Tag: Microsoft

@DavidSacks Isn’t a Neutral Observer—He’s an Architect of the AI Circular-Investment Maze

When White House AI Czar David Sacks tweets confidently that “there will be no federal bailout for AI” because “five major frontier model companies” will simply replace each other, he is not speaking as a neutral observer. He is speaking as a venture capitalist with overlapping financial ties to the very AI companies now engaged in the most circular investment structure Silicon Valley has engineered since the dot-com bubble—but on a scale measured not in millions or even billions, but in trillions.

Sacks is a PayPal alumnus turned political-tech kingmaker who has positioned himself at the intersection of public policy and private AI investment. His recent stint as a Special Government Employee to the federal government raised eyebrows precisely because of this dual role. Yet he now frames the AI sector as a robust ecosystem that can absorb firm-level failure without systemic consequence.

The numbers say otherwise. The diagram circulating in the X-thread exposes the real structure: mutually dependent investments tied together through cross-equity stakes, GPU pre-purchases, cloud-compute lock-ins, and stock-option-backed revenue games. So Microsoft invests in OpenAI; OpenAI pays Microsoft for cloud resources; Microsoft books the revenue and inflates its stake OpenAI. Nvidia invests in OpenAI; OpenAI buys tens of billions in Nvidia chips; Nvidia’s valuation inflates; and that valuation becomes the collateral propping up the entire sector. Oracle buys Nvidia chips; OpenAI signs a $300 billion cloud deal with Oracle; Oracle books the upside. Every player’s “growth” relies on every other player’s spending.

This is not competition. It is a closed liquidity loop. And it’s a repeat of the dot-bomb “carriage” deals that contributed to the stock market crash in 2000.

And underlying all of it is the real endgame: a frantic rush to secure taxpayer-funded backstops—through federal energy deals, subsidized data-center access, CHIPS-style grants, or Department of Energy land leases—to pay for the staggering infrastructure costs required to keep this circularity spinning. The singularity may be speculative, but the push for a public subsidy to sustain it is very real.

Call it what it is: an industry searching for a government-sized safety net while insisting it doesn’t need one.

In the meantime, the circular investing game serves another purpose: it manufactures sky-high paper valuations that can be recycled into legal war chests. Those inflated asset values are now being used to bankroll litigation and lobbying campaigns aimed at rewriting copyright, fair use, and publicity law so that AI firms can keep strip-mining culture without paying for it.

The same feedback loop that props up their stock prices is funding the effort to devalue the work of every writer, musician, actor, and visual artist on the planet—and to lock that extraction in as a permanent feature of the digital economy.

by Trichordist

Search is Ripping Us Off Again, this time for AI

By Chris Castle

In case you think that infringement of copyrights in AI training happens only to rock stars, photographers, record companies or movie studios, let me give you a personal anecdote that might cause you to reconsider. I asked Bing’s Copilot AI tool to list the deal points in a record producer agreement, and this is what I got back:

Copilot

Certainly! When negotiating a producer agreement, several key points should be considered. Here are some common negotiation points from the artist’s perspective:

  1. Scope of Engagement:
    1. The producer is generally engaged for one album project at a time.
    2. Clarify the scope of work, including the number of songs or recordings to be produced.
  2. Budget and Compensation:
    1. Determine the budget for the project (e.g., $10,000 in your case).
    2. Agree on the producer’s compensation, which may include an upfront fee, points on sales, or a combination.
  3. Ownership and Rights:
    1. Address ownership of the master recordings:
      1. Will the artist own and control the masters?
      2. Does the producer retain any rights?
  4. Credits and Royalties:
    1. Specify how the producer will be credited on releases.
    2. Discuss any royalties or backend points for the producer.
  5. Recording Schedule:
    1. Set a timeline for recording sessions.
    2. Define the two-week period for your project.
  6. Logistics:
    1. Determine where the recordings will take place.
    2. Outline the artist’s approval process.
    3. Define the producer’s deliverables.
  7. Termination Clause:
    1. Include provisions for termination if either party breaches the agreement.
    2. Address payment for work completed up to that point.

Remember that each negotiation is unique, and it’s essential to tailor the agreement to your specific needs and circumstances. Legal advice is recommended to ensure compliance with local laws and industry standards1 3 4.

Source(s)

1. An Artist’s Guide to Negotiating Record Producer Agreements – Medium

2. Negotiating a Music Producer Agreement: 7 Key Issues

3. 5 Things to Look for in a Music Producer Agreement – Lawyer Drummer

4. How to Negotiate: Steps, Phrases & Tips to Win the Deal – Selling Signals

Notice that Copilot lists “Source(s)” and that source #1 is an article from the Medium website.

My article.

I’ve written a number of articles about negotiating producer agreements and I can categorically say I haven’t given permission or been asked to give permission for any of those articles to be scraped and used to train AI. So how did it come to be in Copilot’s training materials? 

My guess is that Medium (and probably a lot of other sites) were crawled by Bing’s spider and that copies of Medium pages were stored in Bing’s (or Microsoft’s) data centers. When Microsoft launched its Copilot AI tool, one could imagine that the temptation would have been strong to use those copies as part of the training tools for Copilot. In fact, the Verge reports that “companies around the web are using your site and its data to build massive sets of training data, in order to build models and products that may not acknowledge your existence at all.” Can you say Section 230 or DMCA? Maybe there will be a question at the April 11 House Energy & Commerce hearing on Section 230.

So Google-style “innovation” has a self-destructive flavor consistent with their oikophobic capitalism. Greater Silicon Valley’s view of culture in general and copyright in particular is as sources of wealth extracted by destruction–you know, creative destruction, permissionless innovation, etc. (It’s no wonder Google was inexorably attracted to defense contracting despite all the “don’t be evil” hoorah. After all, what creates massive wealth faster than convincing governments to pay big money to blow things up that must be replaced by ever more big money to blow even more things up.)

Are you surprised then that two of the biggest operators in the AI space are the search engine operators Google and Microsoft? This is another example of how Big Tech helps itself to your data and work product without you even knowing it’s happening. So now what? I now know I’m being ripped off, and I’m wondering if Medium is in on it.

The Verge tells us:

The ability to download, store, organize, and query the modern internet gives any company or developer something like the world’s accumulated knowledge to work with. In the last year or so, the rise of AI products like ChatGPT, and the large language models underlying them, have made high-quality training data one of the internet’s most valuable commodities. That has caused internet providers of all sorts to reconsider the value of the data on their servers, and rethink who gets access to what. 

Ya think?

by Trichordist Editor

Xbox Music : Microsoft to Pay The Most of Any Music Streaming Service?

This could get interesting. Digital Music News reports “The Xbox Music streaming service is venturing into iOS and Android platforms, as well as free internet streaming, with newly adorned with apps and features. The Web service will provide on-demand access to 30 million songs, with an ad-free subscription or ad-supported free use.”

What makes this even more interesting is that Microsoft appears to be paying more than any other streaming service that we know of  (we don’t know what Itunes Radio is paying yet).

Faza at The Cynical Musician wrote this:

A Quickie: XBox Music Royalties

Since this is streaming money, there’s not a lot of it, but the rate is absolutely astounding: the latest statement pegs a stream at 3.6 cents. Yep, you read that right: several cents a pop. Traditionally, I’ll do a quick stream-to-download calculation which works out at 18 XBox Music streams to one iTunes download (both numbers for songs to which we own the entirety of rights, making CD Baby the only middle-man – they take a commission of 9% I believe).

It’s a sign of the times when we get excited by a per stream rate of 3.6 cents…

by Trichordist Editor