Shares in music streaming group Spotify (SPOT) found the right rhythm today after it signed a deal to produce AI products, which will keep stars like Taylor Swift smiling.
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Responsible AI
Spotify said it was teaming up with the world’s biggest music companies Sony (SONY), Universal (UMGNF) and Warner (WMG) to develop “responsible” AI features that respect artists’ copyright.
Spotify did not give details of what the new products would entail, but the company said artists would not be forced to participate and their copyright would not be violated.
“Some voices in the tech industry believe copyright should be abolished. We don’t. Musicians’ rights matter. Copyright is essential. If the music industry doesn’t lead in this moment, AI-powered innovation will happen elsewhere, without rights, consent, or compensation,” Spotify said. “AI tools we develop will not replace human artistry. They will give artists new ways to be creative and connect with fans. Stamping out the worst outcomes of Gen AI is an essential piece of the puzzle.”
AI Battles
The tension between the music industry and some tech firms has already led to the three major labels suing two AI music startups called Udio and Suno for alleged copyright infringement.
The lawsuit last year claimed Suno and Udio’s software steals music to “spit out” similar work and asked for compensation of $150,000 a work.
Both Udio and Suno have said their technology is designed to generate new musical output and does not reproduce specific artists’ work.
Although, earlier this month it was reported that Universal and Warner are close to finalizing AI licensing deals with Suno and Udio.
Spot On
Spotify, which has 276 million paying subscribers, said it has begun building a state-of-the-art generative AI research lab to create “breakthrough experiences” for fans and artists. The Stockholm-based company said the products would create new revenue streams for artists and songwriters, ensuring they are “properly compensated for uses of their work and transparently credited for their contributions.”
Spotify hopes it will also add to its recent strong revenue growth – see below:
Sir Lucian Grainge, Chairman & CEO, Universal Music Group said: “It is essential that we work with strategic partners such as Spotify to enable Gen AI products within a thriving commercial landscape in which artists, songwriters, fans, music companies and technology companies can all flourish.”
Is SPOT a Good Stock to Buy Now?
On TipRanks, SPOT has a Moderate Buy consensus based on 22 Buy and 8 Hold ratings. Its highest price target is $900. SPOT stock’s consensus price target is $777.21, implying a 15.01% upside.
