{"id":237569,"date":"2025-08-05T22:20:56","date_gmt":"2025-08-05T21:20:56","guid":{"rendered":"https:\/\/www.musicbusinessworldwide.com\/?p=237569"},"modified":"2025-08-05T23:32:36","modified_gmt":"2025-08-05T22:32:36","slug":"kobalts-ai-suno-most-favored-nation","status":"publish","type":"post","link":"https:\/\/www.musicbusinessworldwide.com\/kobalts-ai-suno-most-favored-nation\/","title":{"rendered":"Exclusive: Kobalt’s AI deal with Suno rival ElevenLabs guarantees publishing ‘parity’ with recorded music"},"content":{"rendered":"

Earlier today (August 5), music publisher Kobalt announced<\/a> a landmark licensing agreement with ElevenLabs’ new AI music platform, Eleven Music \u2013 a rival to Suno.<\/p>\n

Now,\u00a0MBW<\/em> has confirmed details of this potentially precedent-setting deal<\/strong>, which could reshape the music industry’s approach to<\/span>\u00a0generative AI licensing.<\/p>\n

The opt-in agreement between Kobalt<\/strong> and $3.3 billion-valued Eleven Labs<\/strong> establishes what sources describe as “parity”<\/strong> between publishing and recorded music revenues. Each side will receive an approximate 50\/50<\/strong> split of royalties generated from the AI platform.<\/p>\n

Perhaps most significantly, MBW<\/strong> has learned that Kobalt<\/strong> has secured a Most Favored Nation (MFN)<\/strong> clause in its deal with ElevenLabs, meaning that if any recorded music rightsholder now negotiates better terms<\/strong> than Kobalt’s, the publisher will automatically be upgraded to match them.<\/p>\n

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Kobalt’s 50\/50 “parity”<\/strong> provision will sit alongside a separate deal inked with ElevenLabs by indie body Merlin <\/strong>(and any other recorded music deals Eleven Music has struck).<\/p>\n

MBW understands that\u00a0Eleven Music’s basic tier<\/strong> is trained on production music, but a forthcoming ‘Eleven Music Pro’<\/strong> offering will soon be trained on cleared catalog from Kobalt<\/strong> and Merlin<\/strong>.<\/p>\n

The development comes as the music industry grapples with how to license generative AI platforms<\/strong>, with major labels and publishers pursuing legal action against companies like Suno<\/strong> and Udio<\/strong> for alleged “copyright infringement on a massive scale.”<\/p>\n

ElevenLabs claims<\/a> that Eleven Music<\/strong>, a rival to Suno and Udio, generates “studio-grade music”<\/strong> from “natural language prompts”<\/strong>.<\/p>\n

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\u2018Compensation comparable to sound recordings\u2019<\/h6>\n

In a note sent to clients today and obtained by MBW, Kobalt CEO Laurent Hubert<\/strong> outlined the key principles underlying the ElevenLabs agreement, including “publishing compensated comparably to sound recordings”<\/strong>.<\/p>\n

This deal structure represents a significant departure from traditional streaming economics, where publishing typically receives approximately ~25%<\/strong> of total royalties compared to recorded music’s ~75%<\/strong> share. In the United States, publishers often attribute this disparity to Section 115<\/strong> of the US Copyright Act, which they argue prevents them from negotiating in a “free market”<\/strong>.<\/p>\n

“Think about what we’re offering [AI] platforms: publishers bring the lyrics and the building blocks of the composition. Labels bring the recording. I think it’s fair and logical to have parity.”<\/p>\n

Publishing Source on Kobalt\/ElevenLabs deal<\/span><\/p><\/blockquote>\n

A publishing source observing the Kobalt\/Eleven<\/strong> deal told MBW<\/strong> today: “Because of [section] 115, publishing gets locked into unfavourable rates without being able to negotiate in the free market. But when it comes to gen AI training, we can negotiate freely.”<\/p>\n

They added: “Think about what we’re offering [AI] platforms: publishers bring the lyrics and the building blocks of the composition. Labels bring the recording. I think it’s fair and logical to have parity.”<\/p>\n

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How Kobalt\u2019s \u2018pilot\u2019 will work with Merlin’s own AI deal<\/h6>\n

As mentioned, Kobalt’s <\/strong>agreement with ElevenLabs exists alongside a separate contract between the AI company and Merlin<\/strong>.<\/p>\n

According to Hubert’s client note, works eligible for inclusion in monetization from Eleven Music<\/strong> must meet two criteria as things stand: “100% of the mechanical rights for the composition are controlled by Kobalt, and the corresponding master recording is cleared through Merlin.”<\/strong><\/p>\n

In future, any opted-in, fully-cleared Kobalt composition<\/strong> whose associated recording is represented by a licensed partner of ElevenLabs<\/strong> will also be eligible for monetization.<\/p>\n

Hubert’s<\/strong> note further explains: “Merlin has also reached a licensing agreement with ElevenLabs for masters, making a fully-licensed framework for these works possible for ElevenLabs. Other master and music publisher partners may follow in the future.”<\/strong><\/p>\n

“Merlin has also reached a licensing agreement with ElevenLabs for masters, making a fully-licensed framework for these works possible for ElevenLabs. Other master and music publisher partners may follow in the future.”<\/strong><\/p>\n

Laurent Hubert, Kobalt in note to clients today (August 5)<\/span><\/p><\/blockquote>\n

Hubert tellingly describes the initiative as a “pilot”<\/strong> \u2013 suggesting elements of the agreement could be rolled out to other platforms, and other rightsholders, in the future.<\/p>\n

Beyond the revenue-sharing structure, as MBW reported earlier<\/a>, the Kobalt-ElevenLabs<\/strong> agreement includes extensive content protection measures designed to prevent unauthorized exploitation of copyrighted material.<\/p>\n

These protections include “content identification and protection systems, using a mutually-agreed, outside third party to detect and block copyrighted elements on the platform’s output,” according to Hubert’s<\/strong> client note.<\/p>\n

According to Eleven Music’s own terms and conditions page<\/a>, users are prohibited from entering prompts that explicitly name any artist’s real name or stage name, any song or album titles, or any music publisher or label names.<\/p>\n

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Could MFN clause reshape industry dynamics?<\/h6>\n

Industry sources suggest the Most Favored Nation<\/strong> clause in Kobalt’s agreement could have far-reaching implications for future AI licensing negotiations across the music industry.<\/p>\n

One potential downside? The MFN<\/strong> could arguably make deals with ElevenLabs<\/strong> potentially less attractive to large recorded music rightsholders<\/strong> keen on receiving a larger share of revenues than publishers.<\/p>\n

Then again, the 50\/50 revenue split<\/strong> established in the Kobalt-ElevenLabs<\/strong> agreement bears similarities to synchronization licensing<\/strong>, where publishing and recorded music rights typically receive more equitable compensation vs. streaming royalties.<\/p>\n

Hubert’s<\/strong> client note framed Kobalt’s opt-in agreement<\/strong> with Eleven Music as providing “true choice in licensing Generative AI”<\/strong> for rightsholders, allowing them to “make a clear and informed decision on whether to participate.”<\/p>\n

A Kobalt spokesperson declined to comment when contacted by MBW about details of the publisher’s deal with Eleven.<\/p>\n","protected":false},"excerpt":{"rendered":"

MBW has confirmed details of this potentially precedent-setting deal, which could reshape the music industry’s approach to\u00a0generative AI licensing.<\/p>\n","protected":false},"author":3,"featured_media":237581,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7],"tags":[],"class_list":["post-237569","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/237569","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/comments?post=237569"}],"version-history":[{"count":0,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/237569\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/media\/237581"}],"wp:attachment":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/media?parent=237569"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/categories?post=237569"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/tags?post=237569"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}