Blueprint 34: Hollywood's AI Truce with ByteDance

Reid MercerWelcome back to Blueprint. I'm Reid.

GrantAnd I'm Grant. And man, do we have a strange one for you today.

Reid MercerOkay, so get this. A viral fake fight video-

GrantWow.

Reid Mercer-of Tom Cruise and Brad Pitt just pushed the Motion Picture Association into its first ever AI agreement with ByteDance.

GrantWait, an actual signed deal?

Reid MercerA real memorandum. Variety, Deadline, and The Hollywood Reporter all had it Monday.

GrantAnd yet nobody's talking about what it leaves out.

Reid MercerWhich is where you come in.

GrantIt reads like buying a car on a handshake instead of paperwork. Sounds fine until-

Reid MercerMm-hmm.

Grant-the title's still in someone else's name.

Reid MercerThat's your world, Grant, but training data's still a mess on this one too.

GrantWe're also getting into why the MPA didn't just sue the way Disney and Universal did with Midjourney.

Reid MercerAnd how this whole thing lines up or doesn't with ByteDance's new TikTok joint venture here in the States.

GrantPlus the money. Disney got equity and a Sora license out of OpenAI. ByteDance's deal? Not a dollar mentioned.

Reid MercerAnd that gap, who actually gets paid, is gonna come up a lot today.

GrantSo Reid, where do you wanna start?

Reid MercerRight where it started, with Tom Cruise throwing a punch that never happened. So you remember that clip, Tom Cruise throwing hands with Brad Pitt? Fully fake, fully AI, and it broke the internet.

GrantSix months ago. And that one video is why Hollywood now has a signed agreement with ByteDance.

Reid MercerMonday, August seventeenth, the MPA and ByteDance sign a Memorandum of Understanding covering Seedance, the video model, and Seedream, the image model.

GrantMemorandum of Understanding-

Reid MercerMm-hmm.

Grant-not a contract. That word choice is doing a lot of work.

Reid MercerHere's what the press release buried. Back in February, Deadline reported the MPA sent a cease and desist accusing ByteDance of ignoring established copyright law on a massive scale.

GrantMassive scale. That's not soft language.

Reid MercerNo, and The Hollywood Reporter's version of this six months later reads a lot more like constructive engagement than confrontation.

GrantThat's the tell for me. You don't go from cease and desist to a handshake-

Reid MercerRight.

Grant-unless litigation started looking like the worst bet.

Reid MercerFollow the money. ByteDance needs the US market calm, not stacked with studio lawsuits.

GrantFine, but what does it actually cover? Guardrails sound great until you read where they apply.

Reid MercerVariety's reporting has the framework spanning the full suite: TikTok, the TikTok USDS joint venture, CapCut, Dreamina.

GrantThat's the whole footprint in one sweep.

Reid MercerAnd the MPA is pointing to CapCut two point five and CapCut five point oh Pro as proof the guardrails already work.

GrantProof or demo they picked because it looks good in a press release?

Reid MercerMaybe. Selective footage sells better than a full audit.

GrantI'm reading this like a term sheet. MPA's side frames copyright as the foundation the whole business sits on. ByteDance's side calls it responsible innovation.

Reid MercerTwo different words for the same signature.

GrantOne's protecting an asset, the other's protecting a reputation.

Reid MercerAnd neither framing uses the word payment.

GrantRight. Protection isn't a license fee. Who actually gets paid when a Cruise likeness shows up versus who just gets blocked from using it?

Reid MercerA guardrail with no dollar attached is a very different deal than a licensing agreement.

GrantSo when a studio's IP turns up in a Sora clip anyway, does anyone get a check or just an apology?

Reid MercerBuilding on that gap, the money question isn't the only hole in this thing. TechCrunch reported Monday the deal only touches the output layer. Training data stays untouched.

GrantSo the actual claim from February that ByteDance trained on stolen footage, that's still just sitting out there.

Reid MercerExactly. The cease and desist was about training. The MOU is about outputs. Two different problems. One got solved.

GrantThat's like buying a used Ferrari, and the seller hands you a card that says he promises not to let anyone drive it badly. Nothing about what's actually under the hood.

Reid MercerRight. And nobody's published what's under this hood either. TechCrunch lays out the safeguards, face-blocking filters, copyrighted character detection, watermarks, C2PA content credentials, no technical specs attached to the MOU itself.

GrantSounds solid on paper, though.

Reid MercerSounds solid. Global Village Space cited red team testing showing likeness adjacent outputs are still slipping through.

GrantWow.

Reid MercerNot a photorealistic Tom Cruise. Close enough that a filter tuned for exact matches misses it.

GrantSo the gap is between what a filter blocks and what a patient prompt can talk its way around.

Reid MercerSame shape as the money problem. No disclosed audit rights. No disclosed penalty if ByteDance just stops complying next quarter.

GrantWhat's a promise worth with no mechanism to check it?

Reid MercerIn my world, it's worth exactly what happens the first time someone tests it. No enforcement clause, and this MOU is a press release with better lawyers attached.

GrantHarsh.

Reid MercerAccurate. Compare that to actually suing, which is the road Disney and Universal picked with Midjourney.

GrantWhich raises the obvious question everyone's dodging. If training is the real fight, why negotiate at all instead of dragging ByteDance into a courtroom?

Reid MercerThat's exactly where we go next. So why cut a deal with ByteDance instead of doing what Disney and Universal did to Midjourney, filing suit?

GrantBecause suing is slow, painfully slow.

Reid MercerDisney and Universal filed against Midjourney on June eleventh, twenty twenty-five in the Central District of California. Warner Bros joined in September. The cases got consolidated that November.

GrantAnd?

Reid MercerExpert disclosures don't even start until October fourteenth, twenty twenty-six. That's sixteen months just to get to the part where experts start arguing.

GrantMeanwhile, Seedance ships a new model every few weeks.

Reid MercerRight. The clock doesn't match the technology. The MOU ships guardrails in months. The lawsuit ships a ruling in years, plus appeals.

GrantBut speed costs you something. Litigation gets you statutory damages, up to a hundred and fifty thousand dollars per infringing item if the studios win, and it sets precedent that other studios can actually use.

Reid MercerAnd that's the trade, cash and a ruling later versus guardrails now.

GrantAnd here's what nobody's factoring in. Midjourney's lawyers are demanding the studio's handover their own internal AI usage.

Reid MercerWait, turning discovery back on the plaintiffs?

GrantExactly. A magistrate limited it to consumer-facing AI back in June, but Midjourney's fighting to blow that open. Training data, model weights, board decks.

Reid MercerSo if you sue, you'd better make sure your own AI budget can survive a subpoena.

GrantThat's the part studios don't put in a press release.

Reid MercerAnd this isn't even the first time the MPA skipped the courthouse. Variety reported the MPA tore into OpenAI Sora over exactly this kind of infringement, and OpenAI added guardrails without ever being sued.

GrantPublic pressure worked once already.

Reid MercerTwice now. Shame the company, get the fix, skip the docket.

GrantExcept shame isn't enforceable. A judgment is. You can't call your lawyer when a voluntary framework gets ignored.

Reid MercerWhich is the real bet here, that ByteDance keeps its word faster than a court could ever force it to.

GrantAnd that bet only holds up if somebody's actually watching the model, not just the memo.

Reid MercerWhich raises the real question, who's actually controlling what these things do in the first place? Shifting from courtrooms to corporate charts for a second because the ByteDance structure just changed under our feet.

GrantThe joint venture thing?

Reid MercerRight. TikTok US operations moved into a new entity, TikTok US DS, back on January twenty-second. ByteDance keeps nineteen point nine percent.

GrantMm-hmm.

Reid MercerOracle, Silver Lake, and MGX each hold fifteen percent.

GrantSo ByteDance isn't gone. It's just diluted.

Reid MercerAnd here's the part that matters for Seedance. IndexBox's reporting says ByteDance doesn't sell the recommendation algorithm to that US venture. It licenses it.

GrantSame shape as the MOU. Capacity stays in Beijing. Compliance sits downstream in whoever's holding the bag Stateside.

Reid MercerExactly the pattern. Control never crosses the border, only the paperwork does.

GrantSo when Seedance ships version three in some market where the MPA has zero lawyers on the ground-

Reid MercerThe framework doesn't travel with it. It's voluntary, remember. Voluntary means it only holds where somebody's watching. The models are global, remember. Seedance ships everywhere ByteDance wants it to. The agreement's voluntary, and voluntary things don't cross borders by default.

GrantSo it's a US handshake wrapped around a worldwide product, which is my actual question for studio counsel. Saturday night, the filter fails. Some fan account posts a deepfake trailer.

Reid MercerHmm.

GrantWho do you call?

Reid MercerThere's no hotline number anywhere in the MOU.

GrantRight. No SLA, no penalty clause or here's the number you dial. Just an assumption ByteDance handles it in-house.

Reid MercerAnd that's the same trust exercise as the licensing deal. You rely on the parent company's judgment instead of a contract you can enforce.

GrantA studio wouldn't sign a location deal without a certificate of insurance. This is bigger than a location deal, and there's no paperwork like that at all.

Reid MercerWhich brings us to the part everybody's actually going to fight about.

GrantMoney.

Reid MercerMoney.

GrantRight.

Reid MercerBecause control decides who captures value here, and right now, the value's flowing one direction.

GrantProtection's free. Payment's a separate conversation nobody's opened yet.

Reid MercerWhich is exactly the fight waiting on the other side of this. Who gets a check and who just gets a shield? Let's flip the frame. Look at what Disney got paid for the same kind of access.

GrantThe OpenAI deal.

Reid MercerRight. December, Disney takes a billion dollars in equity per The Hollywood Reporter, plus a three-year license on Sora covering more than two hundred characters.

GrantMm. But not the actors. Real likenesses and voices are carved out of that license.

Reid MercerCharacters, not performers. That's the split worth sitting with.

GrantThe WGA didn't sit with it quietly. They called it a sanctioning of theft of members' work.

Reid MercerStrong words for a check that attached.

GrantA check that goes to shareholders, not writers.

Reid MercerFair, but it proves the catalog has a price. ByteDance's MOU has zero dollars reported, no equity, no license fee.

GrantWhich is exactly the split screen. Protection with no payment on one side, payment with limited protection for performers on the other.

Reid MercerSAG-AFTRA drew its own line on that middle piece. Their four-year contract ratified in June only lets AI performers appear when it adds real significant value.

GrantA threshold the guild struck to get. Meanwhile, the corporate side signs an equity deal and calls it partnership.

Reid MercerI'd call it rights holders finally pricing what they own. Two years of wondering what the catalog was worth, and now there's a number.

GrantAnd the crew, the background actors, the mid-tier writers aren't anywhere in that number. They're the labor it was built on.

Reid MercerThat fight isn't settled, and it's about to run again.

GrantGoogle's next?

Reid MercerDisney already sent them a cease and desist in December. Same script, different studio. Building on that fight over payment, here's a pattern forming. Pressure campaign, cease and desist, quiet talks, output filters, silence on training data.

GrantAnd no admission of liability anywhere in the paper.

Reid MercerRight. Which means the next AI video model that touches Hollywood's catalog gets the same script, and that fight's already moving

GrantWait, you mean Disney and Google?

Reid MercerYeah. Back in December, Disney fired a cease and desist at Google alleging Gemini and its video tools trained on Frozen, Star Wars, the Marvel catalog without a license.

GrantSo we could be watching MOU number two build in real time.

Reid MercerThat's the bet. Deadline reported Google pulled dozens of AI-generated videos within days of the letter landing. That's the output layer fix happening before any formal deal exists.

GrantPressure works even without paper.

Reid MercerFor now. So here's what studio counsel should be asking Monday morning. Which of your vendors' contracts actually grant audit rights versus which ones just hand you a promise?

GrantRight. Big difference between the audit clause and a handshake you can't enforce.

Reid MercerHuge difference. Ask if the filter specs are documented anywhere you can inspect or if it's just a press release everyone's trusting on faith.

GrantAnd the paperwork won't tell you anything until the first failure.

Reid MercerExactly. Picture a clip that slips past whatever face filter ByteDance built into CapCut. Somebody's likeness, somebody's voice going viral again.

GrantThat's the moment this whole voluntary framework either holds or the MPA's lawyers stop drafting memos and start drafting complaints. One clip. That's what decides whether this was a real fix or just a press release with good timing.

Reid MercerAll right, so the big one today. Grant's line about buying a used Ferrari on a handshake. The seller promises he won't let anyone drive it badly. That's this MOU. Memorandum, not a contract. Deadline had the cease and desist back in February, and by August, it's a handshake instead of a lawsuit.

GrantRight. And nobody in the announcement says who gets paid when a likeness shows up. That's the gap.

Reid MercerSo here's the one takeaway. Speed bought goodwill, not enforceability. Watch what happens the first time a viral clip tests it.

GrantExactly. Compare that to Disney's paid OpenAI idea. Money talks louder than promises.

Reid MercerGot a take on this one? Email us, blueprint@heymat.com, or find us on social.

GrantAnd if this changed how you think about these deals, send it to a colleague.

Reid MercerNew episodes every Tuesday.

GrantThanks for spending this one with us.

Reid MercerSee you next week.