In September 2025, the music industry headlines were dominated not by a pop star or a rock band, but by Xania Monet, a virtual R&B artist created using the AI platform Suno. Reports from Billboard and Forbes confirmed that the human creator behind the project, Telisha “Nikki” Jones, signed a record deal with Hallwood Media worth up to $3 million.
For entertainment lawyers, the headline is flashy, but the legal reality is a headache. If a human creator contributes lyrics and prompts, but an AI generates the melody, harmony, and vocal performance, what “economic rights” actually exist to support a multi-million dollar transaction?
It recalls the viral wisdom of rapper and reality star Sukihana, who famously declared: "I am not a musician... I make music." While she was speaking to her own brand of celebrity, she inadvertently defined the current crisis in AI copyright. Suno prompters are certainly making music, often with a single click, but does the law consider them musicians capable of authorship?
When copyright status is murky, the deal doesn't stop; it just shifts from a conveyance of property to an exercise in risk allocation. This article examines the bundle of rights in AI-generated music under Canadian law and how transactional counsel can navigate the uncertainty using specific contracting strategies.
The Rights Stack: What is Actually Being Bought?
In Canadian copyright practice, “economic rights” are not a monolith. They are a bundle of exclusive rights—reproduction, publication, performance, and communication to the public—that attach to specific subject matter. In the Xania Monet scenario, we must unbundle the track into four distinct layers:
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Lyrics (Literary Work): Jones reportedly writes the lyrics based on her own poetry. This is conventional human authorship. She owns the copyright, and she can assign or license it.
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Musical Composition (Musical Work): This is where the ice thins. If the melody and arrangement are generated by Suno based on text prompts, the "skill and judgment" required for originality under CCH Canadian Ltd. v. Law Society of Upper Canada becomes a difficult argument. Contrast this with the "Tilly Norwood" music video experiment I discussed in my earlier column. In that project, while the visuals were synthetic, I wrote the underlying melody and lyrics myself, using AI only for instrumentation and production. Because the core musical work, the melody, originated from a human mind, the copyright claim in that composition is robust. Xania Monet, however, relies on Suno for the melody, leaving the composition on shaky ground. While the U.S. Copyright Office has issued strict guidance rejecting protection for such non-human authorship, Canada’s position remains an open policy question.
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Sound Recording (The “Master”): Section 18 of the Copyright Act grants copyright to the “maker” of the sound recording. If the AI generates the audio file, who is the maker? The human prompter? The software developer? Or is there no maker at all?
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Performer’s Rights: Section 15 grants copyright in a performer’s performance. If the vocal is synthetic, there is no human performer to remunerate.
If the composition and master lack copyright protection due to a lack of human authorship, they effectively fall into the public domain. This creates a "chain of title" crisis: a label cannot buy exclusive rights that do not exist.
Drafting for Uncertainty: The "Knowledge and Belief" Trap
If Hallwood Media contracts with Jones on the assumption she has rights, but a court later rules the AI-generated elements are public domain, is the label still obligated to pay her advances and royalties?
The answer lies in the representations and warranties. A standard label agreement requires the artist to warrant that they are the sole owner of the rights and that the materials do not infringe third-party rights.
However, sophisticated counsel for an AI creator will likely push back against absolute warranties. Absolute representations of non-infringement or validity are often resisted because it is virtually impossible to guarantee them in complex rights landscapes. Instead, counsel may qualify the warranty to the "best of the artist’s knowledge, information, and belief."
This creates a specific risk profile. If Jones warrants only that she believes she owns the rights, and it later turns out she does not (because the law evolves to exclude AI works), she has not necessarily breached the contract. She made a true statement about her belief at the time of signing. Without a breach of warranty, the label may find itself contractually obligated to continue paying royalties for a non-exclusive asset, unless the contract provides a specific off-ramp.
The "No Set-Off" Pivot
If a dispute arises regarding the validity of the copyright, the label’s first instinct is often to suspend payments. However, licensors (and artists) often negotiate clauses prohibiting the licensee from withholding royalties as a set-off against claims.
It is prudent for licensors to include an express clause prohibiting the licensee from withholding royalties during a dispute. If such a clause exists, and the warranty was qualified by "knowledge and belief," the label may be boxed in: unable to claim breach, and unable to stop paying, even while the "exclusive" asset they bought is being freely copied by competitors.
Severability: A Double-Edged Sword
Standard boilerplate includes a "severability" clause, stating that if one provision is held invalid, the rest of the contract stands. In an AI deal, this can be dangerous.
If the clause assigning the copyright in the AI-generated music is deemed invalid (because the right doesn't exist), a standard severability clause might excise that assignment but leave the payment obligations intact. The label is left paying for a deal where the core consideration has evaporated.
To mitigate this, counsel should draft severability clauses carefully. Parties should consider a provision stating that if a material term (such as the assignment of the master) is found unenforceable, the party benefiting from that term has the right to terminate the agreement entirely.
Practical Takeaways for Entertainment Counsel
Until the courts or Parliament clarify the status of AI authorship, economic rights in these deals are manufactured through contract, not statute.
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Distinguish the "Sukihana" Prompter from the Composer: When diligence is performed on the catalogue, determine the source of the melody. If the artist wrote the melody (as with my Tilly Norwood project), you are buying a copyright. If the artist merely prompted for a "sad R&B song" and the AI wrote the melody, you are buying a risk.
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Define "Knowledge": If you accept a warranty based on "knowledge and belief," define what that means. Does it imply that the artist has conducted reasonable due diligence or consulted legal counsel regarding AI copyright status?
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Specific Termination Rights: Do not rely on general breach of warranty. Include specific termination rights if the underlying copyright in the AI output is ruled unenforceable or public domain.
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Enforceable Substitutes: If copyright is shaky, pivot to what you can protect. Trademark rights in the artist name (Xania Monet), rights of publicity, and access to the user accounts that generate the content are enforceable assets that can support a deal even if the melody is free for all.
The Xania Monet deal proves that the market moves faster than the law. For now, the economic rights of AI creators exist primarily in the fine print of their contracts.
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