Warner Music Settles With Udio As Suno’s Valuation Surges In A Rapidly Shifting AI Music Market
The music industry’s long-running tension with AI took an unexpected turn this week as two rival AI music firms found themselves on opposite paths.
Warner Music Group ended its copyright battle with Udio and moved straight into partnership mode, while Suno — still facing its own legal disputes — announced a major funding round that pushed its valuation to $2.45 billion.
Both developments landed on the same day, signalling how record labels and investors are trying to shape the future of AI-generated music even as major legal questions remain unresolved.
Why Warner Music Is Betting On Collaboration With Udio
Warner Music Group has become the second major label to resolve its dispute with Udio, joining Universal Music Group, which settled in October.
Instead of continuing the courtroom fight, Warner and Udio have agreed to jointly build a subscription-based song creation platform set for launch in 2026.
The service will rely on licensed and authorised recordings from Warner Music’s catalogue, allowing users to craft AI-generated remixes, covers, and original tracks that feature the voices of artists who choose to participate.
Those artists will receive credit, compensation, and retain control over their involvement.
Robert Kyncl, Warner Music Group’s chief executive officer, said,
“We’re unwaveringly committed to the protection of the rights of our artists and songwriters, and Udio has taken meaningful steps to ensure that the music on its service will be authorized and licensed.”
Udio’s co-founder and CEO Andrew Sanchez said the collaboration marks a step toward enabling “experiences where fans can create alongside their favorite artists and make extraordinary music in an environment that offers artists control and connection.”
Sony Music remains the last major label still litigating against Udio.
What Makes Suno’s Funding Round So Notable?
While Udio moved closer to the major labels, Suno — its most direct rival — revealed that it has raised $250 million in new funding, lifting its valuation to $2.45 billion.
The round was led by Menlo Ventures with participation from Nvidia’s NVentures, Lightspeed, Hallwood Media, and Matrix.
Suno has gained massive popularity among both first-time creators and professional producers for its ability to generate complete songs from text prompts.
Millions of tracks have been produced on the platform in the past two years, according to CEO Mikey Shulman.
But unlike Udio, Suno has not resolved its copyright battles.
It is still being sued by Warner Music Group, Universal Music Group, and Sony Music, which allege that the company trained its AI systems using protected recordings without permission and risks creating an overwhelming flow of AI-generated tracks that could “drown out” professional artists.
Suno maintains that its training methods qualify as fair use under US copyright law and denounces the lawsuits as attempts to block independent innovation.
From Legal Disputes To New Alliances
The disputes began in 2024 when major labels accused Udio and Suno of copying hundreds of songs from popular artists to train their models.
Both companies denied wrongdoing, arguing they had not violated US copyright rules.
Industry watchers had long predicted that labels would eventually shift from litigation to licensing deals and equity partnerships.
This forecast is now becoming reality, with Universal and Warner striking agreements with Udio while exploring broader AI collaborations.
Both labels have also partnered with Stability AI to develop tools trained on ethically sourced music.
At the same time, concerns around AI-generated content continue to grow.
Streaming platforms such as Deezer have begun labelling AI-made tracks after a survey with Ipsos showed that 97% of listeners struggle to tell AI songs apart from human-composed music.
A separate Luminate survey found audiences more open to AI in technical filmmaking tasks than in creative roles such as scriptwriting or acting.
What Direction Does The Music Industry Truly Want?
The twin headlines — one legal settlement, one multibillion-dollar valuation — reveal an industry caught between fear and ambition.
Labels want control, AI firms want scale, and creators want clarity.
Yet none of the core copyright questions have been settled in court.
If AI music is already this powerful and this heavily funded before the rules are even clear, Coinlive believes the next phase will test how willing the industry is to redefine the idea of authorship itself.
The market may be racing ahead, but the real debate — over who gets to create, who gets credit, and who gets paid — is only just beginning.
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