Over the last month and a half, Suno and Udio — two top AI music creation companies — have had a change of heart. Both services create impressively realistic songs at the click of a button — and have become villains to much of the music industry over their alleged use of copyrighted music to train their models without a license or compensation for artists. The three major music companies even banded together to sue them for copyright infringement in $500 million lawsuits filed last summer.
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Now, after fighting that suit for over a year, Suno and Udio are coming to settle with some of the majors. Udio, often considered by music professionals to be friendlier to the music industry than Suno, went first, announcing a licensing deal with Universal Music Group and another soon after with Warner Music Group. In what was seen as more of a surprise, Suno followed by announcing a licensing agreement with WMG during Thanksgiving week. (UMG’s suit with Suno is ongoing, while Sony has settled with neither.)
The two deals are notably different. Udio’s requires it to pivot its service from one that can create new music in seconds based on text prompts to becoming a fan engagement platform where users can play with licensed music in a variety of ways, like remixing, mashing up, or prompting songs in the style of a certain artist. To control what is produced using Udio’s 2026 model, the service is now a “walled garden,” meaning none of the creations can leave the platform.
Suno, on the other hand, doesn’t have to pivot what it offers users. The only differences to the platform under the agreement with Warner, come 2026, will be that the works it trains on must be licensed, and users will have to pay to download the tracks they make. Because of the differences between the agreements, Suno is viewed as getting the better deal of the two companies, music and AI experts tell Billboard.
So what do these new deals mean for the future of AI music? While the announcements so far create the start of a framework for a system in which music rights holders get compensated for their work, the two AI firms have a lot to do to reestablish themselves as licensed music companies.
Importantly, all of the deals so far have been “opt-in,” meaning artists and songwriters represented by UMG and WMG will have to individually decide whether or not they want to license their rights to the AI companies. For WMG’s CEO Robert Kyncl, this was on his list of “non-negotiables” when working with AI companies.
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While this allows artists and songwriters a lot of agency, it puts Suno and Udio in a tough spot. Many songs, especially modern pop and hip-hop hits, have anywhere from one to 10 (or even more) songwriters who have played a part in making the song, and often these songwriters are signed to different companies, some of which will not have had deals with Suno or Udio. It will be an uphill battle to clear many of the most valuable hits, because if even one songwriter declines a song’s usage by Suno or Udio, the entire song will be disqualified.
As part of these agreements, Suno and Udio have vowed to eventually retire their current models (which are allegedly trained on the world’s catalog of music without a license) and to launch new models next year trained on only licensed works. This raises important questions. Let’s say Suno, for example, still only has its Warner deal by the time it needs to retire its current model. Do the model’s impressive abilities get degraded? Wholly-owned, wholly-licensed songs by artists and songwriters who decide to opt in from WMG alone may not be enough to create a model just as good as the one before it.
Suno’s supposedly better deal might also hold it back from securing other music licenses in the near term. Even if licenses do go through with the other majors, artists and writers signed to those companies might be more nervous to opt their works into it than with Udio, given the commercial potential of them leaving the platform. The majors’ lawsuit against Suno and Udio made it clear that one of their primary concerns is that AI music will compete with human-made creations in the marketplace, including on streaming services. Already, Deezer estimates that 50,000 fully AI-generated songs are delivered to its site every day and that 97% of people cannot tell the difference between AI and human-made works. AI-enabled artists like Xania Monet, Breaking Rust, Velvet Sundown and others have already hit major milestones, including debuting on various Billboard charts and in some cases amassing millions of streams.
On the other hand, with these deals, the flood of AI songs onto streaming services will likely slow down, which will surely be cause for celebration in the music business. But it might not be enough of a relief to make the other music companies, and the artists they represent, feel ready to start working with Suno.
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Udio’s willingness to pivot will likely make it easier for the platform to finalize licensing deals with music companies, but from a financial standpoint, Suno seems better positioned to succeed in the coming years. It recently secured $250 million in Series C funding, whereas Udio has only publicly disclosed a fundraise of $10 million. According to Suno’s investor pitch deck, obtained by Billboard, the AI firm also claims to have 1 million subscribers already, up 300% year over year.
Udio also faces new difficulties by joining an already-crowded race to become the premier destination for AI-powered music remixing and fan engagement. Hook, MashApp, Spotify and KLAY are all pursuing variations of the idea — using generative AI to give fans the chance to rework songs they love. Still, little is known about what Udio, Spotify and KLAY’s take on the idea will actually end up looking like, so it’s possible these services will be differentiated enough to co-exist.
Altogether, the deals suggest that Suno may have a clearer runway moving forward. But in both cases, lingering uncertainty will make it unlikely for most — artist, label, publisher or any other entity — to throw too much of their weight into the fast-changing AI music arena.
Those who have tried to wade into AI music already are experiencing the precarity firsthand. Suno-powered artist Xania Monet learned this the hard way. Monet, who signed a multi-million dollar record deal with Hallwood Media, just went from charting on Billboard’s Adult R&B Airplay to getting her songs pulled from many airwaves across the U.S. last week, due to iHeartRadio’s new “Guaranteed Human” policy that bans “AI music that features synthetic vocalists pretending to be human.” Broke Records, Isekai Records and AAO Records’ song “I Run” by HAVEN., which admitted to using AI to process the song’s vocals, also faced challenges when the viral song, whose vocals closely resembled U.K. artist Jorja Smith’s, received dozens of takedown notices from Smith’s team. Ultimately, the song was removed from streaming and social platforms multiple times and omitted from the Billboard and Official U.K. Charts. Since then, HAVEN. decided to redo the vocals — this time with no AI involved.
So far, nothing is set in stone in these early days of AI music. Whatever the reality of the space is today, it could all shift tomorrow.
