Music's Legal Battle With AI | Bear Market Volatility | Pantheon Raises $5.2 Billion
Here are three stories that caught our eye this week:
1) Music Industry Vs. Artificial Intelligence
Nothing comes from something… right?
Similarly: Any artistic inspiration — music, art, dance — is inspired by someone or something before it… right?
That’s what’s being argued in the courts when it comes to musicians against AI generators.
Musicians and publishers — like Universal Music Group and Sony Music — argue AI companies are infringing on copyrights. That they (musicians and publishers) need to be compensated for it.
AI companies — like Anthropic, Suno, and Udio — argue they’re allowed to train their systems on all music without anyone’s permission. Their models aren’t creating new music based on any one individual song… but a pattern from a consortium of songs. Which makes it original in and of itself. And therefore, it falls under "fair use" in U.S. copyright law.
The music industry rebuts. The simple fact any of their music is used at all in a model, however minuscule, means it should be compensated.
There are multiple lawsuits. Each against a different set of AI companies.
But a judge a couple of weeks ago sided with Anthropic — an AI company.
From Gizmodo (emphasis added):
“A federal court in California denied an injunction sought by music publishers in their copyright case against Anthropic on Tuesday. The injunction would’ve barred the AI company from using song lyrics to train the AI models that power its chatbot Claude. The music publishers first filed the suit in late 2023 and while this is a setback for the publishers, it’s just one battle in a much larger legal war between AI companies and copyright holders…
U.S. District Judge Eumi Lee wrote that although the publishers sought to clarify the scope of what they were asking for, their inclusion of 500 songs that were allegedly used by Anthropic wasn’t good enough, as it was conceded they were “illustrative and non-exhaustive,” according to court documents published by Court Listener.
“Publishers’ counsel could not say how many songs would be subject to the injunction,” the ruling states. “Moreover, the injunction would apply to songs that Publishers currently own and to an unknowable universe of songs that they may acquire while the injunction is in place. Publishers would also ‘update’ the list to add or remove songs as necessary. Publishers did not offer a concrete or definitive way for Anthropic—as the party subject to the injunction and the legal repercussions of a violation—to ascertain its parameters or comply with its terms.
While the copyright holders lost this one round, they expressed confidence in the case moving forward.
“Despite the Court’s narrow ruling, we remain very confident in our case against Anthropic more broadly,” a representative for the publishers said in a statement to Music Business Worldwide.
“In response to our preliminary injunction motion,” the statement continued, “Anthropic had already conceded the merits of our claims against its infringing outputs of our copyrighted song lyrics, by entering into a stipulation requiring it to maintain ‘guardrails’ to prevent such infringing outputs, thereby resolving a critical aspect of the motion in our favor. The Court noted this factor as an important part of its preliminary decision.”
The basis of the suit is broad enough that it’ll go on for years to come.
AI is inevitable. So our bet is the music publishers are just using these lawsuits for licensing negotiations.
If and when that happens, it’ll benefit artists. Including royalty holders of said music.
Either way, this case is fascinating as we’re in the early stages of AI disruption.
2) Bear Market Volatility
Whiplash.
That’s what bear market volatility feels like.
And that’s exactly what we got last week.
Volatility is a feature of bear markets. Not a bug.
Last week, the S&P 500 posted the largest intraday reversal in history.
The NASDAQ posted the second largest single day gain in history. Which is what we predicted would happen last week.
We had four straight days where the S&P 500 had a trading range greater than 5%.
The only other times this has happened were 1987, 2008, and 2020… All massive bear markets.
I read somewhere implied volatility — what the market expects volatility to be — is 2% point swings daily for the next nine months.
That’s insane. Are you ready for that?
Doesn’t matter. That’s what the market thinks is coming.
That’s whiplash.
Take a look at your portfolio. Know what you own. And expect big swings among all your stocks.
You don’t want to get whipsawed into selling your blue chips. But don’t expect them to avoid the big swings.
Everything moves wildly during bear markets.
3) Pantheon Ventures Raises $5.2 Billion Private Credit Fund
“Whenever there’s more uncertainty, there’s more demand for liquidity, and therefore more of a demand for secondary solutions.” — Rakesh Jain, Pantheon’s partner and global head of private credit.
Private equity firm Pantheon Ventures raised a record $5.2 billion to invest in secondary investments of private credit assets.
Pantheon knows the best deals come from companies who need cash in a pinch.
Volatility breeds liquidity issues. So its record $5.2 billion raise will help it write pretty much any check size.
“Two or three years ago, we were writing $100 million to $500 million checks,” said Jain. “Today, we have the ability to write checks over $1 billion.”
The Partners Fund has the same investment strategy within our private credit investment pillar.
Our mantra: We want to be price makers, not price takers.
Pantheon Ventures raising $5.2 billion shows an appetite of investors who understand this strategy. Our investors — a.k.a. Partners — are similarly aligned.
There will be tremendous investment opportunities in the next 12 months. Public and private alike.
Pantheon is gearing up for it. So are we.
Good investing,
Lance
DISCLAIMER: This is solely our opinion based on our observations and interpretations of events. This should not be construed as personal investment advice.