Universal Music Group and AI Startup Udio Settle Copyright Lawsuit, Partner on New AI Music Platform

Reviewed byNidhi Govil

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Universal Music Group has settled its copyright infringement lawsuit against AI music generator Udio and announced a partnership to launch a new AI-powered music platform in 2025. The deal marks the first major settlement between a record label and AI music company, potentially reshaping how AI-generated music is created and distributed.

Historic Settlement Ends Copyright Battle

Universal Music Group (UMG) has reached a landmark settlement with AI music startup Udio, ending a high-profile copyright infringement lawsuit while simultaneously announcing plans for a collaborative AI-powered music platform

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. The agreement represents the first major settlement between a record label and an AI music company, potentially setting a precedent for how the music industry will handle artificial intelligence technologies going forward.

Source: MediaNama

Source: MediaNama

The settlement includes what both companies describe as "compensatory legal settlement" along with new licensing agreements for recorded music and publishing

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. While financial terms remain undisclosed, UMG states the deal "will provide further revenue opportunities" for its roster of artists and songwriters, which includes global superstars like Taylor Swift, Drake, Kendrick Lamar, and Ariana Grande.

From Litigation to Collaboration

The transformation from adversaries to partners marks a dramatic shift in UMG's approach to AI-generated music. Just last year, Universal, alongside Sony Music Entertainment and Warner Records, sued both Udio and competitor Suno for what they termed "en masse" copyright infringement

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. The lawsuit specifically alleged that AI-generated songs created on Udio's platform closely resembled Universal-owned classics including Frank Sinatra's "My Way," The Temptations' "My Girl," and ABBA's "Dancing Queen."

"These new agreements with Udio demonstrate our commitment to do what's right by our artists and songwriters, whether that means embracing new technologies, developing new business models, diversifying revenue streams or beyond," said UMG CEO Sir Lucian Grainge

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Source: The Hollywood Reporter

Source: The Hollywood Reporter

New AI Music Platform Launch

The partnership will culminate in the launch of a new AI-powered music subscription service in 2025, designed to let users "customize, stream, and share music responsibly" on the Udio platform

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. The platform will be trained exclusively on "authorized and licensed music," addressing previous concerns about unauthorized use of copyrighted material.

Source: Rolling Stone

Source: Rolling Stone

Udio CEO Andrew Sanchez characterized the deal as transformative, stating it "empowers artists and fans" and represents "uniting AI and the music industry in a way that truly champions artists"

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. The new service aims to allow users to remix and create music in artists' distinct styles, with participating artists maintaining control over how their music can be used and receiving financial compensation

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User Backlash and Transition Challenges

The settlement announcement triggered immediate controversy among Udio's existing user base. As part of the agreement, Udio immediately stopped allowing users to download songs they had created, sparking what reports describe as a "backlash and apparent exodus among paying users"

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. Users expressed feeling "betrayed" by the platform's surprise move on Reddit forums.

In response to user frustration, Udio offered a brief 48-hour window starting Monday for users to download their existing creations before the platform transitions to its new business model. "We know the pain it causes to you," Udio acknowledged in a Reddit post, explaining that the company must stop downloads as it prepares for the new streaming platform launch.

Industry-Wide Implications

The settlement occurs against a backdrop of escalating legal battles between AI companies and content creators. According to the Chamber of Progress, a tech industry lobby group, more than 50 federal copyright cases are currently pending against AI companies

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. The group has called on President Donald Trump to intervene in these cases to protect AI innovation from "potentially company-killing penalties."

The Artist Rights Alliance welcomed the settlement as a "positive step in creating a legitimate AI marketplace" but raised concerns about protection for independent artists, session musicians, and songwriters who may not benefit from major label agreements

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. The group emphasized that "licensing is the only version of AI's future that doesn't result in the mass destruction of art and culture."

Industry observers are comparing this moment to Spotify's impact on music streaming, suggesting the partnership could represent "AI music's Spotify moment" by legitimizing and mainstreaming AI-generated music creation

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. The timing appears strategic, with speculation that OpenAI may be preparing its own audio-focused AI tool that could reshape the competitive landscape.

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