “entitlement” policy for music streaming apps, created after the commission’s ruling, and begun listing pricing information inside its app for European users — “something as obvious as it is overdue,” the company said in an updated blog post.

iPhone users in Europe will now be able to see how much each subscription plan costs and what they include. Freemium users looking to upgrade can also see special introductory offers and the pricing once a promotion ends. Spotify will be able to list specifics about audiobook listening and pricing as well.

What European iPhone users won’t see, yet, are workable hyperlinks to purchase subscriptions or other digital goods outside the app. Under its “entitlement” terms, Apple receives a 27% commission on proceeds earned from sales on external websites that are linked-to from inside the app. If someone were to click on the link and then wait a week before actually purchasing the service or goods, then the 27% commission would not apply, according to Apple’s terms.

For now, iPhone users will be instructed to “go to the Spotify website.”

Spotify called it a “small step” and said “all music streaming services in the EU are still not able to freely give consumers a simple opportunity to click a link to purchase in app because of the illegal and predatory taxes Apple continues to demand, despite the Commission’s ruling.”

“The fight continues,” the company added. “iPhone consumers everywhere deserve basic information about how much things cost, when they can take advantage of great deals and promotions, and where to go to buy those things online. If the European Commission properly enforces its decision, iPhone consumers could see even more wins, like lower cost payment options and better product experiences in the app.”

Apple has launched a legal challenge against the 1.8 billion euro ($1.95 billion) fine assessed by the European Commission for breaking competition laws and unfairly favoring its own music streaming service over rivals including Spotify.
According to court records, the U.S. tech giant filed an appeal with the EU’s Luxembourg-based General Court earlier this month.

Details of what is contained in the legal action, listed as: “Apple and Apple Distribution International v Commission,” are not yet publicly available. Representatives of Apple and the European Commission did not respond to requests to comment.

Apple had previously said it would appeal the EU’s fine, which was handed down in March following a long-running investigation triggered by complaints from Swedish streaming service Spotify.

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At the time of the ruling, the European Commission’s Margrethe Vestager said Apple had “abused its dominant position” for almost a decade by restricting rival music streaming apps from informing consumers about alternative, cheaper music services available outside of the App Store.

As a result, many users paid “significantly higher prices for music streaming subscriptions” because of the high fee imposed by Apple on developers, which was then passed on to users, the commission said.

Apple has always strongly denied those claims, arguing that EU investigators had failed “to uncover any credible evidence of consumer harm.” The commission’s decision “ignores the realities of a market that is thriving, competitive, and growing fast,” the tech company said in a statement two months ago.

The nearly $2 billion fine was issued as part of an ongoing EU-wide effort to rein in the global dominance of big tech companies through large financial penalties and regulatory measures.

In March, just a few days after Apple received its penalty notice, new EU rules came into force governing how the largest online platforms operate in Europe as part of the Digital Markets Act (DMA).

The DMA requires the six tech giants designated as “gatekeepers” by the European Commission — Apple, Google parent company Alphabet, Amazon, TikTok-owner ByteDance, Meta and Microsoft — to comply with a raft of provisions, including not favoring in-house services at the expense of third-party providers.

The laws are enforceable by fines of up to 20% of total worldwide turnover (a.k.a. gross revenue) or, in extreme cases, the “last resort option” of forced divestments and the break-up of businesses.

In response, companies like Apple have been overhauling how they operate in the 27-member EU bloc, allowing European users to download rival app stores and lowering the fees charged to developers for purchases made through the App Store.

However, Apple’s plans to charge “high volume” services with over 1 million users a €0.50 ($0.54) “core technology fee” per download, per year, for using alternatives to the App Store has been heavily criticized by a number of European businesses, including Spotify and Deezer.

On March 25, the EU announced that it was investigating Apple, along with Meta and Alphabet, for potential breaches and non-compliance with the DMA’s terms.

Apple’s legal challenge against the commission’s $1.95 billion fine opens yet another battlefront with EU regulators. The tech company has previously had some success in the General Court — the European Union‘s second-highest court, which hears cases brought by companies against the commission.

In 2020, EU judges overturned a previous ruling by the commission that Apple had underpaid 13 billion euros in taxes to the Irish government. That case subsequently went to the European Court of Justice and is still slowly making its way through the legal process.

Apple’s latest court fight could be just as longwinded and take several years before any ruling is made by the General Court, which would also be open to appeal.  

European Union regulators opened investigations into Apple, Google and Meta on Monday, the first cases under a sweeping new law designed to stop Big Tech companies from cornering digital markets. The European Commission, the 27-nation bloc’s executive arm, said it was investigating the companies for “non-compliance” with the Digital Markets Act.

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The Digital Markets Act that took full effect earlier this month is a broad rulebook that targets Big Tech “gatekeeper” companies providing “core platform services.” Those companies must comply with a set of do’s and don’ts, under threat of hefty financial penalties or even breaking up businesses. The rules have the broad but vague goal of making digital markets “fairer” and “more contestable” by breaking up closed tech ecosystems that lock consumers into a single company’s products or services.

The commission has heard complaints that tech companies’ measures to comply have fallen short, European Commission Vice President Margrethe Vestager, the bloc’s competition chief, said at a press briefing in Brussels. “Today, we decided to investigate a number of these suspected non-compliance issues. And as we unearth other problems, we will tackle those too.”

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The companies have been ordered to hold on to certain documents that the commission can access in current and future investigations, she said.

Regulators are looking into whether Google and Apple are fully complying with the DMA’s rules requiring tech companies to allow app developers to direct users to cheaper options available outside their app stores. The commission said it’s concerned the two companies are imposing “various restrictions and limitations” including charging recurring fees that prevent apps from freely promoting offers.

Google is also facing scrutiny for not complying with DMA provisions that prevent tech giants from giving preference to their own services over rivals. The commission said it is concerned Google’s measures will result in third-party services listed on Google’s search results page not being treated “in a fair and non-discriminatory manner.”

Google said that it has made “significant changes” to the way its services operate in Europe to comply with the DMA. “We will continue to defend our approach in the coming months,” Google’s director of competition, Oliver Bethell, said.

The commission is also investigating whether Apple is doing enough to allow iPhone users to easily change web browsers.

Apple said it’s confident that its plan complies with the DMA, and it will “continue to constructively engage with the European Commission as they conduct their investigations.” The company said it has created a wide range of new developer capabilities, features, and tools to comply with the regulation.

The commission is also looking into Meta’s option for European users to pay a monthly fee for ad-free versions of Facebook or Instagram, so they can avoid having their personal data used to target them with online ads. “The Commission is concerned that the binary choice imposed by Meta’s ‘pay or consent’ model may not provide a real alternative in case users do not consent, thereby not achieving the objective of preventing the accumulation of personal data by gatekeepers,” it said.

Meta said it will “engage constructively” with the Commission. “Subscriptions as an alternative to advertising are a well-established business model across many industries, and we designed Subscription for No Ads to address several overlapping regulatory obligations, including the DMA,” it said in a prepared statement.

The commission said it aims to wrap up its investigations within 12 months.

LONDON — Sweeping new laws regulating the use of artificial intelligence (AI) in Europe, including controls around the use of copyrighted music, have been approved by the European Parliament, following fierce lobbying from both the tech and music communities.
Members of the European Parliament (MEPs) voted in favor of the EU’s Artificial Intelligence Act by a clear majority of 523 votes for, 46 against and 49 abstentions. The “world first” legislation, which was first proposed in April 2021 and covers a wide range of AI applications including biometric surveillance and predictive policing, was provisionally approved in December, but Wednesday’s vote formally establishes its passage into law.

The act places a number of legal and transparency obligations on tech companies and AI developers operating in Europe, including those working in the creative sector and music business. Among them is the core requirement that companies using generative AI or foundation AI models like OpenAI’s ChatGPT or Anthropic’s Claude 2 provide detailed summaries of any copyrighted works, including music, that they have used to train their systems.

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Significantly, the law’s transparency provisions apply regardless of when or where in the world a tech company scraped its data from. For instance, even if an AI developer scraped copyrighted music and/or trained its systems in a non-EU country — or bought data sets from outside the 27-member state — as soon as they are used or made available in Europe the company is required to make publicly available a “sufficiently detailed summary” of all copyright protected music it has used to create AI works. 

There is also a requirement that any training data sets used in generative AI music or audio-visual works are water marked, so there is a traceable path for rights holders to track and block the illegal use of their catalog. 

In addition, content created by AI, as opposed to human works, must be clearly labeled as such, while tech companies have to ensure that their systems cannot be used to generate illegal and infringing content.

Large tech companies who break the rules – which govern all applications of AI inside the 27-member block of EU countries, including so-called “high risk” uses — will face fines of up to €35 million or 7% of global annual turnover. Start-up businesses or smaller tech operations will receive proportionate financial punishments. 

Speaking ahead of Wednesday’s vote, which took place in Strasbourg, co-rapporteur Brando Benifei said the legislation means that “unacceptable AI practices will be banned in Europe and the rights of workers and citizens will be protected.” 

Co-rapporteur Dragos Tudorache called the AI Act “a starting point for a new model of governance built around technology.” 

European legislators first proposed introducing regulation of artificial intelligence in 2021, although it was the subsequent launch of ChatGPT — followed by the high-profile release of “Heart on My Sleeve,” a track that featured AI-powered imitations of vocals by Drake and The Weeknd, last April — that made many music executives sit up and pay closer attention to the technology’s potential impact on the record business. 

In response, lobbyists stepped up their efforts to convince lawmakers to add transparency provisions around the use of music in AI – a move which was fiercely opposed by the technology industry, which argued that tougher regulations would put European AI developers at a competitive disadvantage.

Now that the AI Act has been approved by the European Parliament, the legislation will undergo a number of procedural rubber-stamping stages before it is published in the EU’s Official Journal — most likely in late April or early May — with its regulations coming into force 20 days after that. 

There are, however, tiered exceptions for tech companies to comply with its terms and some of its provisions are not fully applicable for up to two-years after its enactment. (The rules governing existing generative AI models commence after 12 months, although any new generative AI companies or models entering the European market after the Act has come into force have to immediately comply with its regulations).

In response to Wednesday’s vote, a coalition of European creative and copyright organizations, including global recorded-music trade body IFPI and international music publishing trade group ICMP, issued a joint statement thanking regulators and MEPs for the “essential role they have played in supporting creators and rightsholders.”

“While these obligations provide a first step for rightsholders to enforce their rights, we call on the European Parliament to continue to support the development of responsible and sustainable AI by ensuring that these important rules are put into practice in a meaningful and effective way,” said the 18 signatories, which also included European independent labels trade association IMPALA, European Authors Society GESAC and CISAC, the international trade organization for copyright collecting societies.

If bosses at the world’s biggest technology companies were still in any way doubting the European Union’s commitment towards regulating the digital marketplace, the 1.8 billion euro ($1.95 billion) fine levied against Apple on Monday (March 4) by the European Commission for breaking competition laws over music streaming served as a powerful statement of intent.
This week, more new EU rules come into force governing how the largest online platforms operate in Europe, now that the deadline for complying with the Digital Markets Act (DMA) has passed. 

Beginning today (March 7), the six tech giants designated “gatekeepers” by the European Commission — Apple, Google parent company Alphabet, Amazon, TikTok-owner ByteDance, Meta and Microsoft – are required to comply with a raft of legislative changes designed to rein in their global dominance. 

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They include outlawing companies favoring in-house services at the expense of third-party providers and forcing platforms to offer other businesses, such as apps, access to the data they generate – allowing smaller services to contact their customers directly and making it easier for users to switch services.

The laws are enforceable by fines of up to 20% of total worldwide turnover (aka, gross revenue) for repeat infringers, or, in extreme cases the “last resort option” of forced divestments and the break-up of businesses. 

THIS IS FINE

The changes are already having a significant impact on digital music services and, in turn, the global record business. 

In January, Apple announced that it will begin allowing European users to download app stores other than the company-operated one that comes installed on iPhones. It will additionally lower the fees it charges developers for purchases made through the App Store, reducing commission from the existing 15% to 30% level to between 10% and 17% for developers using the company’s payment-processing system. 

However, Apple’s plans to charge “high volume” services with over one million users a €0.50 ($0.54) “Core Technology Fee” per download, per year, for using alternatives to the App Store has been heavily criticized by a number of European businesses, including Spotify and Deezer.

“Apple’s new terms not only disregard both the spirit and letter of the law, but if left unchanged, make a mockery of the DMA,” said the streaming services in an open letter to the European Commission, sent last week and also signed by 32 other European digital companies and associations, including trade body Digital Music Europe.

The new fee structure, which only apply in the 27 EU member states, will deter app developers from opting into the revised terms “and will hamper fair competition,” say Spotify and Deezer, calling on regulators to take “swift, timely and decisive action against Apple.” (In January, Spotify stated in a company blog post that the new fees “equates for us to being the same or worse as under the old rules.”)

Similar anti-competition concerns were behind the European Commission’s decision to fine Apple 1.8 billion euros at the start of March, following longstanding complaints from Spotify over Apple’s restrictions to outside developers and the 30% fee it charges them on all purchases made through iOS apps. (Apple has said it will appeal the fine, which was issued under existing EU terms, rather the Digital Markets Act).

Defending its response to the new EU provisions, Apple estimates that less than 1% of developers will pay the Core Technology Fee and warned that the DMA brings greater risks to users and developers by compromising its ability to detect malware, fraud and illicit content in external apps. 

NOT JUST APPLE

Other so-called gatekeepers – defined by policy makers as a platform with an annual turnover of more than 7.5 billion euros ($8.1 billion) and more than 45 million active monthly users in the EU region — are also making sweeping changes as a result of the DMA. 

Aside from Apple, music executives will be paying most attention to how ByteDance, the Chinese owner of TikTok responds to the law’s provisions. In November, the company launched an appeal against the EU’s classification of TikTok as a “gatekeeper” arguing that the platform is a “challenger, not an incumbent, in the digital advertising market” and that the new rules could hamper its ability to “remain competitive and grow.”

Despite the ongoing legal challenge, TikTok has already taken a number of steps to comply with the terms of the DMA, including the launch of enhanced data portability tools that allow developers to download and export data profiles, followers and posts from TikTok to other services with users’ permission. These changes are being introduced now to European users, TikTok announced in a blog post on March 4, “with plans to roll out globally in the near future.”

In January, Google and YouTube parent company Alphabet announced that it will allow users to pick their default browser and provide more links to competing sites when searching Google – although, like Apple, Alphabet’s compliance with the DMA has been questioned.

Posting on X (formerly Twitter) this month, Epic Games CEO Tim Sweeney criticized the tech giant for imposing a commission fee of up to 27% for any app purchases made not using Google’s payment services. (Google/Alphabet has previously been issued three major fines totaling 8.2 billion euros by the EU over antitrust issues). 

Meanwhile, Meta is allowing users to separate their Facebook and Instagram accounts to prevent personal information being shared for targeted ads. Amazon is modifying its Amazon Ads service to provide stronger data protections for customers, and Microsoft is implementing changes to its Windows operating system.

The terms of the Digital Markets Act only apply to companies and services operating in the 27-member state EU block, but their impact extends far afield. Following the EU’s lead, similar regulations to rein in tech companies’ dominance are being drawn up in several other nations, including Japan, South Korea, India, Brazil, Australia and the United Kingdom.

What meaningful impact the DMA or comparable international legislation will actually have on curbing Big Tech — and the music companies that either drive or rely upon them to reach audiences — could take years to be felt, if at all, but EU regulators say they are not shying away from the challenge.

“We are looking very carefully at how companies are complying [with the DMA]” the European Commission recently said in a statement, “and once we have full enforcement powers will not hesitate to act.”

The European Union leveled its first antitrust penalty against Apple on Tuesday, fining the U.S. tech giant nearly $2 billion for breaking the bloc’s competition laws by unfairly favoring its own music streaming service over rivals.
Apple banned app developers from “fully informing iOS users about alternative and cheaper music subscription services outside of the app,” said the European Commission, the 27-nation bloc’s executive arm and top antitrust enforcer.

That is illegal under EU antitrust rules. Apple behaved this way for almost a decade, which meant many users paid “significantly higher prices for music streaming subscriptions,” the commission said.

The 1.8 billion-euro fine follows a long-running investigation triggered by a complaint from Swedish streaming service Spotify five years ago.

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The EU has led global efforts to crack down on Big Tech companies, including a series of multbillion-dollar fines for Google and charging Meta with distorting the online classified ad market. The commission also has opened a separate antitrust investigation into Apple’s mobile payments service.

The commission’s investigation initially centered on two concerns. One was the iPhone maker’s practice of forcing app developers that are selling digital content to use its in-house payment system, which charges a 30% commission on all subscriptions.

But the EU later dropped that to focus on how Apple prevents app makers from telling their users about cheaper ways to pay for subscriptions that don’t involve going through an app.

The investigation found that Apple banned streaming services from telling users about how much subscription offers cost outside of their apps, including links in their apps to pay for alternative subscriptions or even emailing users to tell them about different pricing options.

The fine comes the same week that new EU rules are set to kick in that are aimed at preventing tech companies from dominating digital markets.

The Digital Markets Act, due to take effect Thursday, imposes a set of do’s and don’ts on “gatekeeper” companies including Apple, Meta, Google parent Alphabet, and TikTok parent ByteDance — under threat of hefty fines.

The DMA’s provisions are designed to prevent tech giants from the sort of behavior that’s at the heart of the Apple investigation. Apple has already revealed how it will comply, including allowing iPhone users in Europe to use app stores other than its own and enabling developers to offer alternative payment systems.

The commission also has opened a separate antitrust investigation into Apple’s mobile payments service, and the company has promised to open up its tap-and-go mobile payment system to rivals in order to resolve it.

The European Union is looking into whether Elon Musk’s online platform X breached tough new social media regulations in the first such investigation since the rules designed to make online content less toxic took effect.

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“Today we open formal infringement proceedings against @X” under the Digital Services Act, European Commissioner Thierry Breton said Monday in a post on the platform formerly known as Twitter.

“The Commission will now investigate X’s systems and policies related to certain suspected infringements,” spokesman Johannes Bahrke told a press briefing in Brussels. “It does not prejudge the outcome of the investigation.”

The investigation will look into whether X failed to do enough to curb the spread of illegal content and whether measures to combat ” information manipulation,” especially through its crowd-sourced Community Notes fact-checking feature, were effective.

The 27-nation EU also will examine whether X was transparent enough with researchers and will look into suspicions that its user interface, including for its blue check subscription service, has a “deceptive design.”

“X remains committed to complying with the Digital Services Act, and is cooperating with the regulatory process,” the company said in a statement. “It is important that this process remains free of political influence and follows the law. X is focused on creating a safe and inclusive environment for all users on our platform, while protecting freedom of expression, and we will continue to work tirelessly towards this goal.”

A raft of big tech companies faced a stricter scrutiny after the EU’s Digital Services Act took effect earlier this year, threatening penalties of up to 6% of their global revenue — which could amount to billions — or even a ban from the EU.

The DSA is a set of far-reaching rules designed to keep users safe online and stop the spread of harmful content that’s either illegal — such as child sexual abuse or terrorism content — or violates a platform’s terms of service, such as promotion of genocide or anorexia.

The EU has already called out X as the worst place online for fake news, and officials have exhorted owner Musk, who bought the platform a year ago, to do more to clean it up. The European Commission, the EU’s executive arm, quizzed X over its handling of hate speech, misinformation and violent terrorist content related to the Israel-Hamas war after the conflict erupted.

Legislators have provisionally agreed to sweeping new laws that will regulate the use of artificial intelligence (AI) in Europe, including controls around the use of copyrighted music.
The deal between policy makers from the European Union Parliament, Council and European Commission on the EU’s Artificial Intelligence Act was reached late on Friday night in Brussels local time following months of negotiations and amid fierce lobbying from the music and tech industries.   

The draft legislation is the world’s first comprehensive set of laws regulating the use of AI and places a number of legal obligations on technology companies and AI developers, including those working in the creative sector and music business.   

The precise technical details of those measures are still being finalized by EU policy makers, but earlier versions of the bill decreed that companies using generative or foundation AI models like OpenAI’s ChatGPT or Anthropic’s Claude 2 would be required to provide summaries of any copyrighted works, including music, that they use to train their systems. 

The AI Act will also force developers to clearly identify content that is created by AI, as opposed to human works before they are placed in the market. In addition, tech companies will have to ensure that their systems are designed in such a way that prevents them from generating illegal content. 

Large tech companies who break the rules – which govern all applications and uses of AI inside the 27 member block of EU countries — will face fines of up to €35 million or 7% of global annual turnover. Start-up businesses or smaller tech operations will receive proportionate financial punishments, said the European Commission.   

Governance will be carried out by national authorities, while a new European AI Office will be created to supervise the enforcement of the new rules on general purpose AI models. 

President of the European Commission Ursula von der Leyen called the agreement “a historic moment” that “will make a substantial contribution to the development of global rules and principles for human-centric AI.” 

Responding to the announcement, Tobias Holzmüller, CEO of German collecting society GEMA, said the deal reached by the European government was a welcome “step in the right direction” but cautioned that its rules and provisions “need to be sharpened further on a technical level.”  

“The outcome must be a clearly formulated transparency regime that obliges AI providers to submit detailed evidence on the contents they used to train their systems,” said Holzmüller.  

Representatives of the technology industry, which had lobbied to weaken the AI Act’s transparency provisions, criticized the deal and warned that it was likely to put European AI developers at a competitive disadvantage.  

Daniel Friedlaender, Senior Vice President of the Computer and Communications Industry Association (CCIA), which counts Alphabet, Apple, Amazon and Meta among its members, said in a statement that “crucial details” of the AI act are still missing “with potentially disastrous consequences for the European economy.”  

“The final AI Act lacks the vision and ambition that European tech startups and businesses are displaying right now,” said CCIA Europe’s Policy Manager, Boniface de Champris. He warned that, if passed, the legislation might “end up chasing away the European champions that the EU so desperately wants to empower.” 

Now that an political agreement has been reached on the AI Act, legislators will spend the coming weeks finalizing the exact technical details of the regulation and translating its terms for the 27 EU member countries.  

The final text then needs to be approved by the European Council and Parliament, with a decisive vote not excepted to take place until early next year, possibly as late as March. If passed, the act will be applicable two years after its entry into force, except for some specific provisions: bans will apply after six months while the rules on generative AI models will begin after 12 months. 

In a statement, international recorded music trade organization IFPI said the first-of-its-kind legislation provides “a constructive and encouraging framework” for regulation of the nascent technology.   

“AI offers creators both opportunities and risks,” said an IFPI spokesperson, “and we believe there is a path to a mutually successful outcome for both the creative and technology communities.”

LONDON — Representatives of the creative industries are urging legislators not to water down forthcoming regulations governing the use of artificial intelligence, including laws around the use of copyrighted music, amid fierce lobbying from big tech companies.     
On Wednesday (Dec. 6), policy makers from the European Union Parliament, Council and European Commission will meet in Brussels to negotiate the final text of the EU’s Artificial Intelligence Act – the world’s first comprehensive set of laws regulating the use of AI.  

The current version of the AI Act, which was provisionally approved by Members of European Parliament (MEPs) in a vote in June, contains several measures that will help determine what tech companies can and cannot do with copyright protected music works. Among them is the legal requirement that companies using generative AI models like OpenAI’s ChatGPT or Anthropic’s Claude 2 (classified by the EU as “general purpose AI systems”) provide summaries of any copyrighted works, including music, that they use to train their systems.

The draft legislation will also force developers to clearly identify content that is created by AI, as opposed to human works. In addition, tech companies will have to ensure that their systems are designed in such a way that prevents them from generating illegal content.

While these transparency provisions have been openly welcomed by music executives, behind the scenes technology companies have been actively lobbying policymakers to try and weaken the regulations, arguing that such obligations could put European AI developers at a competitive advantage.  

“We believe this additional legal complexity is out of place in the AI Act, which is primarily focused on health, safety, and fundamental rights,” said a coalition of tech organizations and trade groups, including the Computer and Communications Industry Association, which counts Alphabet, Apple, Amazon and Meta among its members, in a joint statement dated Nov. 27.

In the statement, the tech representatives said they were concerned “about the direction of the current proposals to regulate” generative AI systems and said the EU’s proposals “do not take into account the complexity of the AI value chain.”   

European lawmakers are also in disagreement over how to govern the nascent technology with EU member states France, Germany and Italy understood to be in favor of light touch regulation for developers of generative AI, according to sources close to the negotiations. 

In response, music executives are making a final pitch to legislators to ensure that AI companies respect copyright laws and strengthen existing protections against the unlawful use of music in training AI systems.  

Helen Smith, the executive chair of IMPALA. /

Lea Fery

Helen Smith, executive chair of European independent labels group IMPALA, tells Billboard that the inclusion of “meaningful transparency and record keeping obligations” in the final legislation is a “must for creators and rightsholders” if they are to be able to effectively engage in licensing negotiations.

In a letter sent to EU ambassadors last week, Björn Ulvaeus, founder member of ABBA and president of CISAC, the international trade organization for copyright collecting societies, warned policymakers that “without the right provisions requiring transparency, the rights of the creator to authorise and get paid for use of their works will be undermined and impossible to implement.”

The European Composer and Songwriter Alliance (ECSA), International Federation of Musicians (FIM) and International Artist Organisation (IAO) are also calling for guarantees that the rights of their members are respected.

If legislators fail to reach a compromise agreement at Wednesday’s fifth and planned-to-be-final negotiating session on the AI Act, there are a number of possible outcomes, including further ‘trologue’ talks the following week. If a deal doesn’t happen this month, however, there is the very real risk that the AI Act won’t be passed before the European parliamentary elections take place in June.

If that happens, a new parliament could theoretically scrap the bill altogether, although executives closely monitoring events in Brussels, the de facto capital of the European Union, say that is unlikely to happen and that there is strong political will from all sides to find a resolution before the end of the year when the current Spain-led presidency of the EU Council ends.

Because the AI Act is a regulation and not a directive — such as the equally divisive and just-as-fiercely-lobbied 2019 EU Copyright Directive — it would pass directly into law in all 27 EU member states, although only once it has been fully approved by the different branches of the European government via a final vote and officially entered into force (the exact timeframe of which could be determined in negotiations, but could take up to three years). 

In that instance, the act’s regulations will apply to any company that operates in the European Union, regardless of where they are based. Just as significant, if passed, the act will provide a world-first legislative model to other governments and international jurisdictions looking to draft their own laws on the use of artificial intelligence.

“It is important to get this right,” says IMPALA’s Smith, “and seize the opportunity to set a proper framework around these [generative AI] models.”