UMG Faces EU Scrutiny, AI Copyright Loophole Questioned, LyricFind Escalates Lawsuit
How The Music Business Works - Issue #20
July 17, 2025
Welcome back to How The Music Business Works!
This week’s update spans major moves in EU music policy, legal battles in the lyrics space, and growing scrutiny of AI-generated content.
The European Commission is gearing up for a full-scale investigation into UMG’s $775M Downtown deal, while a new report challenges AI companies’ reliance on copyright exceptions for training. LyricFind’s lawsuit against Musixmatch heats up with fresh allegations, Spotify quietly begins removing AI music from Velvet Sundown, and Budweiser’s parent AB InBev walks back a controversial ad boasting about spending nothing on music rights.
EU To Launch ‘Full-Scale’ Investigation Into UMG’s $775M Downtown Deal, Reuters Reports
The European Commission is expected to launch a full-scale Phase II investigation into Universal Music Group’s proposed $775 million acquisition of Downtown Music Holdings, according to a Reuters report. The move follows concerns over potential competition issues in the independent label services market. While most EU merger reviews are resolved in Phase I, a Phase II probe signals deeper scrutiny and could extend the review until at least November. UMG maintains confidence in the deal, claiming it will benefit the independent sector, despite growing opposition from industry groups and indie executives.
No Copyright Exception for AI Training in European Law, Says New Report
MEP Axel Voss is urging the European Commission to reassess whether current EU copyright law properly addresses the legal and competitive issues of generative AI training. A new report commissioned by Parliament argues that the EU’s text and data mining (TDM) exception, often cited by AI firms to justify using copyrighted works, was not intended for generative AI. The report emphasizes that AI models go beyond data analysis by replicating expressive and stylistic elements of creative works, which may amount to copyright infringement. Voss and the report’s author suggest the need for AI-specific legislation, a move likely welcomed by the music industry, which seeks to ensure AI companies are required to license content rather than rely on exceptions.
LyricFind Makes New Allegations in Its Battle With Musixmatch
The legal clash between LyricFind and Musixmatch has intensified with the release of an unredacted lawsuit revealing new allegations. LyricFind claims Musixmatch and its investor TPG tried to acquire the company in 2023, then leaked confidential information to Spotify in violation of an NDA to avoid competition. Musixmatch has called the lawsuit “meritless” and is seeking dismissal, arguing the California court lacks jurisdiction over its exclusive deal with Warner Chappell. LyricFind is pushing back on that claim, keeping the dispute very much alive.
Spotify has pulled multiple releases from AI-generated act The Velvet Sundown, including their newly released album Paper Sun Rebellion II and all tracks from related artist profiles like Velvet Sundown and Crimson Daydream. While Spotify hasn’t commented, the removals suggest mounting internal scrutiny of AI-generated content. The move comes amid industry debates around labeling AI music and growing concerns over the flood of machine-made tracks affecting royalties and listener share. The future of AI music on streaming remains uncertain, but this crackdown may signal a shift in how platforms handle such content going forward.
Ab InBev Apologizes for ‘$0 Spent on Music Rights’ Ad Boast After Budweiser Cannes Lions Win
Budweiser’s parent company, AB InBev, has apologized after backlash over its Cannes Lions-winning “One Second Ads” campaign, which boasted about avoiding music licensing fees. Created for Budweiser’s Brazilian TikTok page, the campaign used one-second song clips from major artists like Beyoncé and Kendrick Lamar, claiming it stayed within legal limits to avoid paying rights. The ad drew criticism from the music industry and led to a copyright claim from Sony Music Publishing, prompting the removal of its case study video. AB InBev acknowledged concerns and said it’s working to resolve the issue.