TikTok’s high-profile contract dispute with Universal Music Group (UMG) highlights how the use of Artificial Intelligence (AI) is impacting the business community. What can small business owners learn about AI from the dispute?

With its vast database of music, TikTok allows users the ability to combine clips of songs with original content to create videos. In addition, TikTok also allows users to generate songs using AI. For example, the viral hit “Heart on My Sleeve,” was produced utilizing the AI voices of Drake and The Weeknd. The AI-generated song went viral on TikTok.

UMG, who represents popular artists such as Taylor Swift, The Weeknd, Drake, Adele, Elton John, Ariana Grande, U2, and many more, recently revealed an ongoing contract dispute with TikTok. The dispute centered on UMG’s interest in TikTok reinforcing its safeguards around the use of AI-generated music. Universal maintains that AI-generated music “massively dilutes the royalty pool” for human performers. UMG also argued that TikTok is uninterested in incorporating alternative royalty models.

TikTok, whose response to UMG is that the music corporation has put greed above the interest of artists, removed all of UMG's music from its library on Feb. 1, 2024. Content creators who utilized UMG artists in their videos were shocked to find their posts had gone silent.

What can businesses learn from the TikTok and UMG dispute?

The TikTok and UMG dispute is a high-profile example of the legal issues surrounding the use of AI, and while most small businesses probably won’t have to worry about contract disputes with big-league music corporations, they should still safeguard themselves to avoid litigation when utilizing AI in business.

Some of the best practices a business owner should consider include the following:

• Before utilizing an AI product, review how the product was developed. Could it have been developed using potentially copyrighted data sources (such as the AI-generated song listed above)? If so, consider another product.
• Review ongoing legal developments regarding AI use to ensure it complies with local, state, and federal developments.
• Design policies for employee use of AI to minimize risk, including copyright-related issues.

Help is available

The attorneys at O’Reilly Rancilio are available to develop policies and evaluate risks related to AI in business. To speak with an attorney, please call 586-726-1000 or visit our website.