During a recent conference hosted by Morgan Stanley, Warner Music Group (WMG) CEO Robert Kyncl presented a compelling vision of how artificial intelligence (AI) could serve as a transformative force within the music industry. His comments came shortly after a shareholder letter where he characterized AI as music’s “next growth engine,” emphasizing its potential to enhance rather than threaten the interests of rights holders.
Kyncl expressed optimism about the overall health of the music industry, describing it as a “very attractive category” that has shown resilience amid global uncertainties. He noted that music has not yet been monetized to the same extent as film and television, suggesting significant opportunities for growth.
One of the key points Kyncl made was the rapid growth of AI music creation platforms, specifically referencing Suno’s recent metrics. According to Kyncl, Suno boasts 2 million subscribers generating approximately $300 million annually, which translates to a monthly fee of $12.50 per user—higher than typical music streaming subscriptions. This growth, he argued, represents an incremental revenue opportunity for the industry, and he urged other stakeholders to embrace this trend.
Kyncl also discussed the evolving structure of music royalties in the age of AI. He predicted a shift from the current market share-based model to an attribution-based system, where royalties would be distributed based on the specific works used in AI-generated content. This change, he believes, will favor owners of well-known and iconic music, rewarding quality over quantity.
Furthermore, Kyncl highlighted WMG’s internal initiatives to leverage AI for catalog optimization and revenue forecasting. He explained that managing a vast catalog of over a million songs is challenging, but AI can streamline this process significantly. He also mentioned the development of an automated quality assurance tool for music videos, which has drastically reduced costs and time while improving quality.
In conclusion, Kyncl argued that the rise of AI does not diminish the importance of major labels. Instead, he posited that there is a “return to scale” in music, where larger companies are better positioned to navigate the complexities of the industry. He emphasized the need for a robust infrastructure to help artists succeed in an increasingly noisy marketplace, reinforcing the value of labels in this evolving landscape.
