Photo by César Guillotel
The high stakes legal war between the world’s biggest record labels and AI music pioneers has reached a dramatic conclusion. After months of litigation that threatened to upend the industry, Universal Music Group and Warner Music Group have officially moved from the courtroom to the boardroom. These major labels have secured landmark settlements and licensing deals with Udio and Suno, fundamentally altering the landscape for AI generated creativity.
The End of the Fair Use Standoff
The legal battle began in June 2024 when the major labels accused Suno and Udio of “mass infringement” for training their models on copyrighted recordings. While the AI companies initially claimed their training was protected under the fair use doctrine, the tide shifted as the industry moved toward a licensed model.
- The Udio Settlement: Universal and Warner reached agreements with Udio in late 2025. These deals involve compensatory payments and the development of a next generation platform set to launch in 2026.
- The Suno Partnership: Warner Music Group finalized a first of its kind partnership with Suno in November 2025. As part of the deal, Suno has dropped its fair use defense and committed to using only authorized, licensed music for its future models.
- The Price of Peace: While exact financial terms remain confidential, Suno recently raised 250 million dollars at a valuation of 2.45 billion dollars, signaling massive investor confidence in this newly licensed ecosystem.
The Rise of the Walled Garden
Universal Music Group is spearheading a new standard known as the Walled Garden approach. Under this model, AI generated music created on platforms like Udio cannot be downloaded or distributed outside the platform. This prevents AI tracks from flooding streaming services and “cannibalizing” human artists. Universal has even reportedly held back on a Suno settlement because the platform remains more permissive than the strict “closed system” that UMG demands.
A Victory for Artist Control
The new framework is built on a strict opt in mechanism. Artists and songwriters now have full control over whether their name, image, likeness, or voice can be used in new AI songs. This shifts the power back to the creators, ensuring they are credited and paid for their contributions to the training data. As the industry awaits the launch of these licensed platforms later this year, it is clear that the “Wild West” era of AI music is over. The labels didn’t just win a lawsuit. They built a new empire.
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