Daniel Johansson: Analysts are starting to talk about an AI bubble, similar to the dot-com bubble

COLUMN

In 1999, I wrote my first tech-oriented news and analyses for the Swedish music industry. One of the very first news pieces I wrote was about the release of Napster. Since then, I have written a few thousand articles and analyses.

I look back a bit in my database and find this news item from November 1999:

“CDnow will start selling music for download this Friday. The first batch will contain 13,000 songs from artists including Beck, Frank Zappa, Fatboy Slim, Frank Sinatra, Muddy Waters, and many more. Prices will range from $1.49 to $3.49 per song, and will only be available in Liquid Audio format.”

This was four years before the iTunes Store was launched and nine years before Spotify was released. A lot has happened since then.

I have had the privilege of being part of the shift that the music industry has undergone since the late 1990s. Or rather, multiple shifts: the transition from physical media to downloads, from downloads to streaming, from music consumption on computers to primarily mobile devices, and now, the transition from “dumb” technology to intelligent technology.

Contemporary Technology
The relationship between music and technology has always been strong. Contemporary technology lays the foundation for the creation, production, performance, and consumption of music. New formats and exposure platforms introduce new ways of working and operating, and it has always been the actors who manage to adapt to the new technical frameworks that succeed the best.

The first news piece I analyzed for MI in 2024 was that Elvis Presley, starting at the end of the year, will go on tour as an AI hologram:

“The concert is called Elvis Evolution and is developed by British Layered Reality. It seems they will mix different technologies, augmented reality that requires some form of glasses, some form of multisensory technology, and new projection technology. The concert seems to be somewhat different compared to other hologram concerts, such as ABBA Voyage which primarily relies on large LED screens and advanced lighting, or Whitney Houston, Roy Orbison, Dio, etc., which have been projections of avatars on a film of transparent plastic. After the concert, attendees will be invited to an after-party. Whether AI-Elvis will participate in the after-party is not clear.”

A Paradigm Shift
A significant portion of the news so far in 2024 has, of course, been about AI. We are going through a paradigm shift that may be greater than what the entire internet meant, and probably no one really knows where it will lead. Here is a selection of what I have written on that subject since the New Year:

Just a selection of everything that has happened regarding AI and music in recent months.

We can expect the “battle” between AI platforms and rights holders to expand even more during the rest of 2024, especially now that the first lawsuits have occurred. In many ways, the situation resembles what happened in the 2000s with piracy, when various tech companies referred to what is known in the US as “fair use.”

Now, AI platforms refer to the so-called TDM exception (text and data mining), an exception intended to allow the creation of new knowledge and research on various types of datasets. Rights holders, not just in music, argue that TDM does not apply to this kind of training of AI models, and this will likely become one of the most critical issues to resolve in the future.

I don’t think it will be resolved in 2024; we can probably expect several years of legal processes and interpretation of new legislation, such as the AI regulation. After all, much is at stake, as platforms like OpenAI’s ChatGPT, Google’s Gemini, or for that matter Midjourney, Dall-E, Stable Diffusion, Suno, Udio, and others, depend heavily on what they have been trained on.

Just like with the internet and digital media 20-25 years ago, we are in the midst of that first big hype, something that Nvidia’s stock price, among other things, testifies to. Overinflated? Yes, of course, but beyond the hype comes the next phase, when the technology settles and begins to seriously change society and the economy.

We are not quite there yet, but we are getting there. The startups that today can identify the potential “gaps” in the upcoming market, after the initial hype has subsided, are, I believe, the ones that will survive and secure an important position for the rest of the 2020s and perhaps especially in the 2030s.

More Legal Processes
In the field of music, we are only at the beginning of these changes, and for the rest of 2024, we will likely see more legal processes and an expanded “war” between AI companies and the industry. Some see this as a negative development, with copyright once again coming in to hinder technological advancement, but I see it differently.

It is precisely this balancing act between restrictive rights, ethics and morals, and rapid technological development that creates truly great products. If copyright had “died” back in the 2000s, Spotify would not have been forced to develop a product that was superior to quick fixes, and much of the Swedish music tech that has emerged over the past 15 years would likely never have seen the light of day.

So, it will be exciting to see what happens in the coming months. I will be back.

Daniel Johansson
daniel@musikindustrin.se