From legal dispute to revolution: UMG and Udio close licence deal for AI music

What began as a tough legal dispute could change the future of music production: Universal Music Group (UMG) and AI provider Udio reached an out-of-court agreement and licensing partnership at the end of October 2025. This represents a paradigm shift in the use of music for artificial intelligence – away from uncontrolled growth and towards remunerated and transparent systems.

What was the AI training conflict about?

In June 2024, several major labels, including UMG, SONY MG and WARNER MG, filed lawsuits against the AI music platforms Suno and Udio. The accusation: both companies are said to have used copyrighted audio recordings without permission to train their AI systems.

The lawsuits claimed that Suno and Udio not only used commercial music from major labels, but also extracted lyrics from databases such as Genius, AZLyrics, Lyrics.com or Musixmatch – also without permission. Suno and Udio had allegedly set up internal libraries with copied audio and lyric data that employees and contractors had access to – without sufficient deletion or accounting records.

And there were more accusations. The platforms are said to have downloaded hundreds or even thousands of songs from YouTube by circumventing protective measures. The complaints speak of “stream-ripping”, a common method of music piracy.

Market and competitive damage

Special focus was placed on independent artists who, according to the claim, are being replaced by AI products. Even if the tracks produced do not copy originals exactly, they are allegedly so inexpensive and can be used in such large numbers that the licence and revenue opportunities of the original artists are damaged.

The central question is can AI be trained with protected music – and if so, under what conditions?
While the dispute in the USA is escalating over so-called Fair Use, the artists are concerned with transparency, licensing models and fair remuneration.

UMG vs Udio: from legal dispute to licensing partnership

UMG and Udio announced on October 30, 2025 that they had agreed a licence and product partnership – a first in the music industry.

Key points of the deal:

• Licensed training: future Udio AI models will be based on an approved corpus of data with clearly defined rights.
• Protection mechanisms: filter and fingerprinting technologies will prevent unauthorised reproduction and enable attribution.
• Fair compensation: UMG artists and songwriters will be compensated when their material in the licensed pools is used.
• Product development: Udio is planning a subscription model with licensed content – a novelty in the AI music world.

Meanwhile, the proceedings against competitor Suno are continuing. The outcome could have a lasting impact on future legislation on AI and copyright.

A change of strategy in the AI music industry

The move by UMG is more than just a legal compromise – it marks a change in strategy:
instead of fundamentally combating AI development, the majors are aiming for controlled cooperation. The goal?

• Legal certainty through clear licensing models,
• New sources of revenue from AI use for artists and labels, and
• Co-design of technical standards around transparency, data use and protection mechanisms.

In short, the music industry wants to help determine the rules of the AI age, rather than just react to it.

What does the AI deal mean for artists?

1. New compensation models

When songs end up in the approved data pool, all parties involved can benefit directly, depending on their place in the rights chain (master, publisher, splits). Fingerprinting should also help to track usage transparently.

2. Creative workflows with AI

AI remains a tool, not a substitute. Text-to-music generators, stem variants or automated mix helpers offer artists new creative spaces, but now in legally compliant, secure environments.

3. New opportunities in the market

Subscription models, curated platforms and creator programmes open up new visibility and monetisation opportunities – especially for artists with clearly documented rights and clean metadata.

Unanswered questions

How exactly does billing work?
What role do indies have, given that they have less bargaining power?
And how will ongoing proceedings – for example against Suno – affect future models?
There are still many moving parts.

Impact on artists

Who will benefit from AI training in the future? Will artists be paid fairly if their music is part of training data sets? And does the legal system really protect creativity? For many independent artists, there is a lot at stake – especially visibility and revenue opportunities.

Impact on AI music platforms

The other defending AI company, Suno, argues that their actions fall under “Fair Use” – a legal exception in US copyright law. However, the industry asserts that platforms are deliberately circumventing licensing obligations. A court order or settlement could set a precedent for dealing with AI training data in music.

Practical tips for artists

If you are an artist and want to benefit from these new models, remember:

• Inventory your rights: keep ISRCs, splits, and metadata up to date.
• Prepare assets: stems and instrumentals increase the chances of being included in licensed AI pools.
• Review contracts: pay attention to AI clauses and usage rights in label or publishing contracts.
• Use licensed tools: experiment with platforms that have protection mechanisms and reporting.
• Track your releases: keep content ID and fingerprinting systems up to date to track usage.

In summary: from conflict to cooperation

The case of UMG vs Udio could be groundbreaking for the future of music production. It is no longer just about technical innovation – it is about rights, visibility and fairness.

For artists, this means keeping an eye on the issue of AI music. Anyone who wants to get involved in AI training should carefully check whether and how their releases end up in training datasets – and what compensation mechanisms exist. For the industry, this means that licensing models, transparency and a renegotiation of the rules are on the cards – and this could decide how music is created and used in the AI age. This litigation could lead to a new form of collaboration – licence-based, remunerated, and technologically controlled.
For artists, this means more transparency, more protection and new opportunities to be involved in the age of artificial intelligence, not left out.

The goal is clear – licensed, remunerated and secured AI models instead of legal grey areas.