Record Labels and AI Startups Strike a New Tune on Licensing

Universal, Warner, and Sony are in talks with AI music pioneers Udio and Suno to forge landmark licensing agreements—potentially ending billion-dollar lawsuits and setting industry-wide standards for how artists are compensated when their work trains AI systems. Read the report.

Negotiations that Blend Fees and Equity

The labels are no longer content with courtroom battles alone. They’re demanding licensing fees for the use of copyrighted tracks and seeking equity stakes in AI startups whose models “listen” to—and learn from—their catalogs. By tying compensation to both immediate payments and long-term revenue sharing, artists stand to benefit from the very technology that once threatened their royalties.

From Suits to Settlements

In early 2024, Universal and others sued Udio and Suno, alleging these platforms infringed on thousands of songs—potentially racking up $150,000 per track in damages. Those suits threatened to saddle startups with billions of dollars in liabilities. Now, conversations are happening “in parallel,” with each side eager to strike the first deal and end the legal standoff. See lawsuit details.

A Proven Path from Napster to Streaming

This high-stakes negotiation mirrors past battles over file sharing and the dawn of streaming services. Back then, labels fought Napster in court before striking deals that ultimately reshaped music distribution. Today’s AI licensing discussions could become another turning point—transforming legal risk into a sustainable revenue stream and fostering collaboration between creators and technologists.

Why It Matters for Artists and Innovators

For artists, these deals promise fairer compensation and a share in the future growth of AI-driven platforms. For startups, licensing agreements replace unpredictable litigation with clear commercial pathways, enabling them to innovate without existential legal threats. As AI-generated music grows in popularity, this framework will define not only how models are trained, but how the entire music ecosystem thrives in the age of machine creativity.