US Upholds Human Authorship Rule for Copyright, Sony Faces Streaming Royalty Lawsuit, and Spotify Highlights Australian Payout Growth

How The Music Business Works - Issue #51

March 5, 2026

Welcome back to How the Music Business Works. Each week, we look at the structural forces shaping the music industry, from copyright law and royalty accounting to the global economics of streaming.

This week’s developments highlight how legal frameworks and financial models continue to evolve alongside new technologies and market realities. Courts, regulators, and rightsholders are all testing the boundaries of how existing systems apply to AI-generated content, legacy recording contracts, and the modern streaming economy.

At the same time, new data from regional markets and streaming platforms provides insight into how revenue flows and audience behavior are shifting globally. Together, these stories offer a snapshot of how rights, royalties, and digital distribution continue to reshape the music business.

US Supreme Court leaves “human authorship” requirement in place for AI-generated works

The US Supreme Court has declined to review a case challenging the US Copyright Office’s position that works created entirely by artificial intelligence are not eligible for copyright protection. The case was brought by inventor Stephen Thaler, who attempted to register an artwork generated by his AI system “DABUS” with the machine listed as the sole author. The Copyright Office rejected the registration, and multiple courts later upheld that decision, reaffirming the long-standing principle that copyright requires human authorship. By refusing to hear the appeal, the Supreme Court leaves that interpretation intact for now. The decision reinforces the current approach taken by the Copyright Office, which allows copyright protection for works created with AI assistance but not for works generated entirely by machines.

Lit sues Sony Music over alleged streaming royalty underpayments

Rock band Lit has filed a lawsuit against Sony Music Entertainment, alleging the label miscalculated streaming royalties under their late-1990s recording contract with RCA Records, now part of Sony Music. The band claims Sony applied a flat 14% royalty rate to streaming income, even though their agreement requires royalties to be calculated on a “net receipts” basis tied to the revenue collected from digital service providers. According to the complaint, that formula would result in substantially higher payments to the artists. The filing also alleges that Sony applied the wrong calculation to video streaming royalties, paying roughly 17% instead of the contractually required 50% share of net receipts. In addition, the band claims Sony failed to apply royalty escalations triggered when their album A Place in the Sun achieved gold and platinum certification in the US.

Spotify highlights rising payouts and global discovery for Australian artists

Spotify says it paid AUD $330 million to Australian rightsholders in 2025, a 7% increase from the previous year. Roughly half of those earnings went to independent artists and labels, highlighting the continued role of streaming in supporting a broad range of rightsholders beyond major-label catalogues. The platform also reported that more than 370 Australian artists generated over AUD $100,000 annually from Spotify alone. According to the company, Australian artists were discovered 2.7 billion times globally by first-time listeners during the year, reflecting the growing international reach of locally produced music through streaming platforms. Spotify partly attributed the increase in global exposure to initiatives like its “Turn Up Aus” program, which aims to promote domestic artists.

German recorded music growth slows as streaming gains offset physical decline

Germany’s recorded music market grew by 2.3% in 2025, reaching approximately €2.42 billion ($2.83 billion), according to new figures from the Bundesverband Musikindustrie (BVMI). The modest increase marks the slowest annual expansion in several years and reflects mixed performance across formats. Streaming revenue rose 3.8% year-over-year and now accounts for the vast majority of digital income, while physical sales declined nearly 6% overall due largely to falling CD demand. Vinyl sales continued to rise but were not enough to offset the broader physical downturn. Industry leaders described the market as stable but increasingly competitive, noting that AI developments and digital licensing will play a central role in the sector’s future.

IRMA calls for ethical AI framework to protect Ireland’s €1B music sector

The Irish Recorded Music Association (IRMA) has urged lawmakers to introduce an “ethical AI framework” to safeguard Ireland’s music industry, which contributes more than €1 billion annually to the national economy. During a briefing with members of the Irish parliament, IRMA outlined both the opportunities and risks presented by rapidly advancing generative AI technologies. The group emphasized that while AI can support innovation and creative growth, the use of copyrighted music in training datasets without permission or compensation could undermine artists’ livelihoods and the wider creative economy. To illustrate the technology’s potential impact, IRMA demonstrated a live deepfake example to policymakers, highlighting how easily AI tools can replicate voices and identities.