Hank's IP Brew — Issue #29

Howdy, y'all.

This week: the world's biggest music company just figured out how to pay artists when fans remix their songs — and the Senate spent an all-night session trying, and failing, to pass the most consequential college sports legislation in years. One story about what a licensing framework looks like when it actually works. One about what happens when it can't get to 60 votes.

Let's get into it.

For the past decade, the music industry's relationship with fan creativity has been a legal mess. Fans remix songs. Platforms pull them down. Sometimes nothing happens. Occasionally someone gets sued. Nobody makes money, and the artist whose work inspired the remix gets nothing.

On August 19, Universal Music Group and Hook — an AI-powered music remixing app — announced a licensing partnership that tries to solve that problem. It's worth understanding in detail, because if it works, it's the template other industries will copy.

What Hook actually does

Hook launched in 2024 with a deliberate philosophy: no AI music generation. While Suno and Udio were building tools that generate new songs from scratch, Hook built something different — a platform where fans apply filters and effects to existing licensed recordings to create short "Hooks," minute-long remixed clips tied to their own videos, shareable to Instagram and TikTok.

The distinction matters legally and commercially. Hook isn't creating new music that competes with the original. It's enabling fans to remix and express fandom through existing music — a use case that has always existed, has always been legally murky, and has never had a workable revenue model for artists.

Under the UMG deal, fans can now remix tracks from Republic Records, Capitol Records, Virgin Music Group, and other UMG sublabels — a catalog that includes artists like Kendrick Lamar, the Weeknd, and Lil Wayne. When a fan creates a Hook and shares it, the artist retains ownership of the underlying track and earns money from that use.

Two years of negotiation to get here

This deal didn't happen quickly. UMG spent two years working with Hook to shape the product before agreeing to license its catalog. That's not unusual — it's what licensing negotiations with major rights holders actually look like. UMG's chief digital officer Michael Nash described the process as making sure Hook had "purpose-built technology" targeting specific, demonstrated fan behavior in the social sphere.

Hook CEO Gaurav Sharma described it as a parallel to the early days of streaming: "All the things that we had to do in figuring out streaming back in 2010 is effectively what we spent the last two years working on with UMG."

That's a useful frame. Streaming took years of painful negotiation to create a model where labels, artists, and platforms all got paid. The fan-creativity space is going through the same process now. Hook/UMG is one early data point. Disney/TikTok — which we covered in Issue 27 — is another. The question of how fan creative work gets licensed, compensated, and controlled is being answered deal by deal.

What artists control — and what they don't

Under the Hook model, artists retain full ownership of their recordings. Hook can't use a song without the artist opting in through their label. The artist earns revenue when fans use their music. And the platform is built to surface fan creativity back to the artist's community, not bury it.

That's meaningfully different from platforms that claim broad licenses to user-generated content under terms of service, or AI companies that ingested catalogs without permission and later settled. Hook's architecture — licensed at the source, revenue-sharing built in, artist control preserved — is what a legitimate fan-creativity framework looks like.

Former Warner Music CEO Edgar Bronfman Jr., a Hook investor, put the contrast bluntly: "That, I think, is very different than what I would call sort of generative AI or AI slop, which is just music that's been written, and some AI algorithm changes it up. I don't think that's a lasting phenomenon. I think people care about artists."

What this means for creators outside music

The Hook/UMG model is music-specific, but the structure it demonstrates applies to any creator whose work inspires fan creativity — authors, visual artists, game developers, podcasters.

The framework: identify the specific fan use case that's happening anyway (remixing, fan fiction, fan art, mashups). Build or license a platform purpose-built for that use case. Negotiate a license with the rights holder that preserves ownership, enables revenue sharing, and gives the artist control over opt-in and opt-out. Let the fan creativity generate engagement and revenue instead of cease-and-desist letters.

That's not easy to execute. It took Hook two years and the backing of Khosla Ventures, Point72, and Edgar Bronfman Jr. to get UMG to the table. But the deal exists. The model works. The question for other rights holders is whether they build their own version or watch someone else build it first.

At approximately 2:30 a.m. on the Saturday before Congress's August recess, Senate leadership punted on the Protect College Sports Act. Not because the bill was dead — it had White House support, eight cosponsors, and Cruz working the phones until 3 a.m. — but because it couldn't get to 60 votes by the time everyone needed to leave for summer break.

As part of the agreement to adjourn, the PCSA was given a guaranteed floor vote between September 15 and September 23. That window is now the bill's best and possibly only shot.

Why it stalled

The PCSA had more opposition than its sponsors let on publicly. Three distinct groups created problems in the final days:

The Congressional Black Caucus and AFL-CIO mounted opposition from the Democratic side, raising concerns about athlete labor rights and whether the bill's framework adequately protects athletes — particularly from schools and programs that have historically exploited them.

Republican senators raised last-minute objections over transgender athlete provisions, with three senators filing an amendment specifically targeting whether the bill would override state laws restricting transgender athletes from competing in women's sports. That amendment created a procedural problem that couldn't be resolved before recess.

The Big Ten and SEC have been opposing the bill throughout, concerned that the PCSA's cap structure — including a new $22.5 million retention fund above the House settlement's $20.5 million school revenue-sharing cap — doesn't actually prevent a spending arms race and may override existing revenue-sharing arrangements their schools prefer.

Trump publicly pressured the Senate on Truth Social Friday afternoon: "The Protect College Sports Act is a great bill, and the Senate will hopefully stay in D.C. until it passes. Stop grandstanding, and try getting this done." It didn't move votes.

What's actually in the bill

For anyone following NIL who hasn't tracked the PCSA closely: the bill does several things. It gives the House v. NCAA settlement structure explicit federal statutory backing, which would insulate the current revenue-sharing and NIL framework from future antitrust challenges. It imposes caps on what schools can pay athletes directly. It includes the $22.5 million retention fund — additional school spending above the revenue-sharing cap, aimed at keeping stars from transferring. It has a 9-year sunset, meaning Congress would need to revisit it before 2035.

What it doesn't do: resolve the question of what happens to third-party NIL deals — the six- and seven-figure sponsorship arrangements we covered in Issue 28 that exist outside the school-to-athlete revenue-sharing framework. Those deals remain subject only to the College Sports Commission's "valid business purpose" review for associated entities, and entirely unregulated for independent third-party brands.

Why September is the last realistic window

Senate Commerce chairman Ted Cruz said at 3 a.m. the morning of recess: "When the Senate returns in September, the Protect College Sports Act will be one of our first orders of business, having locked in a vote." Senator Cantwell echoed: "The challenges facing student athletes and universities aren't going away."

But the calendar is brutal. Congress returns in September with midterm elections closing in fast. Anything that doesn't pass the Senate in the September 15-23 window either dies or gets squeezed into a lame-duck session — historically the graveyard for complex legislation without clear majority support in both chambers.

Even if the Senate passes the PCSA in September, the House is another obstacle. House majority leader Steve Scalise has publicly criticized the legislation. The House would need to pass a reconciled version before the end of the year.

What brands and programs should do right now

If you have NIL deals structured under current rules — whether as a brand, a school-affiliated entity, or an athlete's representative — September is the window to understand exactly how the PCSA would affect your existing contracts if it passes.

The cap provisions and the retention fund structure create specific questions for long-term deals: How are payments counted against the cap? What happens to multi-year commitments that exceed new limits? Does the federal framework preempt state NIL statutes in states like Louisiana, which passed its own agent licensing law this year?

None of those questions have answers yet, because the bill hasn't passed. But they will need answers fast if it does. September 15 is three weeks away.

See you next time,

Hank

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About Hank's IP Brew

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