| Hollywood has spent the last year looking for the right company to sue. Studios believe their intellectual property is being used to train artificial intelligence models and want to set a precedent to protect their most valuable assets: their characters. Midjourney was a ripe target. Founded in 2022, its model allows people to generate an image using a text prompt. It was clear to Walt Disney Co. that the model had been trained on characters such as Darth Vader and Deadpool, and the company sent Midjourney several notices asking the startup to take down material it believed infringed upon its copyrights. Those notices were ignored, according to a lawsuit filed earlier this month. Midjourney declined to comment on the suit. Disney’s top lawyer Horacio Gutierrez took the lead on this legal fight, but he asked his peers in Hollywood to join. Some, like Paramount Global and Warner Bros. Discovery Inc., were distracted with their own corporate dramas. Others, like Netflix Inc. and Amazon.com Inc., have different priorities. Yet Comcast Corp., the owner of NBCUniversal, agreed to participate. Midjourney isn’t the most important AI company in the world. It’s much smaller than OpenAI and Anthropic, to say nothing of Alphabet Inc.’s Google or Meta Platforms Inc. But this is the first time a major Hollywood studio has taken legal action against an AI company. “It is part of a campaign to protect our intellectual property rights in the world of generative AI,” Gutierrez said recently from his office on Disney’s Burbank lot. “This is our first case, but it likely won’t be the last.” Gutierrez, who previously worked at Spotify and Microsoft, said Disney’s goal is “to maintain our right to authorize whether, on what terms, and by whom our IP and characters are commercialized.” The rise of AI poses a new challenge for Hollywood studios, which haven’t always been the best at harnessing the power of new technology. Entertainment executives say they’ve learned their lesson from the industry’s response to the internet, which reduced their work to small bits easily shared for free. Though Hollywood weathered the shift from analog to digital better than newspaper publishers, radio stations and record labels, that wasn’t because they were especially innovative. Hollywood studios, like record labels before them, responded to file sharing and user-generated content by trying to suppress them. They tried to sue companies like Limewire or YouTube into oblivion. While the courts spent years weighing the matter, media companies were slow to fully embrace the next big thing in media: streaming. Internet companies YouTube and Netflix, are now the most popular entertainment services on earth. “Everyone learned they need to embrace the technology instead of fighting it,” said Mitch Glazier, the chief executive officer of the Recording Industry Association of America, the primary advocacy group for the music industry. Media companies continue to be litigious. Major newspapers (the New York Times), record labels (all three majors) and Hollywood studios have sued AI companies. But those engaged in litigation also say they want to work with these new companies. Publishers, including the Atlantic and Vox Media, have licensed their work to OpenAI while record labels have struck partnerships with YouTube. Hollywood studios already use AI technology in many phases of their business. The Wonder Project used AI to cut the cost of shooting its hit Amazon show House of David while Lionsgate struck a deal with AI startup Runway to build a model trained on some of Lions Gate’s IP. “The goal is you’re making higher quality content for lower prices,” Lionsgate Vice Chairman Michael Burns said at Runway’s AI Film Festival in Santa Monica earlier this month. While Disney isn’t interested in licensing its full library to anyone, it is talking to companies like OpenAI about potential partnerships. Disney recently licensed the use of Darth Vader’s voice for a chatbot in the video game Fortnite. These deals only work if the two sides agree on a general framework for what AI companies can and can’t do with copyright. Neither the courts nor the legislature has established a legal framework. Courts have ruled on the side of both copyright holders and AI companies, depending on the case, while legislation is expected to take years. Perhaps the central question facing the courts – and in the Midjourney suit – is the interpretation of fair use, a legal principle that permits some use of copyrighted material without needing permission. Can companies train large language models on copyrighted material without securing a license? Leaders in the entertainment industry worry that government will side with big tech. Trump has appointed several technology industry veterans, such as venture capitalists David Sacks and Michael Kratsios, to come up with a proposal to ensure the US outpaces China in AI. Kratsios, who transitioned from working for VC Peter Thiel to the Trump administration, has said people have grown too pessimistic about the downside of AI and that the government needs to empower AI companies to better compete. “We understand there will be changes artificial intelligence brings to the country, but at the end of the day were in a global race and we need to be able to lead in that race,” Kratsios said at the Bloomberg Technology Summit earlier this month. “We want the world to be running on the American AI stack.” The Trump administration fired the head of the copyright office not long after she issued a report contending that some usage of copyrighted materials to train models was legal while others were not. Trump’s action plan isn’t the law of the land. It will be up to Congress and the courts to establish the legal standards. That process will take years. But Hollywood studios don’t want to wait too long. “We cannot afford to repeat the mistakes of the past,” Gutierrez said, aruging protecting copyright will benefit the US in competition with China. We’ll soon find out if the power brokers in Washington, DC agree. The best of Screentime (and other stuff) | Netflix is now TV in France | Netflix will soon offer all programming from France’s most-watched TV network under a new deal that covers live sports, news and scripted programming. It’s not hard to see the appeal for Netflix, which gains access to many of the most popular shows in one of the most important markets in Europe. The deal also creates additional advertising inventory and should mute French regulators’ complaints that Netflix doesn’t offer enough French programming. Whether this is a good idea for TF1, which is handing over all of its most valuable programming to a rival, is less clear. But that’s a debate for another day. The biggest takeaway from this deal is that Netflix is competing with YouTube and Amazon to be the centerpiece of your living room. Media executives have been waiting for all of these streaming services to bundle with one and recreate cable. Netflix has avoided doing so. Netflix doesn’t want to offer its programming via a third party. It hasn’t participated in Amazon’s Channels program or YouTube’s equivalent. While Disney, Paramount, Warner Bros. and others have long relied on other companies to maintain the customer relationship, Netflix does not. Netflix is competing with Amazon, YouTube and maybe Disney to amass enough programming in one place that customers don’t need to go anywhere else to watch film and TV. TF1 just handed Netflix a huge boost in France. While this is a test, expect Netflix to strike similar deals in other territories if it works. The No. 1 movie in the world is…still How to Train Your Dragon. The new Pixar film, Elio, came in third during its first weekend. That is… not great. Streaming > all of TVAmericans spent more time in May watching streaming services than cable and broadcast combined, the first time that’s happened. YouTube alone added almost 3% over the last year, while the Roku Channel added 1%. Netflix and Disney were essentially flat. Deals, deals, dealsI don’t usually listen to podcasts about TV shows, but The Watch’s episodes on Andor were tremendous. I spent my Friday night watching The Materialists. What a joy. Let Celine Song do whatever she wants. | 
