Universal Music Group and Warner say the AFM clause misses their AI deals

Universal Music Group and Warner Music have told a judge that the clause the American Federation of Musicians is suing them over does not apply to their artificial intelligence licensing deals. The union sued both majors in June, arguing they had failed their obligations under its Sound Recording Labor Agreement over deals with Udio and, in Warner's case, Suno. Both sides filed fresh papers this month as the labels push for dismissal.

The whole case turns on one clause. Under the agreement's new-use provision, if a label uses a recording in a way the agreement did not anticipate, it owes the musicians who played on it compensation and has to tell the union. Neither Universal nor Warner has done either of those things for their AI deals.

Their reason is a reading of how the clause sets a rate. It says a musician should be paid as if they had been called back into the studio to record for that new purpose, using whatever standard agreement covers that kind of session. The majors argue that no such agreement exists for AI, so the clause has nothing to import a rate from and therefore cannot apply at all.

Universal puts that in absolute terms in its filing, calling the clause clear and unambiguous and saying it is susceptible to only one meaning. It also says the union, having failed to counter that reading, has offered a scattershot series of arguments that obscure the contract rather than confront it, and that the union conceded in a meeting that no AI agreement exists.

The AFM's answer is that the missing agreement is not fatal. Its filing says the text imposes a mandatory payment obligation whenever a company puts a covered recording to a purpose the agreement does not cover, and that existing provisions of the same contract, including session rates, streaming rates and sampling rates, supply objective measures a court could use to set damages.

Interestingly, the union concedes something the majors will not: that the clause is reasonably open to more than one interpretation. That concession is tactical rather than weak, because a motion to dismiss fails if the judge finds any ambiguity and decides the union's reading is plausible.

Underneath the contract dispute is a question about who gets paid at all. Rightsholders have been signing generative AI deals for two years and, as CMU notes, almost nobody is currently talking about paying session musicians, even though AI models learn from their performances and then compete with them. Whether that changes looks likely to come down to union bargaining and copyright reform rather than to any single lawsuit.

We covered the labels' opening move in their motion to kill the lawsuit and Universal's separate filing in the federal court request to toss the case. The same majors are running the other side of the argument elsewhere, covered in the refiled Suno suit over stream ripping and in their joint investment in Stability AI.