On… OpenAI, Bain Capital, Daniel Ek, and reasons to be cheerful

MBW Reacts is a series of analytical commentaries from Music ComeOn written in response to major recent entertainment events or news stories. Only MBW+ subscribers have unlimited access to these articles. The below article originally appeared in Tim Ingham’s latest MBW+ Review email, issued exclusively to MBW+ subscribers yesterday (April 6).

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It had to go down as one of the bleakest weeks for music business investors in recent memory.

First, on March 13, Sam Altman’s OpenAI filed a policy submission with Donald Trump’s White House recommending, in essence, that the USA’s 200-year-old copyright laws be torn up to help artificial intelligence platforms.

To paraphrase OpenAI’s reasoning: “Something something, China is scary, also we like money.”

Then, five days later, the RIAA announced its own shocker: recorded music trade revenues in the US last year grew by a paltry 2.7% YoY, slower than the rate of inflation.

Perhaps even worse, US ad-supported streaming revenues fell YoY (-1.8%), dragging down overall streaming revenue growth in the world’s biggest market to an anemic 3.6%.

We were ready for the era of double-digit growth to end, but a slump into low single digits? Troubling.

The last seven days have only piled on the torment.

First OpenAI, having now firmly outed itself as an enemy of rightsholders, announced it had raised $40 billion in a SoftBank-led round – money that will surely help amplify the ChatGPT owner’s anti-music lobbying arguments.

Then, on Wednesday, the Tony Blair Institute – a ‘think tank’ founded by the former UK Prime Minister – recommended that the current British government dilute its own historic copyright laws to help AI platforms.

(Choice quote from the Blair report: “There are better ways to help creators flourish in the digital age than strict copyright laws.” There’s literally not.)

This depressing drip-feed of events may have left you wondering if the music biz’s recent streaming-fueled party is over – and if everything good built in this industry since the dark days of piracy is now, suddenly, under attack from Big Tech.

Despite the doom-laden headlines, I’d like to leave those of you invested (literally or figuratively) in this business feeling somewhat positive about music’s future.

So, chin up. Here are three key reasons to be cheerful…

1) Big Money still loves music

Clever people very much believe that music copyright’s next century is gonna work out just fine.

That’s what we can ascertain from a raft of fresh money washing into music rights M&A, anyway. Two examples:

• Warner Music Group is expected to soon announce a $1 billion+ pact with Bain Capital to buy copyrights. I hear that this deal will involve a chunk of debt, and talks are ongoing with two potential lenders: Fifth Third Bank and Goldman Sachs. Bain’s interest in funneling investment into the music business in 2025 is particularly reassuring, considering the firm’s reputation for rigorously researching industries. There’s also a possible air of FOMO going on: Bain Capital, alongside Providence, part-funded the deal that saw Edgar Bronfman Jr. acquire Warner Music Group in 2004 for $2.6 billion. After floating on the NYSE, WMG was then sold to Len Blavatnik/Access in 2011 for $3.3 billion. Today, even in a depressed stock market environment, Warner is worth around $19 billion;
• Pophouse Entertainment, the Swedish company that’s previously acquired music rights associated with KISS, Swedish House Mafia, Cyndi Lauper, and Avicii, just closed out a USD $1.3 billion acquisition fund. Pophouse, led by CEO Per Sundin, says it has so far deployed 30% of its fund – leaving it with around $900 million+ still to spend. According to Pophouse, its monetary backers include “leading pension funds, endowments, high-net-worth individuals, family offices, and sovereign wealth funds”.

Meanwhile, I keep hearing rumblings that Temasek – the Singaporean state-owned fund – is keen to make a big splash in music rights. (It’s already invested in music via equity positions in SoundCloud and CAA.)

Also consider Sony Music Group‘s double-billion-dollar catalog splurge last year (Queen! MJ! Pink Floyd!) and the frothiness of other recent market activity ($100 million for the $uicide Boy$ publishing, anyone?).

Further names in the rumor mill of late: Will country superstar Zach Bryan sell his songbook for anywhere up to $100 million? Might ex-Warner Chappell boss Cameron Strang resurface with a bundle of bank money to acquire rights?

Wherever the next headline is coming from, financial investor interest in music catalog doesn’t seem depleted by recent events. Indeed, it might even accelerate if international consumption of online music (a digital good) remains unhindered by those Trump tariffs.

2) Is there actually AI-nything to be worried about?

Picture the worst-case scenario: OpenAI, Google/Gemini, and the rest are granted complete legal free rein to train their models on all of the best music ever released.

Result: you, too, can now make a track that sounds just like Taylor Swift! And what’s this? AI Drake-a-like and AI Kendrick-a-like beefing on the same tune!

It all sounds exciting until you realize… no music fan is actually going to listen to this dreck.

We already get 100,000 tracks a day no one’s interested in. Soon we’ll have more. The end.

I know 15 chords and can sing through my nose. Voilà: I have all the ‘training materials’ of Bob Dylan’s career.

Want to hear me perform? Thought not.

However, there is a real danger that AI could meaningfully compete with the human pen when it comes to the ‘building blocks’ of great songs – especially lyrics.

Nick Cave protested that, when ChatGPT was asked to write lyrics in his style, the result was “a grotesque mockery”. (Best quote: “Writing a good song is not mimicry, or replication, or pastiche, it is the opposite.”)

Yet protecting the value of lyrics – music’s most ancient copyright – is a must-win battle for music rightsholders as the age of AI dawns.

Just as well, then, that there’s some promising news on that score.

Witness a widely misunderstood detail of Concord/ABKCO/Universal Music Group‘s ongoing landmark lawsuit against Anthropic (multi-billion-backed home of AI bot Claude).

In March, the US court presiding over the UMG vs. Anthropic case nodded to the fact that OpenAI had recently struck monetized content licensing agreements with News Corp, Financial Times, and Shutterstock.

This, said the judge, suggested that a commercial licensing framework for AI training already exists (i.e. the money OpenAI paid to Rupert Murdoch and co. is an early barometer of legal market dynamics).

In turn, this means that if UMG triumphs, the court would have a commercial basis for calculating the monetary damages Anthropic would need to pay for past mass copyright infringement.

The music publishers fighting the suit say they remain “very confident” of winning.

3) Apple Music and Amazon Music had a woeful 2024. Might they up their game (finally) in 2025?

According to Midia Research, there were 818 million total subscribers to music streaming platforms globally at the close of 2024, up by 85 million YoY in net terms.

Star performers included Spotify (with a 32% market share of 2024’s global subs), China’s Tencent Music (15%), and YouTube Music (10%).

But Midia’s numbers also included this shocking stat: Apple Music and Amazon Music added just 6 million subscribers, globally, between them in 2024.

That’s an especially weedy figure when you consider that YouTube Music and Spotify, according to respective company announcements, added over 50 (!) million subscribers between them in the same timeframe (with Spotify up 27 million YoY and YouTube up by approximately 25 million YoY).

So where do Apple and Amazon go from here? Apple’s mooted hiring of TikTok’s Ole Obermann certainly suggests that Cupertino HQ recognizes it needs a strategy change (and better subscription performance) for Apple Music in 2025.

As for Spotify? I’d be amazed if we don’t see further price rises this year, in addition to the launch of the firm’s ‘superfan’ Music Pro tier at around $18 per month. (I’d like to see Spotify experiment with shifting its ‘free’ tier in the United States to a lower-price, pay-only-with-ads option, but I don’t hold out much hope.)

What’s led Spotify to emphatically outperform Amazon and Apple in music subscription these past few years? That free tier ‘funnel’ certainly helps, yes.

But what about this: the current heads of Apple Music and Amazon Music, Oliver Schusser and Steve Boom respectively, each oversee multiple operations of which music is just one constituent.

Schusser is the President of Beats Electronics, plus the Vice President of Apple Music and ‘international content’. Boom doesn’t even have music in his official title: he is Amazon’s Vice President of Audio, Twitch, and Games.

As for Daniel Ek?

Despite Spotify’s recent expansion into podcasting and audiobooks, Ek told his investors in February that SPOT would be “going all in” on music experiences in 2024, referring to music as his platform’s “core”.

It appears that Mr Ek recognizes something some of his rivals may have forgotten: the unique appeal, resonance, and value of music.

That, in a world of infinite content, the human artistry behind great music remains irreplaceably finite – and worth every billion being invested in it.Music ComeOn