State Champ Radio Suno
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Suno and Warner Music Group (WMG) have signed a licensing agreement to forge “a new chapter in music creation,” as Suno CEO Mikey Shulman put it in a company blog post. The deal effectively settles WMG’s part of the $500 million copyright infringement lawsuit against Suno, which it filed alongside UMG and Sony Music last summer. (UMG and Sony Music’s part of the lawsuit is still ongoing).
The deal also includes Suno’s acquisition of the WMG-owned live music discovery platform Songkick, which will continue to run as-is. “The combination of Suno and Songkick will create new potential to deepen the artist-fan connection,” says a press release about the deal.
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As Suno’s blog post puts it, the licensing agreement with WMG “introduces new opportunities for artists and songwriters to get paid,” but it does not describe exactly how. It does, however, note that participating is optional for WMG artists and songwriters, who can “opt-in” for the use of their names, images, likenesses, voices and compositions to be used in AI-generated music as they wish. A press release about the deal also notes that it will “compensat[e] and protect artists, songwriters and the wider creative community.”
The blog post also states that the WMG partnership “unlocks a bigger richer Suno experience for you,” including “new, more robust features for creation, opportunities to collaborate and interact with some of the most talented musicians in the world.” It adds that the deal “preserves the magic of Suno and the way you’ve come to love creating with it.”
News of the agreement comes just weeks after Universal Music Group (UMG) forged a licensing deal with Udio, which was also sued by the majors in a near identical lawsuit. That deal resulted in Udio pivoting its service significantly, becoming more of a fan-engagement platform where users could play with UMG copyrights whose rights holders opted into the platform’s “walled garden” environment, rather than one where users can create and download AI-generated songs at the click of a button. WMG followed suit with a similar agreement on Nov. 19.
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The press release states that in 2026, Suno will make several changes to the platform, including launching new and improved licensed music-making models, but it is not pivoting away from its core offerings. When that new model rolls out, the release says that the current one will be “deprecated,” given that it is not licensed. “Moving forward, downloading audio will require a paid account. Suno will introduce download restrictions in certain scenarios: specifically in the future, songs made on the free tier will not be downloadable and will instead be playable and shareable,” the release adds. Paid users of Suno will also be limited in the number of downloads they can make each month; to unlock additional downloads, they will have to pay extra fees.
“This landmark pact with Suno is a victory for the creative community that benefits everyone,” said WMG CEO Robert Kyncl in a statement. “With Suno rapidly scaling, both in users and monetization, we’ve seized this opportunity to shape models that expand revenue and deliver new fan experiences. AI becomes pro-artist when it adheres to our principles: committing to licensed models, reflecting the value of music on and off platform, and providing artists and songwriters with an opt-in for the use of their name, image, likeness, voice and compositions in new AI songs.”
Suno CEO Shulman added: “Our partnership with Warner Music unlocks a bigger, richer Suno experience for music lovers, and accelerates our mission to change the place of music in the world by making it more valuable to billions of people. Together, we can enhance how music is made, consumed, experienced and shared. This means we’ll be rolling out new, more robust features for creation, opportunities to collaborate and interact with some of the most talented musicians in the world, all while continuing to build the biggest music ecosystem possible.”
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Every two weeks, users on the AI music platform Suno create as much music as what is currently available on Spotify, according to Suno investor presentation materials obtained by Billboard. Those users are primarily male, aged 25-34, and spend an average of 20 minutes creating the some 7 million songs produced on the platform daily, according to the documents and additional sources.
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Suno sees a future where, as it expands its offerings, creators and listeners will not need to leave the app to create, stream or share their music socially. The goal is listed as creating “high-value, high-intent music discovery” and “artist-fan interaction.”
Now, Suno might have the money to fulfill that ambitious vision. Suno announced last week that it had raised $250 million in a C fundraise, led by Menlo Ventures, with additional investors including NVIDIA’s venture capital arm NVentures and Hallwood Media. The round brings Suno’s valuation up to $2.45 billion.
“In just two years, we’ve seen millions of people make their ideas a reality through Suno, from first-time creators to top songwriters and producers integrating the tool into their daily workflows,” Suno CEO Mikey Shulman said in a statement about the company’s new influx of cash. “This funding allows us to keep expanding what’s possible, empowering more artists to experiment, collaborate and build on their creativity. We’re proud to be at the forefront of this historic moment for music.”
The investment materials, obtained by Billboard, provide more insight into the company’s aspirations for what Shulman calls the “future of music” which he is “seeing … take shape in real time.” In the materials, Suno claims that by 2028 the company will grow to $1 billion in revenue, and “this is before we consider monetizing consumption.” Eventually, the company says, the Suno of “tomorrow … will power the new, bigger music ecosystem and will be a $500 billion company.” Reps for Suno did not respond to multiple requests for comment.
According to the pitch deck, this funding round will be allocated to the following uses: 30% computing power, 20% mergers and acquisitions, 20% discovery, 20% marketing, 15% data and 5% partnerships. Already, the company has shown an interest in growing and expanding its offerings via acquisition, having purchased digital audio workstation WavTool in June 2025.
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Notably, compute power — the hardware, processors, memory, storage and energy that operate data centers — is the company’s biggest expense since Jan. 2024, which is a common situation for many AI companies. “Amid the AI boom, compute power is emerging as one of this decade’s most critical resources … there is an unquenchable need for more,” a McKinsey study said about the cost of compute in the age of AI.
OpenAI’s AI video and social platform, Sora, for example, especially struggles against high compute costs due to the complexities of generating video. According to an estimate by Forbes, Sora costs the company as much as $15 million per day to run. According to Suno’s financials, reviewed by Billboard, Suno has spent over $32 million on training its model since January 2024. That breaks down to $32 million spent on compute power and $2,000 spent on data costs — meaning the cost of content, like music, which it uses to train its model.
Suno is currently in the middle of a number of lawsuits concerning the data on which it trains its model. This includes two class action copyright infringement lawsuits, filed by indie musician groups; one lawsuit from Danish rights group Koda; and one from German collection society GEMA. Most significantly, however, is the copyright infringement lawsuit filed by the three major music companies, Sony, Universal and Warner, against Suno for $500 million, claiming widespread copyright infringement of their sound recordings “at an almost unimaginable scale” to train its model.
In recent months, there have been reports that Suno — and Udio, which was also sued in a near-identical lawsuit by the majors — has been in licensing and settlement talks with the majors. At least part of that reporting proved to be true: recently, Udio settled with both Universal and Warner and created a license structure for their recorded music and publishing interests. (Sony’s lawsuit against the company is still ongoing). Now, to work with the music companies, Udio is pivoting its service to become more of a fan engagement platform where users can play with participating songs in a “walled garden,” meaning users cannot download and post the creations on streaming services.
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Suno’s pitch deck does not say anything about its lawsuits with copyright holders. It also does not discuss any plan for licensing musical content.
Suno sold investors on its vision to create a service where you can “create, listen and inspire” on the platform, “turn[ing] music from passive consumption into an active participatory culture.” To expand this vision, Suno plans to roll out more products like a voice beautification filter and a social media service. It also touts that its work has cultural power outside of consumption on its own service, including a photo of cover art from viral AI band The Velvet Sundown next to the text, “Suno songs go viral off platform.”
The deck shows an image of a user playing guitar in a TikTok-like vertical social media video. In the top right corner, above typical social media buttons (“Like” “comment” and share”) is a button that says “Create Hook,” implying that users will connect through iterating and remixing each other’s creations in a video, social-forward way.
The company’s vision for the future, however, hinges on customer acquisition and reducing the number of users who leave the service after joining. According to the deck, Suno says it has 1 million subscribers already, up 300% year over year, and it currently says approximately 25% of subscribers remain after 30 days. On a weekly basis, Suno says it has 78% retention for subscribers and 39% weekly retention for all users.
Suno’s investment materials say that one positive indicator is that the company is “reactivating” an increasing number of users, meaning these users came back after one month. As of July 2025, Suno claims 350,000 reactivated users per week. The company attributes this to things like new features, increased awareness and improvements in their model.
Additional reporting by Elizabeth Dilts Marshall.
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Even before its release to streaming services, “I Run,” a dance/EDM track by the artist HAVEN., was a viral sensation online, amassing millions of plays on TikTok after it was teased on Oct. 10. “I love this song so much,” said one TikTok commenter. “DROP THIS RIGHT NOW PLEASEEEE,” commented another.
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For HAVEN., a new artist project from British producers Harrison Walker and Jacob Donaghue, who also makes music under the name Waypoint, it was the kind of debut that could change the trajectory of their lives. But now, a swirl of legal complaints and takedown notices have engulfed the song, resulting in it being removed and reuploaded to streaming services multiple times — and stopping its momentum just as it was poised to reach the Billboard charts.
The frenzy of activity around “I Run” prompted multiple A&Rs at major and independent music companies to look into signing the track and the people that created it as it awaited official release. It also caught the attention of the popular UK R&B singer Jorja Smith. The uncredited female vocalist on “I Run” sounded eerily similar to Smith, prompting the singer to to post a video of herself on TikTok using it. She asked in the caption: “who actually is this?” and noted in a reply to a comment “it’s not meeeee” when fans asked if she sang on the track or if it was AI. (The video has since been deleted). Around that time, HAVEN. jumped in, adding #jorjasmith to a now-deleted social post about the song, according to a member of their team. “It was more so just embracing that it does sound like her,” a spokesperson for HAVEN. said. “It became an organic trend.”
That’s when questions started circulating about the origins of HAVEN.’s viral track — and whether or not it was an unauthorized AI deepfake of Smith’s voice. Ultimately, the song was released in late October by Isekai Records, Broke Records and AAO Records, and it continued to amass major listenership — so much so that it quickly reached #11 on the U.S. Spotify chart and #25 on Spotify globally. Meanwhile videos using the song kept going viral on social media, including one in which the rapper Offset apparently played the song during a Boiler Room DJ set, with the video overlaid with text that said, “Unreleased Jorja Smith.” (The song was not actually used during Offset’s recent Boiler Room set.)
Just as the song was taking off, it was taken down from streaming services. The Orchard — to whom Smith is signed — as well as the Recording Industry Association of America (RIAA) and International Federation of the Phonograph Industry (IFPI), issued dozens of takedown notices for “I Run” upon its official release, according to screenshots of the notices, alleging various issues with the song, including that the song “misrepresents” another artist and that it constitutes copyright infringement.
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As a result of the dispute, the song has also been withheld from the Billboard charts, including the Billboard Hot 100, on which some chart prognosticators had predicted it would debut this week. Billboard reserves the right to withhold or remove titles from appearing on the charts that are known to be involved in active legal disputes related to copyright infringement that may extend to the deletion of such content on digital service providers.
Broke Records tells Billboard that it filed dozens of counter-notices, asserting HAVEN.’s ownership of the song and noting that no lawsuit has been filed against them to date in association with the song. (The Orchard declined to comment.)
Donaghue and Walker maintain that they wrote and produced the song in ProTools, sharing screenshots and videos of the ProTools session files and stems with Billboard. They admit, however, that “AI-assisted vocal processing” was used to “transform solely [their] voice” in the song. Specifically, they say they used AI music generator Suno to turn Walker’s voice into that of a woman’s — without referencing Smith. According to Suno prompts shared with Billboard, the producers wrote into the model a prompt that included, among other requests, “soulful vocal samples” to get the voice they ultimately used on the song.
“It’s been such an honor to see the love and support for ‘I Run’ these past few weeks,” HAVEN. said in a statement to Billboard. “What started as something fun and experimental between two producers and music-lovers ended up taking the internet by storm. I’m aware that AI has become part of that storm. It shouldn’t be any secret that I used AI-assisted vocal processing to transform solely my voice for ‘I Run.’ As a songwriter and producer I enjoy using new tools, techniques and staying on the cutting edge of what’s happening. To set the record straight, the artists behind HAVEN. are real and human, and all we want to do is make great music for other humans.”
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Suno does not allow users to request specific artist or song names. But the company is currently in the midst of a blockbuster lawsuit with the three major music companies — Sony, Universal and Warner — over allegations of widespread copyright infringement of the majors’ sound recordings during the AI training process. Given Smith is signed to The Orchard, a Sony Music-owned distributor, it is possible her sound recordings were used in Suno’s training. According to the lawsuit and to AI music expert Ed Newton-Rex in an article for Music Business Worldwide, users can find savvy or accidental ways to prompt Suno into providing results that seem to contain recognizable pieces of intellectual property from artists like ABBA, James Brown, Michael Buble and more.
The takedowns list a variety of reasons for the request for removal, according to emails obtained by Billboard, including one from Spotify that says, “We have received a complaint that your content infringes the sound recording rights of a third party. While this claim is under investigation, the content has been removed.” Another from Spotify says the content “violates exclusive rights.” A third reads, “Spotify may remove content that misrepresents a track as originating from or featuring an artist or that uses an artist’s name in a misleading way.” One from TikTok also lists the reason why the track is muted as “it contains unauthorized copyrighted music.”
“Sound recording copyrights are not going to protect her voice if the voice sounded like her. There would have to be a sample of her sound recordings,” says Theresa Weisenberger, lawyer and co-lead at BakerHostetler’s AI practice, adding that voices are only protected by publicity rights — the legal right that varies state-to-state in the U.S. which protects one’s name, image and likeness from exploitation.
Historically, these rights have been mostly limited to commercial contexts, like misleading endorsements. The singer Bette Midler once famously sued the Ford Motor Co. over ads featuring a Midler impersonator who was hired by the company. Amid the boom in AI and deepfakes, however, lawmakers in Tennessee passed a new law, called the ELVIS Act, to dramatically expand the right to stop voice cloning in any context. And federally, lawmakers are currently considering a similar law, the NO FAKES Act, that would do the same thing nationally.
“I think this ought to be a wake up call for people to look at the status of the NO FAKES Act and to deal with how long it will take to get that moving and into a national uniform law,” adds Kenneth Anderson, an attorney at Rimon Law who recently advised his client, Ben Folds, though a deepfake situation. “We have a problem that is rapidly overtaking the music industry. It’s rampant and it’s increasing.”
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To fight the takedowns, HAVEN.’s labels started reuploading the song over and over, leading to a seemingly endless game of whack-a-mole for both sides. The impact on “I Run” became even more pronounced when the song did not appear on The Official Charts in the U.K. or the Billboard charts.
“Once that counter notice is filed and then a lawsuit is not filed, a platform is free to put the song back up if they want to,” explains Weisenberger. “But the fact that platforms aren’t doing that might speak to the PR issue this song causes.”
For Broke, an indie record label founded in 2023, “I Run” was gearing up to be their (and HAVEN.’s) biggest hit yet, and its founders tell Billboard they feel the song is being discriminated against by bigger industry players. “HAVEN., an independent producer-songwriter who created a global breakout hit on his own, is the one being fully de-platformed through a sophisticated campaign by a major label,” the label said in a statement to Billboard. “It is difficult to imagine this recording, if released by a major label, being treated in the same way as HAVEN.”
The song has become a lightning rod for conversations around generative AI use in the creation of popular music. To date, some music streaming services still do not have AI-specific policies in place, and those that do, like Deezer and SoundCloud, tend to only penalize fully AI-generated works, not something like “I Run,” which contains significant human input. As Billboard reported in 2023, however, an increasing number of platforms have broadened the ability of rightholders to issue takedowns when publicity rights — the right to one’s name image likeness and voice — are violated, due to the rise of AI-generated deepfakes. This is done on a voluntary basis and is not required by law.
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Spotify added to these publicity rights protections just last month when it announced that it was strengthening its policies against negative uses of AI. This included increased protections around impersonation, and according to a source close to the situation, the platform’s impersonation rules did come into play with the takedowns for HAVEN.’s track specifically. The source adds that Spotify tends to side with the party that feels they have been deepfaked. (Spotify declined to comment.)
Now, HAVEN. is gearing up to release a re-recording of the song, featuring the vocals of a singer named Kaitlin Aragon. She was discovered by the team after posting a TikTok video, covering “I Run” which sounds fairly similar to the original. The hope is, for HAVEN.’s team, that they can recapture the same buzz as they achieved with the last version of the song and restart HAVEN.’s career — but this time, with human vocals.
Trending on Billboard Suno, the leading AI tool for making music, said on Wednesday it raised $250 million from a group of investors led by Menlo Ventures that values the company at $2.45 billion. Other investors in the series C round included NVIDIA’s venture capital arm NVentures, Hallwood Media, Lightspeed and Matrix. Related Founded in […]
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Like many technologies, generative AI developed slowly — then suddenly, all at once. That’s how it looks from a music business perspective, anyway. One day a few top executives at UMG were telling me about it as a future issue — then next “Fake Drake” made news and now AI-assisted artists account for a third of the top 10 on Billboard’s Nov. 15 Country Digital Song Sales chart. Breaking Rust and Cain Walker, the names credited with the songs, are about as country as a server farm.
So where did those songs come from?
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The assumption is that the kind of generative AI software that created them was trained on copyrighted songs and recordings, presumably without a license, since few have been granted. That’s probably going to change soon. On Nov. 11, German rights group GEMA won its infringement case against OpenAI (which only involves song lyrics, but the principles are the same and it is also suing Suno). And after all three major labels sued Suno and Udio in the U.S., Universal Music Group announced a settlement with Udio in late October.
The nature of these deals could shape the music business of the future — or could be remembered as something music executives thought was important for some reason they can’t recall. Although little is known about the UMG deal, its unexpected provision is that it restricts the music “output” created by AI by removing the ability of users to download it. That’s a fundamental shift in expectations, and it suggests that UMG envisions AI music as existing apart from music on streaming services — more of a hobby akin to an amateur garage band than a professional product. Obviously, there’s no stopping the flood of AI music, and Udio users who want to “free” their creations can play them and record them to another device — but it’s interesting to note how Udio and UMG think this will work.
The UMG-Udio deal is opt-in for artists and songwriters, so it will take time to see what they think and whether they sign. But the deal casts Udio as “the good guy,” eager to work with the industry’s biggest company, less combative in its public statements and more willing to talk, according to two sources. Suno was already on its way to becoming “the bad guy,” responding to the label lawsuit by accusing the majors of reverting “to their old lawyer-led playbook,” hiring Timbaland to create some space between labels and artists and taking a more oppositional stance, according to one source. (It seems worth noting that the line about the “lawyer-led playbook” may not have aged as well as Suno CEO Mikey Shulman thinks: Anyone who is 30 today was five when the major labels sued Napster and 10 when the Supreme Court ruled in the Grokster case.)
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It’s hard to know what the better strategy is in the abstract: Udio scored the first deal, but Suno is said to be raising money at a $2 billion valuation, although it’s also facing a GEMA lawsuit that Udio isn’t. Now that Udio has gone legit, though, Suno has a big incentive to do the opposite, just to differentiate itself. In tactical terms, it will be both more powerful and more vulnerable. If Suno loses its big court case in the U.S., it could get stuck settling its lawsuit under terms worse than Udio’s. If the decision has limited scope or splits, which seems more likely than some executives realize, it could have to make some of the same feature-set compromises as Udio, but under pressure. If it wins the case completely, though, it ends up with a product that is superior to the competition, with a much better cost structure.
Making the first big deal also gives UMG the power to set a pattern that could influence later agreements, at least in structure if not specifics. So far, the big issue executives are talking about is the split between labels and publishers. The latter, which customarily get half of synch rights revenue, want the same deal, and this is one of the few cases, along with synch licenses, where rights to a song might be useful without a recording. (In the case of synch, the song can be played by another artist; theoretically, an AI could be trained on a written composition.) The major label groups all own publishing businesses but have an incentive to favor the recorded music side, since they have more financial exposure to it and the financial model is more favorable. As is generally the case, though, the majors aren’t saying anything about the issue.
Finding the right balance between recording and publishing rights is tricky, and I would bet the publishers end up with a much higher percentage of revenue than they make on streaming, but less than 50%. But will that be all? The opt-in structure of the UMG deal implies that either the biggest company in the industry is feeling especially nice or that it may also need likeness or personality rights from artists. (It’s also possible that those rights are not needed for training purposes — just specific uses of prompts.) But it suggests some other questions. Most important, will artists with especially distinctive voices want a better deal than the standard one on offer?
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Then — and here I’m really getting ahead of myself — what happens when artists have recorded for multiple labels or released the same album on different ones in different territories? If you want to use the voice of Johnny Cash, do you want young Cash (from his Sun Records work), prime Cash (Columbia), late Cash (Mercury), or very late Cash (American)? More complicated, what happens if you don’t much care — and how does that affect the structure of licensing? I am offering more questions than answers, but in this case I don’t think anyone has all the solutions. But we should know more soon — and the one thing we know for certain is that it’s going to be very interesting.
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On Oct. 29, Universal Music Group (UMG) announced a landmark deal with AI music startup Udio. As part of the agreement, Udio, which UMG was suing for widespread copyright infringement along with the two other major music companies, offered a compensatory settlement with UMG, effectively ending UMG’s part of the lawsuit and paving the way for a new version of Udio, set to release in 2026, which would be a “new commercial music creation, consumption and streaming experience” that would remunerate participating UMG artists.
To survey the industry’s reaction to the deal, Billboard spoke with professionals who have been following the development of AI music closely from various vantage points, including labels, investment firms, AI music start-ups, the songwriting community and consultancies.
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“This deal is beneficial for the music industry,” one label professional tells Billboard. “My question is, though, is it beneficial for Udio? In the short term, they’re going to go through some tension as they do a reset, but this could be great. It’s early.”
To most who spoke to Billboard for this story, the timing of the deal wasn’t entirely surprising. One label executive points out that news of the agreement was cleverly released just hours before UMG’s Q3 earnings call. Still, Sean Power, CEO of Musical AI, says he “expected a deal in Q1 of 2026, not now.”
Since this summer, reports have circulated that the majors have been discussing settlements with Suno and Udio, leading many to believe the talks were getting close. But as the year wore on, some grew skeptical that settlements would be reached by the end of the year. Though the UMG-Udio deal represents the start of reconciliation, these lawsuits are far from over — Warner Music Group and Sony Music are still pursuing their claims against Udio, and all three majors are still pursuing their lawsuit against Suno.
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Vickie Nauman, founder of music-tech consultancy CrossBorder Works, says she’s been watching out for this deal since Lucian Grainge, UMG’s chairman/CEO, released a letter on Oct. 13 expressing the company’s plans to pursue AI deals. “I saw that as Lucian putting a stake in the ground about AI,” Nauman says. “When I read that, I thought, ‘He wouldn’t say this unless he’s pretty sure he will reach a deal soon.’ That letter exuded confidence.”
As part of the deal with UMG, Udio is pivoting its offerings, launching a new version of the service in 2026 that will be focused on building fandom and encouraging engagement with existing music, rather than just offering brand-new songs at the click of a button, as it does now. The new version of Udio will feature a number of tools that will allow users to remix, mash up and riff on the songs of participating UMG artists. Users will also be able to create songs in the style of participating artists and use some artists’ voices on songs.
One investor, who has not invested in Suno or Udio and spoke to Billboard on the condition of anonymity, said that he fears Udio will run into the same problems as AI film company Runway, which signed a deal with Lionsgate to adapt their intellectual property — a partnership that, one year later, has yet to produce results. “The Lionsgate catalog is too small to create a model,” a person familiar with the situation told The Wrap. “In fact, the Disney catalog is too small to create a model.”
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A label executive, who spoke under the condition of anonymity, adds: “I’d like to see Udio succeed, because I think they’re trying to get on the right side of history. Do I think this deal puts them in a little bit of a box, though? Yes.”
Songwriter/producer Oak Felder raised another point in my TikTok comment section: “The question is: how does [this deal] affect catalogs that are split between Universal and Sony or any other publisher without a deal[?] Udio can’t utilize a song in Universal’s catalog that’s split between writers on non-Universal publishers, right?” (A UMG rep declined to provide specific details on that point.)
Udio and UMG’s deal allows artists to opt in with “granular” controls, as Udio CEO Andrew Sanchez told Billboard shortly after the deal was announced, over which parts of the new Udio service they want to participate in — seen as a win for artists’ autonomy. But the investor asks: “How many of these artists are actually going to opt in?”
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Another possible challenge for Udio: there are already multiple companies offering, or planning to offer, remixing and fan-focused AI features. This includes MashApp, Hook and Spotify, which recently announced that it’s working on AI music products, including remixing features, with the consent of the majors and some large independent music companies.
“It’s a calculated risk,” says Nauman about Udio’s decision to pivot, but she notes that trying to build a business that allows everyone to create quick songs was a risk, too. “I think that just the idea of being able to prompt a few songs easily is kind of a fad, so this [new Udio service] could be interesting. But users will be the ultimate arbiter here.”
Executives interviewed for this story were mixed on how they think Udio’s deal with UMG will impact Suno. “If I were Suno, I would be feeling a lot of pressure after this deal,” says Power. “But also, I don’t imagine that its investors are scared of litigating this to the end.”
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Barclays Research recently pointed out that Suno’s fundraising better insulates it from the impact of these lawsuits with the majors than Udio: “Even a [tough] settlement…would likely only mean the disappearance of Udio, while…Suno may have the necessary financial firepower.”
The anonymous investor adds, “One thing that helps Suno here is they will capture all the Udio users that are going to unsubscribe,” given that Udio is pivoting to become a different service. As part of the UMG deal, Udio prevented its users from exporting their work from Udio, effective immediately. This led to backlash among users, who felt they should’ve been warned about the change. Soon after, Udio allowed users to export their work during a 48-hour window.
Nauman says the UMG-Udio deal “puts every single AI music company, including Suno, on notice. I’ve already seen a number of comments from people in music who are saying Udio is very impressive and friendly. That’s an important piece to this. When engaging with rights holders and licensing, it’s both incredibly transactional but also very relationship and trust-driven. Udio is in a strong position by earning that trust.”
Most interviewed for this story saw the deal as an important step forward for the music business. But does it make Warner and Sony more likely to come to the table? “What Sony and Warner do here, I’m not exactly sure,” says Power. “I’m going to be very interested to see where things land, and I’m really thinking about Universal here. They’re now the ones who can say they made the big move.”
Trending on Billboard Danish rights organization Koda has filed a lawsuit against AI music company Suno, alleging that it infringed on copyrighted works from its repertoire — including songs by Aqua, MØ and Christopher. Koda claims that Suno used these works to train its AI models without permission and has concealed the scope of what […]
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On Wednesday night (Oct. 29), Universal Music Group (UMG) and AI music company Udio announced they had reached a strategic agreement. Importantly, this agreement not only settled UMG’s involvement in the massive copyright infringement litigation the major labels brought against Udio and another AI music company, Suno, last summer, but also paved the way for the two companies to “collaborate on an innovative, new commercial music creation, consumption and streaming experience,” according to the announcement.
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The newly revamped version of Udio is set to debut in 2026, and it will feature fully-licensed UMG sound recordings and publishing assets that are totally controlled by UMG — but only those from artists that choose to participate.
Here, Billboard looks at the deal more deeply and answers some questions that have arisen in the wake of the first-of-its-kind agreement.
Why did UMG and Udio decide to come together and settle this week?
It’s hard to know exactly what happened behind closed doors, but reports that the major music companies had been in talks to settle with Udio — and Suno, which was also sued in a nearly identical lawsuit by the majors — have been circulating since this summer, making it relatively unsurprising to hear that at least one deal has been finalized.
One clue as to why there was incentive to settle here comes from a recent Barclays Research report on the majors’ lawsuits against the AI music firms, which stated that it could be “prohibitively expensive to lose” for Udio, much more than Suno, given the two firms had raised $10 million and $125 million, respectively, at the time the report was published on Tuesday (Oct. 28). Even a tough settlement, the report states, “would likely only mean the disappearance of Udio.”
The timing of the press release about the UMG-Udio deal also arrived the night before UMG’s Q3 earnings call, which took place yesterday (Oct. 30). The company has a history of announcing big news just before earnings calls in general, including one instance when UMG reached an agreement with TikTok the night before earnings in 2024 after a three-month standoff.
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What exactly will this 2026 version of Udio entail?
The new version of Udio will feature a number of tools to allow users to remix, mash up and riff on the songs of participating UMG artists. Users will also be able to create songs in the style of participating artists and use some artists’ voices on songs.
According to Udio CEO Andrew Sanchez, who spoke to Billboard just after the deal was announced, “[Udio is] going to involve all kinds of AI models, like a base model… 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.”
How can UMG artists and songwriters participate, and can they get paid for that?
Yes, UMG artists and songwriters will be remunerated for participating in Udio. According to a source close to the deal, this will include financial rewards for both the training process of the AI model and for its outputs. The details of exactly how that payment will work beyond this are unclear. Sanchez declined to answer a question about whether the model uses attribution (tracing back which songs in a training dataset influenced the outputs of a model) or digital proxies (a selected benchmark, like streaming performance, used to determine the popularity of songs in a dataset against others overall) as a way to determine payment — two of the most often proposed methods of AI licensing remuneration.
This answer is also made more complicated when considering the breadth of AI tools Udio plans to offer on its service. Importantly, artists can pick and choose exactly which Udio tools they “opt-in” to: “We’re going to launch with a set of features that has a spectrum of freedom that the artist can control,” Sanchez said. “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.”
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Who is the target audience for the newly revamped Udio?
According to Sanchez, it’s fans: “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.”
Are Sony and Warner still pursuing their lawsuits against Udio?
Yes, for now. UMG’s settlement and deal with Udio does not impact Sony Music and Warner Music Group’s lawsuit against Udio for widespread copyright infringement. While some industry onlookers posit that Sony and Warner are more encouraged to settle now that UMG is no longer pursuing litigation against Udio, there’s no indication that these companies are definitely planning to do so yet.
Why are some Udio users upset about this deal?
By doing this deal with UMG, Udio has agreed to a major pivot in its offering to users. Currently, the site is known for helping users make songs from simple text prompts, which they can then export and upload to streaming services, share on social media — or whatever they want to do.
Users are particularly upset because, as part of this deal with UMG, Udio immediately removed its users’ ability to download their work from the service. Angry subscribers gathered on a subreddit to complain. “This feels lie an absolute betrayal,” wrote one user. “I’ve spent hundreds of $$$ and countless hours building tracks with this tool,” wrote another. “No one warned us that one day, we wouldn’t even be able to access our own music. You can’t just pull the plug and call that a ‘transition.’”
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In a statement to Billboard on Thursday (Oct. 30), an Udio spokesperson said that disabling exports on the platform is “a difficult but necessary step to support the next phase of the platform and the new experiences ahead.” On Friday (Oct. 31), Udio relented slightly, writing on Reddit that starting Monday (Nov. 3), the platform will give users a 48-hour window to download their existing songs — and that any songs downloaded during that time will be covered by the terms of service that existed before the UMG deal was signed.
The move to restrict downloads in the long term may prove to be more than just an inconvenience for users — Udio could also be hit with legal claims over it. There could be arguments made that disabling downloads was a breach of the subscription contract that Udio signed with users, or that Udio falsely advertised its services in violation of consumer protection laws. It wouldn’t be the first time this has happened in recent memory: Just last year, Amazon Prime users brought claims like this over changes to the cost of ad-free movie and TV streaming for subscribers.
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Universal Music Group and Udio have settled their legal battle by striking a deal for a fully-licensed artificial intelligence music platform. But the broader litigation involving rival AI firm Suno and both Sony Music and Warner Music is still very much pending.
The deal, announced Wednesday, will end UMG’s allegations that Udio broke the law by training its AI models on vast troves of copyrighted songs. Under the agreement, Udio will pay a “compensatory” settlement and the two will partner on a new subscription AI service that pays fees to UMG and its artists, and allows artists to opt in to different aspects of the new service.
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But that agreement will not resolve the entire legal battle, in which all three majors teamed up last year to sue both Udio and Suno — the other leading AI music firm — for allegedly “trampling the rights of copyright owners” by infringing music on an “unimaginable scale.”
For now, Sony and Warner will continue to litigate their case against Udio, but a settlement like the one struck by UMG obviously creates a framework for them to reach a similar deal. The revamped Udio 2.0 will not be an exclusive UMG partner, according to sources close to the situation — meaning it’s able to strike similar catalog licensing deals with Sony and Warner, as well as any other parties.
Udio has ample incentive to do so. Past experience has shown that music licensing for tech platforms is something of a zero-sum proposition; it often doesn’t work for users if you have glaring gaps in your catalog of songs. Spotify wouldn’t be nearly as ubiquitous if it were missing catalogs by Taylor Swift, Drake or The Beatles, while TikTok’s standoff with UMG last year ended up impacting non-UMG recording artists like Beyoncé and Adele due to rights being owned by different companies.
In striking the deal, Udio has also effectively put its cards on the table: it wants to be the music industry’s AI good guy. Though not legally impossible, it’s hard to argue in court that you don’t need training licenses and artist consent while touting the benefits of both in press releases. Udio has also already made concrete changes to its platform, including controversially disabling downloads for its existing subscribers — a further sign that it’s no longer looking to fight it out.
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It’s worth noting that the settlement makes for odd bedfellows in any ongoing litigation. The same team of lawyers that repped UMG in its claims against Udio — now settled with a first-of-its-kind partnership — is also representing competitors Sony and Warner as they continue to sue that company. Ditto for Suno, which is defended by the same team of attorneys as Udio, which just agreed to sign a licensing deal that’s antithetical to Suno’s core argument that no such deals are needed.
But such situations are par for the course for cases like these, where industry rivals team up for a legal case, and each company on both sides almost certainly signed agreements waiving any legal right to argue that their lawyers have a conflict of interest.
The case against Suno, on the other hand, looks more likely to keep going. All three majors are still suing that company, and Suno has long been seen in industry circles as more the more combative of the two. One can’t imagine that Suno’s will to fight will be reduced by the Udio deal; if anything, it has a clearer runway to AI music dominance now that its largest text-to-audio rival has effectively left the space to cultivate its own walled-off garden.
The Suno lawsuit remains at the earliest stage, where a defendant will file a motion to dismiss a case, which is typically the first big ruling in a civil litigation. If both sides decide to fight it out, the case and resulting appeals could go on for years into the future. But the key battle lines of the litigation are already clear.
The multi-million-dollar question is whether training AI platforms like Suno on millions of unlicensed copyrighted songs counts as “fair use,” a legal doctrine that allows for the reuse of protected works in certain circumstances. That issue is also at the heart of dozens of other lawsuits filed against booming AI firms by book authors, news outlets, movie studios, comedians and visual artists — meaning it might really be more of a trillion-dollar question.
Can Suno prevail on that point, making Udio look silly for settling so early? The proverbial jury is very much still out.
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One federal judge, ruling on a major case against Anthropic, sided resoundingly with AI firms, saying that unlicensed training was clearly a fair use because it was no different than a human writer taking inspiration from copyrighted books they had read. But another judge ruled that such training would be illegal “in many circumstances” and that AI firms expected to generate “trillions” in profits “will figure out a way to compensate copyright holders.”
A separate, emerging flashpoint in the case is whether Suno broke the law by “stream-ripping” its training songs from YouTube. That’s a key issue in the wake of a court ruling this summer that said AI training on copyrighted works itself is fair use, but that using illegally-obtained works to do so could lead to billions in damages for AI firms.
In the wake of this week’s Udio settlement, the record labels likely see that deal as setting a helpful precedent: “See, AI companies do need licenses to train their models — Udio just took one.” And in that same vein, when it comes to that all-important courtroom battle over fair use, those same music companies likely view this week’s Udio deal as potential legal ammo.
A key factor in the fair-use analysis is whether exploiting a copyrighted work for free caused market harm — whether it hurt the ability of the original author to monetize their own creative output. A major licensing deal with a direct competitor would seem to be a very obvious market that would be harmed by the conduct of Suno, which says it can build its AI models without such deals.
But that argument has already been rejected in both of those earlier fair-use rulings. Even for the judge who said AI training would be illegal in most circumstances, that kind of argument would be “circular” — since essentially any copyright owner could argue that the specific thing they’re suing over is a lost market opportunity. That means the Udio deal might help the labels in the business world and the court of public opinion, but likely not in actual court. For now, time will tell.
For deeper reading, go check out the full lawsuits against Suno and Udio, and go read the responses from Suno and Udio. And stick with Billboard for updates as the cases move ahead.
The three major music companies — Sony Music, Universal Music Group and Warner Music Group — are in talks with AI music companies Suno and Udio to license their works as training data, despite suing the two startups for infringement “on an almost unimaginable scale” last summer. Now, executives in the “ethical” or “responsible” AI music space are voicing displeasure that the alleged infringers could potentially benefit from their actions.
Several of those ethical AI companies said they were led to believe they would be rewarded by the record labels for going through the tough process of licensing music from the beginning, in what one AI music company founder previously told Billboard would be “a carrot and stick approach to AI,” penalizing those who raced ahead and trained models without permission or compensation.
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“That’s all out the window,” that founder says now. “I was talking to another founder that does ethical AI voice models, and he told me, ‘F–k it. I don’t care anymore. Why does it matter to be ethical if we just get left behind?’”
Ed Newton-Rex, founder of non-profit Fairly Trained, which certifies ethically-trained AI models, adds: “If I were running a startup that had tried to do the right thing — respecting creators’ rights — and investors had rejected me because I wasn’t exploiting copyrighted work like so many others, and then this happened? I’d definitely be pissed off.”
Tracy Chan, CEO of AI music company Splash, told Billboard via email that she stands by her decision to license music from the start. “At Splash, being ethically trained wasn’t a debate — it was obvious,” she says. “We’re musicians and technologists. We believe AI should amplify creativity, not exploit it. We don’t need to scrape the world’s music to make that happen.”
It remains unclear how far along these licensing talks are between the major music companies and Suno and Udio, and if deals will even come to fruition to avert the blockbuster lawsuits. It’s common in costly and lengthy litigation like this for the two sides to discuss what it would look like to settle the dispute outside of court. Plus, licensing is what the majors have wanted from AI companies all along — does it matter how they come to it?
Multiple executives expressed fear that if the majors ditch the lawsuit and go for deals, they will set a bad precedent for the entire business. “Basically, if they do this deal, I think it would send a message to big tech that if you want to disrupt the music industry, you can do whatever you want and then ask for forgiveness later,” says Anthony Demekhin, CEO/co-founder of Tuney.
This, however, is not the first time the music business has considered a partnership with tech companies that were once their enemy. YouTube, for example, initially launched without properly licensing all of the music on its platform first. In his 2024 New Years’ address to staff, Lucian Grainge, CEO/chairman of UMG, alluded to this, and how he would do it differently this time with his so-called “responsible AI” initiative. “In the past, new and often disruptive technology was simply released into the world, leaving the music community to develop the model by which artists would be fairly compensated and their rights protected,” he wrote, adding that “in a sharp break with the past,” UMG had formed a partnership with YouTube to “give artists a seat at the table” to shape the company’s AI products, and that the company would also collaborate “with several [other] platforms on numerous opportunities and approaches” in the AI space.
Another part of Grainge’s “responsible AI” initiative was “to lobby for ‘guardrails,’ that is public policies setting basic rules for AI.” Mike Pelczynski, co-founder of ethical AI voice company Voice-Swap, also worries that if these deals go through, they could weaken the music industry’s messaging to Capitol Hill, where bills like the NO FAKES Act are still in flux. “All the messaging we had before, all the hard-lining about responsible AI from the beginning, it’s gone,” he says. “Now, if policy makers look at [the music business] they might say, ‘Wait, what side should we take? Where do you stand?’”
If talks about licenses for Suno and Udio move forward, determining exactly how that license works, and how artists will be paid, will be complex. To date, almost all “ethical” AI companies are licensing their musical training data from production libraries, which offer simple, one-stop licenses for songs. Alex Bestall, CEO of music production house and AI company Rightsify, says that the structure of those deals are typically “flat-fee blanket licenses for a fixed term, often one to three years or in some cases perpetuity… all data licensing [music or otherwise] is pretty standardized at this point.”
It’s unclear if the deals the majors have discussed with Suno and Udio will follow this framework, but if they did, the question then comes — how do the majors divide up those fees for their artists and writers? The Wall Street Journal reported that “the [music] companies want the startups to develop fingerprinting and attribution technology — similar to YouTube’s content ID — to track when and how a song is used.” In that scenario, the money received would be given to signees based on usage.
While there are a few startups working on music attribution technology right now, multiple experts tell Billboard they don’t think the tech is ready yet. “Attribution is nowhere,” says Newton-Rex, who also previously worked as vp of audio at Stability AI. “It’s not even close. There’s no system that I have seen that would do a decent job of accurately assigning attribution to what has inspired a given song.”
Even the possibility of deals between the parties has sparked a larger conversation about how to handle tech companies who ask for forgiveness — and not for permission — from the music business.
“If the two biggest offenders actually become the legal standard, it’s effectively like making Pirate Bay into Spotify,” says Demekhin. “I understand it from a business perspective because it’s the path of least resistance [to settle and get a license now]. But this could send a message to tech that could bite the industry on the next wave.”
