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On Wednesday (Oct. 29), Universal Music Group came to a landmark agreement with AI music company Udio. The deal ends UMG’s involvement in the lawsuit against Udio, which it filed last summer with the two other major music companies — Sony Music and Warner Music Group. In the lawsuit, the labels accused Udio of infringing on its copyrighted sound recordings to train its AI music model, which can generate realistic songs in seconds.

Wednesday’s deal went beyond a “compensatory” legal settlement for UMG and Udio, as stated in the press release; it also provides licensing agreements for UMG’s recorded music and publishing assets, creating a new revenue stream for the company and its signees. Participating UMG artists and songwriters will be rewarded for both the training process of the AI model and for its outputs, according to a source close to the deal.

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The deal also means that Udio will significantly revamp its existing business. In 2026, Udio and UMG plan to work together to launch a new collaborative platform that will combine music creation with streaming capabilities. According to the press release, the new platform will be “powered by new cutting-edge generative AI technology that will be trained on authorized and licensed music. The new subscription service will transform the user engagement experience, creating a licensed and protected environment to customize, stream and share music responsibly, on the Udio platform.”

The source close to the deal says that Udio users will not be able to export works made within Udio’s forthcoming platform. Instead, they can enjoy their creations within the service, which will be geared towards superfans.

To talk about the new deal, along with Udio’s plans for 2026, Billboard got on the phone with Udio CEO Andrew Sanchez minutes after the deal was announced. You can read the Q&A below.

What was the turning point in negotiations with UMG when you felt like both companies could actually become partners?

Sanchez: We share a really similar vision about what we want to do. The thing that I think is going to be the most extraordinary thing for the music industry in general is when people can do things with their favorite artists and their favorite music. Actually, I think that we had agreements with UMG across the board on this. We said, “Look, we want the human to be centered in this. We want the AI to empower human creators. And we also think, by the way, that that’s actually going to really expand the market.” There actually was a lot of — we had a philosophical alignment on that throughout the whole process. And then the question was, it’s incredibly complex. It’s not something [where] we can pull something off the shelf. We had to actually walk through and figure out how it would all work, and that’s just based on time.

How long did your negotiations with UMG last?

Many months.

One of the things that I thought was really interesting in the press release about this deal is that it notes that Udio will be a “creation, consumption and streaming” destination. Right now, I think of Udio as a place for creation. Can you provide more insight about your vision for this forthcoming 2026 platform with UMG that will do it all?

You’re a keen reader. We believe there’s an incredibly exciting market that combines creation and consumption, both of human-generated songs and of AI-generated songs. We are building a platform that is going to allow you to engage in both of those activities, because that’s where we think the market and users want to go. By the way, we also think that’s the way that artists are going to benefit from this enormously. Because if you can go and you can do stuff with your favorite artists, make a song in their style or remix [a] favorite song, you’re also going to listen to their own music. And we want to be able to meet the users and provide them one place to do that.

It sounds like some of the capabilities you’ll provide with this new platform include mash-ups, remixes and speed controls of existing music. There’s already a few things on the market that do these sorts of things — MashApp, Hook and even Spotify sounds like it’s working on tools like that. How will you make Udio stand out from the pack?

There’s a couple of ways. It’s not just remixing and mashing up. It’s also creating in the style of artists with their opt-in. There’s a huge amount of desire for this, and we know that when we do this the right way with the artist, a huge amount of value will be made for the fan and revenue for the artist.

If I were to say I want to make a pop ballad in the style of Taylor Swift, I can now do that because it’s all licensed?

Well, I don’t want to get specific with artists. It’s their choice, but yeah, in the new service, you would be able to do that, and you’d be able to make extraordinary music. I mean, our model is already really powerful. You can imagine what it’s like when you get to do it directly with the artist’s input and their voice and style, and then the artist gets to benefit from that in multiple ways. They get the financial upside from it. They can increase their brand. And the user gets to go deeper in their connection with you as a fan.

Can users export what they make in Udio to streaming services now?

Not now. That’s an important component of this deal. As we’re entering this transition period, when we’re building out our new models and functionality, you’re not able to have songs leave the platform.

Sony and Warner still have active lawsuits against Udio. Are you confident that they will come to the table now that you’ve reached a deal with UMG?

This is something I need to pass on answering.

There are three parts to this. You have your “compensatory” deal with UMG that settles the lawsuit. Then you also have licenses with UMG on the publishing and recorded music side for this future Udio platform. Does this first part mean you are now retroactively paying UMG for the licensing of their recordings for training data?

To be honest, I think I’d be a little bit over my skis on this, and there’s a lot of legal complexity around that. I don’t think I’m in a position to actually speak about that directly.

Now that you have publishing and recorded music licenses in place with UMG, how does the process of compensating participating artists work? Are you doing a system of attribution or digital proxies for payment?

I wish I could give more details about this right now, but it’s something that we have a clear plan for. This is a trade secret for the moment.

Given this past history with this lawsuit, I imagine that a number of artists will be hesitant about opting in and working with your team. How do you plan to reassure UMG artists who might be hesitant but are interested in diving into AI?

So I think the way to do this is to say you have control, right? We’re very clear about this: If you want to participate, that’s great. If you’re unsure about participating, call me, I’ll sit down with you, and we will talk about it. Call Universal. They’ve been working and thinking about this alongside us. We’ve built and invested an absolutely enormous amount into controls. Controls over how artists’ songs can be used, how their styles can be used, really granular controls. And I think that the way for artists to become comfortable with this is to just talk to me or anyone on the team, and we can walk them through what’s possible.

One of the things that you’ll see is we’re going to launch with a set of features that has a spectrum of freedom that the artist can control. There are some features that will be available to users that will be more restrictive in what they can do with their artists or their songs. And then there will be others that are more permissive. The whole point of it is not only education but just meeting artists at the levels they’re comfortable with.

I think this is something that, when done right, can bring an enormous amount of interest and fan engagement. By the way, data is a huge thing for artists. So imagine that you’re an artist, you’re a hip-hop artist, people are on the platform, and 60% or 70% of them are remixing your songs or using your style in a country song. That’s amazing information that we will provide artists in the back end. They’re going to have this new insight into what people like and want. And I also hope that will inform their own music making.

Interesting. So it sounds like artists aren’t just doing a blanket opt-in here. It’s more granular, and artists can pick and choose what they want to say yes to?

One hundred percent. I also think what we’ll see is, artists at different points in their career are going to also have different views on this — when they’re trying to break, and they want to get their name out there, you know, versus when they’re at the peak of their career. We are ready to learn about that, and we’ll meet them where they’re at.

Since this is a destination for creation and streaming, it feels like an interactive product. Do you have any plans to integrate social features into this, too?

Yeah, for sure. I think that we want to build a community of superfans around creation. As we say internally, it’s connection through creation — whether that’s with artists or that connection with other music fans. We want to lean into that. I think it’s going to be a huge asset for artists and fandoms.

So this platform will now include artists’ voice models, correct?

It’s going to involve all kinds of AI models, like a base model, and then we will have a specific…it’s hard to describe. The best way to explain it, [is it] will have sort of like flavors of the model that will be specific to particular styles or artists or genres. And this, again, provides an enormous amount of control.

Who is your ideal user base for this, since it’s a departure from what you’re doing right now?

I think our ideal user is a passionate music fan who maybe hasn’t created yet, but has the impulse to do so. And if they’re given tools, or they’re given experiences that are straightforward, and they’re given a community that they can engage with, they’re going to want to go deeper. I think that people are going to create songs, or there’ll be songs for you made by people in the communities that you love. I think it’ll be an interesting combination of creation and consumption. I think it goes towards people who are just deep music lovers, who want to go further than is possible today, further than is possible on any of the normal forms of music consumption that we have right now.

Now that Udio is moving forward with this partnership with UMG, I’m wondering, how do you feel this deal can help differentiate the direction that Udio is going in versus Suno, since so many people have lumped the two companies together for so long?

I think that we’re clearly building into a totally new space. I mean, what I’ve described to you isn’t even a question of Udio versus other players. Today, we are breaking new ground on a market that combines new forms of AI and artist interaction — creation and consumption. We’re making a new market here, which we think is an enormous one. I think that we’re already incredibly differentiated just today, just by saying all of this.

Anything else to add?

Partnership is absolutely vital to doing this. This has to be done with artists and songwriters and rights holders, and we are super thrilled about this announcement today, and we want to do this with other artists across the board. So we’re ready to build alongside the entire user community.