AFM Fights Record Labels Over ‘New Use’ Clause in High-Stakes AI Lawsuit

Union Demands AI Revenue Sharing

The American Federation of Musicians (AFM) has accused major record companies of attempting a “nonsensical” interpretation of the Sound Recording Labor Agreement (SRLA).

At the heart of the federal court dispute is the union’s “new use” clause. The AFM argues that the provision mandates Universal Music and Warner Music share licensing proceeds from their partnerships with AI platform Udio with session musicians hired under the agreement, while also disclosing details of any AI licensing arrangements involving their work.

The Core Contractual Disagreement

The dispute centers on how the SRLA’s long-standing “new use” provision should be applied to emerging technologies:

The Union’s Position: The AFM asserts that any new commercial exploitation of a recording not explicitly covered by the agreement triggers an obligation to compensate the featured musicians.
The Record Labels’ Defense: Warner and Universal contend that the clause requires musicians to be compensated based on standard session rates established for that specific medium. Because no standard union agreement currently exists for AI training, the labels argue the clause has no benchmark to point to and is therefore unenforceable.

Arguments Before the Court

In its filings, the AFM countered that limiting the clause exclusively to media with pre-existing rate sheets would completely undermine a contractual safeguard established in 1999. The union emphasized that the rule was designed specifically to protect musicians when technology creates brand-new distribution channels.

Additionally, the union noted that music produced by platforms like Udio can subsequently be streamed or synchronized into video content—mediums where established AFM rate frameworks already exist. The AFM maintained that even if the court views the clause as ambiguous, the lawsuit should move forward rather than face early dismissal.