Music Labels Shift from Litigation to Collaboration: Sony, Universal Music Group, and Warner Music Group in Advanced Talks with AI Startups Suno and Udio for Licensing Deals, Unlocking Billions in New Revenue Streams

Major music labels (UMGNF, SONY, and WMG) are negotiating licensing deals with AI startups Suno and Udio, potentially unlocking billions in revenue for investors. These deals would allow AI startups to access label catalogs in exchange for fees and attribution. The global AI music market is projected to reach $6.2 billion by 2025, with generative AI music accounting for $2.92 billion. If labels secure 20-30% of this segment, they could generate $584-876 million in new annual revenue.

Major music labels Universal Music Group (UMG), Warner Music Group (WMG), and Sony Music Entertainment (SONY) are reportedly in licensing discussions with AI startups Suno and Udio. These talks, which began in early June 2025, aim to establish a framework for how AI companies can compensate artists for their work [1].

The negotiations come after both AI startups faced lawsuits from the music companies for copyright infringement. The labels are pushing for a small equity stake in Suno and Udio, while the AI firms seek flexibility to experiment [1]. The proposed deals would allow Suno and Udio to access the labels' extensive music catalogs in exchange for fees and the development of attribution technology [2].

The potential impact of these deals is significant. The global AI music market is projected to reach $6.2 billion by 2025, with generative AI music accounting for $2.92 billion. If the labels secure 20-30% of this segment, they could generate $584-876 million in new annual revenue [3].

However, several challenges remain. The labels will need to obtain agreements from independent labels and publishers, as well as artists and songwriters, who may not support the use of their work in AI training [3]. Additionally, the development of attribution technology is still in its early stages, and flat-fee licenses may not be sufficient to capture the long-term value of generative AI [3].

Despite these challenges, the potential for these licensing deals to unlock billions in revenue for investors and the music industry is substantial. As the AI music market continues to grow, these negotiations could set a precedent for how songs are used and artists are compensated for AI-generated remixes.

References:
[1] https://techcrunch.com/2025/06/02/major-record-labels-are-reportedly-in-licensing-talks-with-ai-firms-udio-and-suno/
[2] https://www.investopedia.com/major-labels-in-talks-to-license-ai-use-of-music-report-says-11747128
[3] https://www.billboard.com/pro/why-ai-licensing-deals-major-labels-suno-udio-hard/