Record Labels Push for Deals That Ensure AI Pays Artists for Their Music

Universal Music Group, Warner Music Group, and Sony Music Entertainment are in advanced talks with generative AI startups Suno and Udio to negotiate licensing agreements that would allow the use of their music catalogs.

As part of the proposed deal, the labels are also seeking modest equity stakes in the two companies—both of which are at the forefront of AI-generated music.

According to individuals close to the negotiations, who spoke on condition of anonymity, the outcome could set a key precedent for how AI firms compensate artists and rights holders going forward.

AI Firms Clash with Media Giants Over Use of Copyrighted Content

Udio and Suno are reshaping music creation by enabling users to generate songs from simple text prompts—like “a modern country ballad about unrequited love”—and receive fully produced audio in return.

To power this capability, their AI models are trained on massive datasets, often comprising vast libraries of music.

This need for copyrighted material has sparked legal and ethical tensions across the media landscape, as AI companies argue that training on such content falls under fair use, while rights holders demand compensation.

The conflict has already reached the courts, most notably with The New York Times suing OpenAI, despite OpenAI securing licensing deals with publishers like News Corp., Vox Media, and the Associated Press.

Now, in the music industry, major labels and AI startups are pursuing a different route—negotiating instead of litigating.

Universal Music Group, Warner Music Group, and Sony Music Entertainment are in discussions with Udio and Suno to establish licensing frameworks that could set a precedent for how generative AI engages with copyrighted music.

But the path to consensus is not straightforward.

Labels want greater oversight and control over how their catalogs are used, while startups are pushing for flexible, cost-effective terms that allow them to innovate.

Streaming Platforms Poised to Bridge the Gap Between Labels and Tech

The music industry continues to grapple with how best to adapt to the rise of AI.

While revenues have grown over the past decade—thanks in large part to streaming platforms like Spotify—they have yet to fully recover from the disruption caused by early internet-era piracy and file-sharing.

Historically, major record labels have resisted new technologies, clashing with platforms for user-generated content, streaming services, and now, AI.

Just last year, the industry took legal action against AI startups Udio and Suno, with the Recording Industry Association of America (RIAA) seeking damages that could reach billions, citing copyright infringement and demanding up to $150,000 per work.

Despite this combative past, the industry is shifting its approach.

Mitch Glazier, CEO of the RIAA, recently noted that the music community is embracing AI—so long as it is developed responsibly.

He emphasized that labels and artists are already partnering with developers to build sustainable AI tools that prioritise human creativity and give creators control over how their work is used.

Still, Glazier made clear that meaningful progress depends on collaboration.

The industry is willing to work with AI innovators—but only if those innovators are equally committed to working with the industry.