An Open Letter to Perplexity
An Open Letter to Perplexity
No, Media Isn't Trying to Stop Technology. It Just Expects to Be Paid.
Wake up. It’s brAIn dump time! First, it’s this week’s “mAIn event” (my response to generative AI search Perplexity’s dismissive response to the entire media, entertainment and creative community; and boy do I have more to say about it.). Next, it’s the “showc-AI-se” — your GenAI video & podcast of the week. Finally, the “AI Litigation Tracker” (updates on key AI infringement cases, including News Corp’s new lawsuit v. Perplexity) brought to you by the law firm McKool Smith.
I. the “mAIn event: My Open Letter to Perplexity — No, Rights-Holders Aren’t Trying to Stop GenAI (They Just Expect to Be Paid).
Last week, I wrote about generative AI search “tool” Perplexity, not once but twice (a rare week of two posts). And for good reason. I posted my first Monday morning Perplexity analysis based on The New York Times’ recent demand to “cease and desist” from its alleged mass copyright infringement. And then a few hours later — after my newsletter — News Corp actually filed formal litigation against Perplexity for similar reasons (hence, my second further refined post on Wednesday).
Then, on Thursday, Perplexity responded. Not in the actual courts. Rather, in the court of public opinion. It posted its response on its official blog. You can read its full response here. Suffice it to say, it’s exactly what you would expect it to be. And, given the fundamental issues and widespread Silicon Valley attitude it represents — issues that are downright existential to every single player in the world of content and creativity — I wanted to address them here head on.
So Here’s My Response to Perplexity’s Blog Post:
Oh the dismissive nature and obfuscation of it all.
News Corp sued Perplexity (and The New York Times sent its cease-and-desist to the company) for copyright infringement — using their copyrighted content to build their own "products" and overall enterprise value without seeking consent from, and paying compensation to, those rights-holding media companies.
On Thursday, Perplexity responded THIS way in its blog (and I quote):
"About the Dow Jones lawsuit
On Monday, we got sued by the Wall Street Journal and the New York Post. We were disappointed and surprised to see this.
There are around three dozen lawsuits by media companies against generative AI tools. The common theme betrayed by those complaints collectively is that they wish this technology didn’t exist. They prefer to live in a world where publicly reported facts are owned by corporations, and no one can do anything with those publicly reported facts without paying a toll."
Now back to my thoughts (especially to the line I highlighted above).
How typical and rich it is for Perplexity to try to convince the world that every time rights-holders believe they should be asked first (and paid) for their content that's used as Tech's "food" to build Tech value, the reason is because copyright owners "wish this technology doesn't exist."
I've run several tech companies — am certainly not afraid of tech — and what Perplexity is saying in its response about rights-holders is precisely NOT the point. And Perplexity, its executive team, its blog-writing marketing/PR team, and its VC’s 100% know that. It's not about stopping technology. Not at all.
Want Exhibit A? Check out Principle #1 of the Human Artistry Campaign's 7 “Core Principles for Artificial Intelligence Applications” (the Artistry Campaign is an organization that represents over 150 media, music and entertainment companies, guilds and organizations). THIS is precisely what Principle #1 says (yes, it’s its first principle!): "1. Technology has long empowered human expression, and AI will be no different." And here’s Exhibit B. I prominently feature cool applications of GenAI every week in this newsletter. Check out my GenAI video and podcast of the Week below.
Not exactly wishing tech away, is it?
Everyone in the media and entertainment world fully understands that no one can stop technology anyhow. Rather, it's simply about "doing it right." And doing it right, Perplexity, just means that you should pay for the ingredients you use to create the massive value that you and your investors seek to build. In that regard, Perplexity is now seeking a new $500 million round of financing at an $8+ billion valuation.
By the way, how much of that $500 million is budgeted for the media copyright owners, whose content you are scraping in order to directly compete with them to be the new market "substitute"?
To be clear, those critical words of market "substitution" don't come from me (and I want to give proper attribution). As I wrote last week, they come directly from the U.S. Supreme Court in its recent Andy Warhol decision where it rejected “fair use” on market "substitution" grounds. As I further pointed out, just last month, the Second Circuit Court of Appeals — the same Court that decided the famous “Google Books” case (on which GenAI companies universally rely) — used those same words and Warhol’s foundational reasoning to reject fair use in "Hachette v. Internet Archive."
So nice try, Perplexity. But your blog post isn't convincing anyone.
Of course, and to be clear, Perplexity absolutely has the right to defend itself in court (although I think it will be a slog given recent precedent). But there’s a right and wrong way to do it. Perhaps it shouldn’t be so dismissive to an entire industry — that is comprised of individual writers, authors, artists and creators (you know, real human beings) — all of whom have very good reason to be "concerned” that their life’s blood (their content and creativity) are being sucked into the great GenAI vortex to build billions and trillions of dollars of value (of which they are, for the most part, not yet sharing).
And Perplexity, I bet you would expect to be paid too if someone simply scraped up your tech without paying for it.
But the winds are changing. And the 40-ish litigations now winding their ways through the courts (many of which are featured in the “AI Litigation Tracker” below) are media’s necessary means to the ultimate end — which is to participate in some fair way in that massive value “unlock.” That’s all rights-holders want — and understandably expect. They don’t want to litigate. But they essentially have no choice if GenAI developers choose not to license their content.
So let’s value rights-holder core, essential contributions fairly and do some licensing deals. Respectively. Not dismissively. Because that’s where all this is going anyhow. We all know that. That’s what happened in all earlier tech revolutions like the internet — take YouTube, for example — in which massive infringement first ruled the day. Ultimately, after the internet’s initial great IP pain and litigation waste, NorCal and SoCal came together to find solutions so that the industry could move forward constructively (not everyone agrees the economics are split fairly, of course, but at least we have licensing systems in place).
Constructive Collaboration. Fair Compensation. THAT is the answer.
HIGHLY RECOMMENDED FURTHER READING: Read this from The Information: “Legal Threats, Google Competition Loom Over Perplexity’s ‘Newbie CEO.’”
II. The Showc-AI-se
(1) GenAI Video of the Week
Here is award-winning GenAI filmmaker Paul Trillo’s video of the week — titled, “Money Talks” — created with Runway’s new “Act-One” tool, which can create compelling animations using video and voice performances as inputs. Just press play to watch it.
(2) GenAI Podcast of the Week
This week, my synthetic co-hosts discuss my “Open Letter Response.” The discussion — generated by using Google’s NotebookLM — is informative, engaging, multi-layered (and more optimistic than you may think). I think you’ll get a lot out of it.
III. AI Litigation Case Tracker - Updates on Key AI Litigation (brought to you by McKool Smith)
Partner Avery Williams and the team at McKool Smith (recently named “Plaintiff IP Firm of the Year”) lay out the facts - and latest critical developments - via this link to the “AI Litigation Tracker”. You’ll get everything you need for each of the cases listed below. So much you need to know (no matter what role you play). So little time. We do the work so you can don’t have to!
Here’s the central theme in all these cases: GenAI developers need access to (and use of) the world of content for training their AI models. But rights-holders — whose content they scrape — believe (as do I) that tech companies must seek their consent and pay them compensation when they do. When they don’t, they increasingly find themselves in court.
(1) Dow Jones, et al. v. Perplexity AI
(2) The New York Times v. Microsoft & OpenAI
(3) Sarah Silverman v. OpenAI (class action)
(4) Sarah Silverman, et al. v. Meta (class action)
(5) UMG Recordings v. Suno
(6) UMG Recordings v. Uncharted Labs (d/b/a Udio)
(7) Getty Images v. Stability AI and Midjourney
(8) Universal Music Group, et al. v. Anthropic
(9) Sarah Anderson v. Stability AI
(10) Authors Guild et al. v. OpenAI
(11) The Center for Investigative Reporting v. OpenAI
NOTE: Go to the “AI Litigation Tracker” tab at the top of “the brAIn” website for the full discussions and analyses of these and other key generative AI/media litigations. And reach out to me, Peter Csathy (peter@creativemedia.biz), if you would like to be connected to McKool Smith) to discuss these and other legal and litigation issues. I’ll make the introduction.
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