On June 1, 2025, Bloomberg reported, citing people familiar with the discussions, that Universal Music Group, Warner Music Group, and Sony Music Entertainment were in licensing talks with AI music startups Suno and Udio. Less than a year after the labels sued both companies, the two sides were negotiating a framework under which the AI firms would pay to use the protected catalogs.
Music Business Worldwide (MBW) and TechCrunch followed on June 2. This is more than one industry’s business story: how licensing for generative AI gets negotiated, and how value gets split between rights holders and AI companies, is being worked out here first, and music’s template is likely to be consulted by every other content industry.
From the defendants’ seat to the negotiating table
In mid-2024, the three major labels sued Suno and Udio for copyright infringement, and MBW pointedly noted the timeline: Bloomberg’s report arrived just under a year after the suits were filed. The shift from outright confrontation to licensing talks suggests both sides have recalculated. For the labels, litigation outcomes are uncertain while licensing revenue is guaranteed; for the startups, removing the legal uncertainty hanging over them is the only way their products and business models can grow normally. The stalemate in court pushed both sides toward the table. A settlement framework would also give later entrants clear rules of the road for the whole category.
The framework: license fees plus a small equity stake
Bloomberg’s reporting outlined two layers of terms. First, license fees: the majors want the platforms to pay for using their music. Second, equity: the labels are seeking a small amount of equity in both Suno and Udio, upgrading a plain licensing relationship into aligned ownership. TechCrunch added two more tension points: the labels want more control over how their music is used, while the startups want room to keep experimenting within any deal. In other words, the negotiation is deciding three things at once, the price of using copyrighted catalogs, the scope of rights-holder oversight, and the freedom AI products will have to evolve. Equity is the notable part: taking stakes turns a zero-sum royalty negotiation into shared upside, since the better the AI products perform, the more the labels earn beyond fixed fees.
A possible exit from the 2024 lawsuits
MBW’s sources said any agreement would help settle the lawsuits between the startups and the music companies. The licensing talks are, in effect, the groundwork for a settlement: rather than waiting for courts to issue an unpredictable ruling on copyright questions around training data, the two sides can address past infringement disputes and future cooperation in one commercial package. If this litigation-to-license path works, it offers a replicable resolution for the broader conflict between generative AI and the copyright industries, which is exactly why the report drew attention well beyond the music business.
What it means for generative music
The outcome directly shapes the cost structure and legal footing of AI music products. If Suno and Udio reach licensing deals with all three majors, licensed-catalog-first becomes the market rule, and the cheap route of training on scraped public data becomes hard to sustain; at the same time, the two startups walk out of the shadow of litigation with a more stable content supply. TechCrunch flagged the longer-term point: these deals would establish a framework for how AI companies compensate artists. How that compensation is designed, and how much reaches creators themselves, is the next battleground.
What to watch next
As of the reporting, neither side had disclosed concrete terms, the sources remained anonymous, and talks could still fall apart. Three things are worth tracking: whether a licensing agreement comes bundled with a litigation settlement that resolves past and future in one stroke; how the labels’ small equity stakes are structured, and whether they become a standard clause in future negotiations; and how much product experimentation freedom the startups preserve, which determines whether AI music products can keep iterating quickly. Looking back from 2026, the early-June 2025 report stands as the landmark moment when AI companies and the content industry shifted from courtroom fights to commercial negotiation, and it is the precedent behind the wave of licensing deals with labels, publishers, and media groups that followed. For musicians, the fine print on those equity stakes is worth reading closely.
Sources
- Music Business Worldwide: Universal, Warner, and Sony in talks to license AI music generators Suno and Udio (report)
- TechCrunch: Major record labels are reportedly in licensing talks with AI firms Udio and Suno
AI-assisted summary compiled from the sources above, reviewed by a human before publishing.