Universal Music Group has settled its lawsuit with AI-music startup Udio, and the pair are planning to launch a \u201cmusic creation, consumption and streaming\u201d service together in 2026.<\/p>\n\n\n\n
All three major labels sued Udio<\/a> (as well as rival firm Suno) in June 2024, in lawsuits filed by US labels body the RIAA. The accusation was of copyright infringement \u201con a massive scale\u201d in the way both companies had trained their AI-music models.<\/p>\n\n\n\n Last month, the RIAA amended its lawsuits<\/a> to include accusations that both Udio and Suno had sourced the music from \u201cillegal scraping of copyrighted sound recordings from YouTube\u201d.<\/p>\n\n\n\n\n However, soon after a report claimed that both firms were among a group of AI companies in talks with two of the three majors<\/a>: UMG and WMG. For Udio, those talks have now resulted in a set of \u201cstrategic agreements\u201d with the first of those.<\/p>\n\n\n\n \u201cIn addition to the compensatory legal settlement, the new license agreements for recorded music and publishing will provide further revenue opportunities for UMG artists and songwriters,\u201d revealed UMG in its announcement of the agreements.<\/p>\n\n\n\n \u201cThe new platform, which will be launched in 2026, will be powered by new cutting-edge generative AI technology that will be trained on authorised and licensed music. The new subscription service will transform the user engagement experience, creating a licensed and protected environment to customise, stream and share music responsibly, on the Udio platform.\u201d<\/p>\n\n\n\n\n Until then, there will be what UMG described as a \u201ctransition period\u201d for Udio while it builds the new service.<\/p>\n\n\n\n \u201cUdio\u2019s existing product will remain available to users during the transition period with creations controlled within a walled garden and the service amended in multiple ways\u2014including fingerprinting, filtering, and other measures\u2014before the launch of the updated service,\u201d it said.<\/p>\n\n\n\n \u201cThese new agreements with Udio demonstrate our commitment to do what\u2019s right by our artists and songwriters, whether that means embracing new technologies, developing new business models, diversifying revenue streams or beyond,\u201d said UMG boss Sir Lucian Grainge.<\/p>\n\n\n\n\n \u201cThis moment brings to life everything we\u2019ve been building toward \u2013 uniting AI and the music industry in a way that truly champions artists,\u201d added Udio CEO Andrew Sanchez. \u201cTogether, we\u2019re building the technological and business landscape that will fundamentally expand what\u2019s possible in music creation and engagement.\u201d<\/p>\n\n\n\n \u201cWe look forward to working with Andrew who shares our belief that together, we can foster a healthy commercial AI ecosystem in which artists, songwriters, music companies and technology companies can all flourish and create incredible experiences for fans,\u201d added Grainge.<\/p>\n\n\n\n The Wall Street Journal broke the news<\/a>, and talked to UMG\u2019s digital chief Michael Nash. While he did not reveal any financial terms from the settlement, he did talk a little about the plans for Udio\u2019s new platform.<\/p>\n\n\n\n \u201cThe label and artists who opt in will be paid for music used for training the model,\u201d reported the WSJ. \u201cThey will also be compensated when songs are used by subscribers to create new works.\u201d<\/p>\n\n\n\n That phrase \u201cartists who opt in\u201d is important. It strongly suggests that they will also be able to NOT opt in if they don\u2019t want their music to be used to train Udio\u2019s new model. That\u2019s a right that management bodies have been pressing for.<\/p>\n\n\n\n The WSJ also talked to Udio\u2019s Sanchez about the \u2018walled garden\u2019 aspect of the new service, confirming that while people will be able to share songs within it \u201cit is important to protect artists by keeping those creations within the platform\u201d.<\/p>\n\n\n\n In a blog post, Sanchez also gave more details on what Udio is building<\/a>.<\/p>\n\n\n\n \u201cArtists will set permissions for what and how you can create, allowing you to make new music in their distinct style,\u201d he wrote. Users will also be able to \u201creimagine your favorite song in a new genre, blend it with a different artistic style, or begin experimenting with covers.\u201d<\/p>\n\n\n\n That includes mash-ups. \u201cTake your favorite artists, songs, or styles and combine them in novel ways. In our internal experimentation, the team has gotten some truly remarkable and unusual results that will definitely delight,\u201d wrote Sanchez.<\/p>\n\n\n\n He also confirmed that as of today, Udio users cannot download the tracks they have made on its existing service. The walls of the garden have gone up already.<\/p>\n\n\n\n \u201cI understand this represents a significant sacrifice, and I hate eliminating functionality for our users. We make this change with a heavy heart, but it is necessary to help achieve the vision we\u2019re working towards,\u201d he wrote.<\/p>\n\n\n\n Naturally there are several more questions that flow from all this. First, will Udio soon announce a similar settlement and partnership with Warner Music Group? How about Sony Music, which wasn\u2019t named in that recent report about talks being ongoing?<\/p>\n\n\n\n Second, will UMG soon announce a similar settlement and partnership with Suno? That company is reportedly raising a $100m funding round at a $2bn valuation<\/a>, which would certainly give it a healthy pot of settlement cash.<\/p>\n\n\n\n Is Suno on the verge of striking other deals with majors too? Where does independent music fit into all this: will the AI-music firms make licensing agency Merlin \u2013 recently in the news for its pioneering licensing deal with ElevenLabs<\/a> \u2013\u00a0a priority too?<\/p>\n\n\n\n Will Udio need its own sizeable funding round to cover settlements, licensing deals and development on its next-gen platform? How will the opt-in \/ opt-out process work for artists signed to UMG, and will it extend to songwriters signed to the major\u2019s publishing arm too?<\/p>\n\n\n\n Finally, UMG\u2019s announcement of its strategic agreements with Udio described the new platform as a collaboration, raising the question of whether UMG will have more influence on its development, guardrails and business model than rivals.<\/p>\n\n\n\n Lots of questions, eh? But the sight of Udio signing its first deal with a music rightsholder does feel like a domino moment for the GenAI music sector, with more deals surely following in quick succession in the coming weeks and months.<\/p>\n\n\n\n Settling lawsuits may unlock the next rounds of funding for the bigger startups in that sector too, as well as new players who emerge in 2026, from any investors who were feeling jittery about the litigation.<\/p>\n\n\n\n We\u2019ll leave you with a final thought on the bigger picture. Udio is working on a new service for people to create GenAI music, but also to share and stream it. Meanwhile, Spotify recently announced partnerships to build \u2018artist-first AI music products\u201d<\/a> with the three majors, Merlin and Believe.<\/p>\n\n\n\n UMG\u2019s announcement today makes it clear that the intention is for music created on Udio to stay within Udio \u2013\u00a0and so NOT make its way onto Spotify and other commercial streaming services.<\/p>\n\n\n\n So, we could be looking at the latest bifurcation in the digital music world. GenAI creation and streaming services over there, with their walled gardens containing only GenAI tracks made by their communities.<\/p>\n\n\n\n And then mainstream DSPs over here, with the full commercial music catalogue, and GenAI features that \u2013 reading between the lines of Spotify\u2019s announcement \u2013\u00a0may be more about remixing and mashing up those tracks than creating brand new ones.<\/p>\n\n\n\n (Although judging by Udio\u2019s blog post, that\u2019s a feature that it\u2019s also building into its next-generation service.)<\/p>\n\n\n\n We\u2019re used to thinking about Spotify\u2019s main competitors being YouTube Music, Amazon Music and Apple Music. Now think of the big GenAI players like Udio, Suno, Stability AI and co as the new competitors.<\/p>\n\n\n\n Our take is that UMG is making a bet here: that if the dividing line between these two groups are clear, they can be complementary. Udio\u2019s next-gen platform may be a streaming service, but it\u2019ll only be for GenAI music \u2013 so people won\u2019t be cancelling their Spotify subscriptions for it.<\/p>\n\n\n\n Whether that dividing line stays clear is another question. We\u2019re already seeing music created on Suno used for virtual-artist projects like Xania Monet<\/a> that are getting traction on mainstream DSPs, for example.<\/p>\n\n\n\n Will there be scope in Udio\u2019s deals for its most talented \u2018music designers\u2019 (a phrase we\u2019re still not sure will catch on, but it\u2019ll suffice for now) to take their tracks out of the walled garden \u2013 with royalties still flowing back to the original, human music that trained the model.<\/p>\n\n\n\n So many questions. But as we said, this feels like a domino moment for GenAI\u2019s intersection with the music industry. We await the next deals with keen interest.<\/p>\n