Major record labels in talks to license music to Suno and Udio

Last year, the major record labels wanted billions in court. Now, they are not just asking for licensing checks; they want a piece of the startups themselves.

Universal Music Group, Warner Music Group, and Sony Music Entertainment are in talks to license their catalogs to AI music makers Udio and Suno, according to Bloomberg. The deals would resolve the massive copyright lawsuits hovering over both startups.

From billion-dollar damages to startup equity

Last year, the Recording Industry Association of America sued Udio and Suno for alleged copyright infringement. The industry body demanded up to $150,000 per infringed work, a figure that easily climbed into the billions.

Now, the two sides are trying to find common ground outside the courtroom. The labels are asking for upfront licensing fees plus a small equity stake in both companies.

Both startups generate fully formed tracks from simple text prompts, but they operate at very different financial scales. Udio raised $10 million last year with backing from Andreessen Horowitz, while Suno pulled in $125 million in a round led by Lightspeed Venture Partners.

Sources say the negotiations are running in parallel, setting off a quiet race to see who signs first. Still, plenty of friction remains: the labels want strict control over how their catalogs get deployed, while the startups are fighting for affordable pricing and room to experiment.

Dusting off the old streaming playbook

If this feels familiar, that is because the music industry has played this exact game before.

From MP3 file-sharing to early YouTube uploads and the rise of Spotify, the labels have always sued first, stalled the disruptors, and then settled for a mix of licensing cash and platform equity. Streaming ended up saving the recorded music business, and labels want AI to do the same.

The push mirrors OpenAI's recent copyright trajectory. While The New York Times took OpenAI to court, publishers like News Corp, the Associated Press, and Vox Media chose to take the licensing checks.

Why it matters

Taking equity is a brilliant, calculated hedge by the record labels. It proves they know AI music cannot be sued out of existence. Instead of fighting a forever war, they are buying a front-row seat to their own potential disruption.

For everyday users and bedroom producers, this is generally good news. Licensed training data means fewer legal gray zones when you try to commercialize an AI-generated song on streaming platforms. The downside? You will almost certainly foot the bill through higher subscription tiers and stricter watermarking or style guardrails.

For the broader AI ecosystem, this signals that the fair use defense in creative media is rapidly giving way to checkbook diplomacy. We think this creates a dangerous moat: well-funded startups like Suno can afford to carve out equity and pay labels, but smaller bootstrapped teams and open-source models will be locked out of the best datasets entirely.