Major Labels in Talks With AI Music Startup Suno Amid Controversy

Universal Music Group, Warner Music Group and Sony Music Entertainment are in licensing negotiations with artificial intelligence music startups Suno and Udio, according to Bloomberg. The talks could resolve ongoing copyright lawsuits filed by the labels last year, as the music industry seeks new ways to manage the fast-growing AI-generated music landscape.

The proposed deals would include licensing fees as well as small equity stakes in the two companies, Bloomberg reported Sunday. If finalized, the agreements would outline how AI firms compensate artists when their models are trained on copyrighted music. Both Suno and Udio offer platforms that generate entire songs based on text prompts, allowing users to request fully produced tracks in seconds.

The talks follow a wave of lawsuits from the Recording Industry Association of America, which accused the startups of infringing on protected works by using copyrighted material without permission to train their AI systems. The RIAA’s legal action, filed in June 2023, sought damages of up to $150,000 per infringed work—potentially totaling billions of dollars.

Suno and Udio have argued their practices fall under fair use, claiming their systems are transformative and don’t replicate existing music. But filings in the case revealed that both companies acknowledged training their models on commercial recordings, intensifying concerns among artists and rights holders.

The negotiations arrive amid backlash over remarks made by Suno CEO Mikey Shulman. In a May interview on the 20VC podcast, Shulman said, “It’s not really enjoyable to make music now,” suggesting that many people don’t want to invest time in learning instruments or production software. “People don’t want to make music,” he said, “they want music to exist”). The comments were widely criticized by musicians and producers, who called the sentiment dismissive of the creative process.

Despite the controversy, investor confidence in generative music remains strong. Suno raised $125 million last year in a round led by Lightspeed Venture Partners, reportedly valuing the company at $500 million. Udio secured $10 million from Andreessen Horowitz and others.

As the music industry navigates how to coexist with emerging AI platforms, the outcome of these negotiations could shape the future of licensing and creative control for years to come.