| Last week, executives from OpenAI called their peers in Hollywood and the music industry to give them a heads up about an imminent announcement. The company would be releasing a new app that lets users generate videos with artificial intelligence. The clips are possible only thanks to technology trained on intellectual property owned by the entertainment industry. Executives raced to respond. The Motion Picture Association, an advocacy group that represents major Hollywood studios, held a call with top lawyers and policy officials. The Recording Industry Association of America, which represents major record labels, did the same. Hollywood talent agencies threatened war if OpenAI didn’t allow major celebrities to opt out of this product. The entertainment industry wants to avoid a repeat of what happened at the dawn of the internet era, when piracy and user-generated content employing bits of their material undercut its business. While major media companies debate the best strategy, OpenAI is moving ahead. The app, Sora by OpenAI, is already the most popular free option in the App Store, eclipsing both Google Gemini and ChatGPT. OpenAI isn’t just creating an app for people to create videos. It wants to create a place for people to watch them as well, competing with YouTube and TikTok. “Hollywood now faces a stark choice: Take action to protect its IP or wake up to find its most valuable properties circulating as AI-generated slop across social media,” attorney Aaron Moss wrote in his blog, Copyright Lately. Whether Hollywood can even protect its IP is an open question. AI companies believe they can train their models without any regard for copyright. The law on this is unclear. Studios feel confident they can win if they can prove that the apps are spitting out videos with characters that resemble their own. Disney has already sued Midjourney, seeking to set a precedent. Hollywood companies have some power. Talent representatives kicked and screamed enough that OpenAI adjusted its approach. The company was initially going to force actors to proactively bar the use of their image and likeness. Now they have to opt in. OpenAI chief Sam Altman uploaded a blog post Friday notifying the public of upcoming changes including a plan to give rightsholders more control over characters as well. While the model has trained on their IP, they will be able to block the technology from reproducing its characters. Yet if Hollywood’s only goal is to protect its IP, it has already lost. The owners of shows, movies and songs tried to fight piracy and user-generated content in the courts but were outmaneuvered. While they spent years adjudicating and pushing for changes in copyright law, tech companies lured away their customers and advertisers, becoming the largest media companies on Earth. OpenAI isn’t the only company giving Hollywood fits. Google’s generative AI tool, Veo, was seen by many as more advanced than Sora. Google has the largest video site in the world, YouTube, to help train its videos. If we’ve learned anything from YouTube, it’s that the tech companies will not ask for permission. They will also almost always be a step or two ahead. Altman is trying to create a product users will love, which gives the tech company the power over any individual IP holder. Companies like OpenAI have already trained their models on copyrighted material. You may not be able to ask for Tom Cruise, but you can ask for Ethan Hunt from Mission: Impossible. And even when Paramount asks OpenAI to remove Mission: Impossible from Sora, copycats proliferate faster than anyone can stop them. It’s a never-ending game of Whac-A-Mole. A more successful model for the entertainment is Spotify, which operates under a licensing regime that gives rightsholders a majority of the streaming service’s shares — as well as equity in the company. Spotify is now worth more than all three major record label groups combined, but the music industry has benefited from its success. Yet while Spotify created a popular platform for distributing music, it never gave artists all the tools to make music that would compete with the major labels. These AI video generators do. Hollywood studios have spent a couple of years talking to OpenAI and its peers, assessing the best ways to cooperate (or not). They have started to use new technology in production. Lest they fall further behind on the latest wave of technology, Hollywood studios need to lean into change and figure out how to use AI to their advantage. The best of Screentime (and other stuff) | The slow unraveling of Candle Media | Hello Sunshine, the media company founded by actress Reese Witherspoon, is closing its division that produces unscripted programming, according to people familiar with the company’s plans. Sara Rea, who runs that business, will start a new company and produce projects with Hello Sunshine, said the people, who declined to be identified because the plans are still being worked out. Four years after Hello Sunshine was sold to Candle Media, the company that co-produced The Morning Show and Big Little Lies is undergoing a major transition. Chief Executive Officer Sarah Harden is departing after nine years and handing the reins to Maureen Polo. Hello Sunshine is focusing more on direct-to-consumer businesses, like the lifestyle brand The Home Edit. The company will still produce high-end scripted series, including an upcoming show based on Legally Blonde, but the company sees more growth potential in areas other than Hollywood. That’s why the head of its consumer division is the new CEO. Most of these changes have been negotiated personally between Witherspoon and the folks at financial giant Blackstone, Candle’s biggest investor. Candle Media chiefs Kevin Mayer and Tom Staggs haven’t been very involved. The leadership team at Candle has shriveled in recent months. Chief Financial Officer Salil Mehta has left, while Chief Development Officer Brent Weinstein now works at Hollywood talent shop Creative Artists Agency. A few years after going on a major shopping spree, Mayer and Staggs are trying to figure out what to do with the assets they acquired. They’ve been shopping the digital media company ATTN without success and are still sitting on some small production companies. The best asset they have is Moonbug, producer of the CoComelon children’s shows. Saudi Arabia inches into HollywoodElectronic Arts plans to go to private in a $55 billion leveraged buyout. Saudi Arabia’s Public Investment Fund will be the company’s largest investor, joining the private equity firm Silver Lake Management and Jared Kushner’s Affinity Partners. Electronic Arts, which produces The Sims and Apex Legends, has been seeking a buyer for a while. The company came close to selling to Comcast, but that deal fell apart. Enter Saudi Arabia, which has become one of the biggest investors in video games. (Side note: Whenever Saudi Arabia buys or invests in your media business, it’s probably a sign you couldn’t find many others at the terms you wanted.) The deal represents a big windfall for investors and a warning for employees, thousands of whom are likely to lose their jobs, Jason Schreier writes. Electronic Arts isn’t alone in doing business with the Saudis. Dozens of comedians performed at the Riyadh Comedy Festival, including many who lambasted the lack of free speech in the US while performing in a country not exactly known for free expression. The No. 1 album in the world is...The new Taylor Swift. It’s already setting records on Spotify even though Swift has done very little to promote the album. Ashley Carman explored her unique marketing strategy. Swift’s latest movie tied to the film is also the highest-grossing release of the weekend at the box office in the US and Canada. Swift is now worth more than $2 billion, per my colleagues. Deals, deals, deals - Baseball reported large jumps in TV viewership and attendance.
- A former partner at Goldman Sachs made the Tampa Bay Rays a winning baseball team but couldn’t get fans to care. Now a real estate billionaire is buying the team and trying anew.
- Disney is going to close Hulu eventually and fold it into Disney+.
- The FCC advanced plans that would make it easier for local TV stations to merge.
- Verizon is the latest buyer in EchoStar’s sale of wireless spectrum.
Two recent food books I have been enjoying: Slutty Cheff’s Tart and I’m Not Trying to Be Difficult, a memoir by restaurateur Drew Nieporent co-written by my friend Jamie Feldmar. | 
