Perhaps the biggest spotlight on growing fears about the impact of generative artificial intelligence on the industry is the Hollywood strike. Screenwriters are particularly afraid of having their jobs stolen by robots. And while technology like ChatGPT is highly unlikely at this point to replace actors, it raises important medium-term questions about voice actors. Microsoft can already replicate anyone’s from a simple three-second clip. Google produces 380 different human voices in more than 50 languages and variations using its machine learning technology.
“Generative audio will arrive at scale in 2024”, we anticipate at Deutsche Bank where, consequently, we see with a good eye the decision of Universal Music to negotiate an agreement with Google to create, within a legal framework, music from AI. A way to turn threat into money. Yesterday the FinancialTimesreported that the Californian technology giant and UMG, which owns, in addition to Universal, the record labels EMI, Capitol, Def Jam or even Decca Records and Virgin, were in talks to lay off the voices and melodies of artists under contract, such as the Rolling Stones , U2, Billie Eilish, Taylor Swift, Drake, Nicki Minaj, Lana Del Rey or even Justin Bieber. The information has not been confirmed by the companies concerned but the London business daily quotes “four people familiar with the file”.
“Users would be able to create fake songs. Google would provide the tools to track the use of licensed material in order to compensate copyright holders who choose to provide access to their works.details financial analyst Silvia Cuneo at Deutsche Bank, who recommends buying UMG shares on the stock market to aim for a price target of 26 euros.
The rise of generative AI has spawned a wave of “deepfakes” – like this true-fake piece created by OpenAI which is inspired by Franck Sinatra or this fictional collaboration which went viral this year between Drake and The Weeknd – who know how to imitate very convincingly the voices, lyrics and style of established artists, without their consent.
Bloomberg consensus is 76% buy
At Deutsche Bank, it is estimated that“UMG is at the forefront of protecting the rights of its artists. » The group, as the world leader in music production, is able to defend them, explains Silvia Cuneo, in the absence of ad hoc legislation. Last month, UMG urged the US Congress to pass legislation that would protect creators and rights holders from violations committed by users of artificial intelligence.
North America represents around 50% of UMG’s revenue, separated from Vivendi since 2021, ahead of Europe (around 30%), Asia (15%), Latin America (3%). “The United States, Japan, the United Kingdom, France and Germany represent 75% of turnover”according to more precise figures from analyst Adrien de Saint Hilaire, at Bank of America Securities, which also advises buying UMG on the stock market, with a target of 31 euros, the highest of the Bloomberg consensus (median target: 25 .41 euros).
Analysts from Deutsche Bank and JPMorgan, aiming for a price target of 31 euros on UMG, are the most optimistic of the consensus as listed by the Bloomberg news agency. 16 analysts recommend buying the stock market.
The group, up 1.5% on the Amsterdam Stock Exchange over the past two days, is on track for a seventh week of increases in a row, a first since its listing almost two years ago. , at a price of 18.5 euros. At its highest, in November 2021, its shares pushed as high as 27.96 euros in session. They are currently trading at just under 24 euros. On July 27, they had gained more than 10% after the publication by the group of its results for the second quarter, better than expected. Turnover, up 6.4% to 2.7 billion euros, was driven in particular by the increase in subscriptions on streaming platforms and the sale of derivative products around the Taylor Swift tour, “The Eras Tour”.
In May, UMG teamed up with Endel, which specializes in artificial intelligence, to help its artists create ambient or “functional” music, for sleep or running, “an important sub-category of music consumption with around 15 billion monthly streams, all music platforms combined”, says one at Deutsche Bank.