The music industry's chaos around copyright and compensation may feel unprecedented, but it's not. AI developers are following a familiar script: build empires on unlicensed creative work and address fair pay only when forced by law or industry pressure. The wave of lawsuits and scattered licensing deals is not a broken system but the old “ask forgiveness, not permission” approach, a repetition of history that also points the way toward a more sustainable balance for creators.
Peter Csathy is a veteran dealmaker, media executive, and tech leader who has operated on every side of this conflict. As Founder & Chairman of the advisory firm Creative Media, he now sits at the intersection of AI, media, and law. But his perspective was forged in the trenches of past digital wars. As the former President of digital music pioneer Musicmatch (acquired by Yahoo!), he was at the epicenter of the original streaming revolution. As a former senior executive at Universal Studios and a representative for iconic artists like Prince and Devo, he understands the stakes for rights holders big and small. Drawing on this expertise, the Harvard-trained lawyer argued that while the technology is new, the solution is rooted in hard-won precedent.
- We've seen this movie before: "We've seen this movie before. In the streaming revolution, YouTube came in and built its billions of dollars of value on the backs of the creative community without paying them. There was no allocation, there was no revenue share. There was just copyright theft, which built the company."
The parallel to YouTube isn’t just a metaphor; it’s a financial reality playing out in real-time. While a handful of high-profile licensing deals have been announced between AI developers and media companies, Csathy argued they represent a statistically insignificant fraction of the value being created in the AI gold rush. The numbers, he noted, tell the real story of an industry where meaningful revenue sharing has yet to begin.
- A rounding error: "Let's not kid ourselves, there's no revenue sharing right now. There is none. The highest one that's been reported is $250 million. And $250 million, in the scheme of the $1 trillion that's being invested by the AI developers, that is 0.025%."
But this imbalance, Csathy insisted, is temporary. The path forward is not endless litigation, but a pragmatic business framework that can serve the entire creative ecosystem, from major studios to independent artists. He proposed a concrete solution, arguing that it's achievable today.
-
A three-tiered, opt-in solution: "The workable solution is a three-tiered licensing system where it's opt-in for all. It has to be an opt-in system." The system would allow major players to strike one-to-one deals, mid-sized companies to band together in content pools, and independent creators to participate in a marketplace. For this third tier, he points to emerging real-world examples like the marketplace recently introduced by Cloudflare, where rights holders can signal their willingness to be indexed and set their own terms. "And it's doable today."
Let's not kid ourselves, there's no revenue sharing right now. There is none. The highest one that's been reported is $250 million. And $250 million, in the scheme of the $1 trillion that's being invested by the AI developers, that is 0.025%.Peter Csathy - Founder & Chairman | Creative MediaThis entire business solution, however, hinges on a single, powerful lever: the threat of copyright infringement. Contrary to the popular narrative that our laws are hopelessly outdated, Csathy argued that the existing legal framework is not only equipped to handle AI, but is already adapting. The courts, he said, are providing the necessary pressure to bring tech companies to the negotiating table.
-
The market substitution test: "The Supreme Court came out saying that if there's market substitution and market dilution, meaning you're taking commercial opportunities from an artist, then you go outside of fair use. It's actionable infringement."
This concept of "market substitution" is the legal lynchpin. It means that even if an AI’s output is new and transformative, if it harms the commercial market for the original work, it can be deemed infringement. This legal reality is what makes his proposed licensing framework a business necessity. On a global stage marked by a confusing "patchwork" of regulations, the universal threat of litigation in key markets like the U.S. creates a powerful incentive for tech giants to seek a stable, global economic solution.
- Litigation as a catalyst: "Litigation is not going to be the answer. It's not in anybody's interest because there's too much uncertainty, so it's not in the interest of the big tech companies, nor is it in the interest of the media companies. All litigation does is accelerate the case for finding an economic solution that works and that can be globally deployed."
Ultimately, Csathy hopes the current friction is not the final destination, but the catalyst for something greater. The lawsuits and tense negotiations are not the end goal, but the necessary force required to push the industry past conflict and toward a new era of sustainable partnership. The goal is to spur innovation on how to move forward productively and get onto the next big thing, because we are still very early in this conversation.