The tools “will be helpful for the legacy recorded music companies in terms of letting them ‘sweat’ historic assets harder,” he added.
Citi expects the risk-reward from AI to be “fairly balanced,” and holds a neutral rating on UMG. Bloomberg News has reached out to UMG for comment.
AI-generated music has been criticised by some members of the industry, who say artists and rights owners may be denied compensation if bots use their songs to produce content. Universal, the record label for Taylor Swift and The Weeknd, has said the training of generative AI using its artists’ music represents a breach of its agreements and a violation of copyright law.
Earlier this year, a song called ‘Heart on My Sleeve,’ created by an unknown TikTok user with AI-generated vocals from Drake and The Weeknd went viral after being uploaded on streaming services. Country singer-songwriter Chris Stapleton has called on legislators to prevent AI from impersonating music artists.
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But while AI risks increasing the volume of music available to consumers, the Beatles development adds another dimension to the discussion, according to Citi’s Singlehurst.
“It highlights that the debate around risk/opportunity from AI for music is more nuanced than perhaps the ‘Loser vs. Winner’ basket debate may suggest,” he added.
UMG shares were down 0.2% to €20.04 as of 1:57 p.m. in Amsterdam. Citigroup’s price target of €23.50 implies a 17% upside to the stock from current levels.
