Major label settlements that are reshaping AI music
In one of the first major legal battles between music labels and artificial intelligence companies, major record labels Warner Music Group and Universal Music Group have surprisingly moved from suing AI music platform Udio and Sudio for copyright infringement, to partnering with the companies to create new AI-based music streaming platforms.
These labels represent some of the world’s biggest artists, with Warner’s roster including Ed Sheeran, Fleetwood Mac, Dua Lipa and Charli XCX, and Universal boating artists such as Billie Eilish, Taylor Swift, The Weeknd, Bob Dylan, and Kendrick Lamar.
The settlements, announced in October and November 2025, mark a pivotal moment in the intersection of copyright law and AI technology, with implications that will echo throughout the music industry.
Udio and Suno are the two most prominent new AI music companies. They provide platforms that allow users to generate complete songs using text prompts. The Recording Industry Association of America (RIAA), on behalf of Warner Music Group, Universal Music Group, and Sony Music Entertainment, filed copyright infringement lawsuits against both companies in June 2024. The labels alleged that these platforms had committed “mass copyright infringement” under US copyright law by training their AI models using copyrighted songs, without authorisation or payment to creators and rights holders, and that this use directly competed with and threatened to displace human artists.
Udio argued that training AI models using copyrighted material qualified as fair use under US copyright law.
The settlements were reached before judgment was entered in the suits, and come at a time where artists globally are protesting AI-generated music. Across the industry, prominent musicians have warned that this technology undermines artistic integrity, human creativity, and risks saturating the market with derivative or misleading works.
Recent developments – from Paul McCartney’s silent album Is This What We Want? to the rapid rise of AI-constructed bands such as Velvet Sundown, whose “members” do not exist – have intensified calls for transparency, consent, and meaningful control over the use of artists’ voices and compositions. Rosalía’s recent operatic pop album, Lux, recorded with the London Symphony Orchestra, stands as a direct protest to AI, with the Spanish artist singing in 13 different languages, the album, Lux, has been described as a celebration of “the irreplaceable complexity of human musicianship and emotion.”
Many have argued that labels and tech companies are moving faster than the ethical and legal frameworks that should govern AI music, leaving artists feeling left behind in decisions that directly affect their livelihoods and identity as creators.
The New Framework
Udio and Universal have announced it will launch a “music creation, consumption, and streaming platform” in 2026, trained exclusively on legally licensed music. They have proposed that under this service, labels and artists will be paid not only for the rights to train on their music, but they will also receive compensation for AI songs that are created using their work. Crucially, artists must opt in to participate in the platform, meaning their music will not be used without their consent.
However, significant questions remain. The amounts Udio and Sudo paid Universal and Warner to settle their disputes have not yet been disclosed, and it is still unknown what revenue artists will ultimately receive if they choose to take part in the new platform. Concerns also remain about who truly benefits from these arrangements. The Music Artists Coalition, a nonprofit founded by legendary artist manager Irving Azoff, has raised concerns about the new platform. “We’ve seen this before – everyone talks about ‘partnership,’ but artists end up on the sidelines with scraps”, Azoff stated following the Universal-Udio settlement.
The opt-in model seems beneficial for artists who wish to prevent their music from being used to train AI platforms. Yet, if standard recording contracts contain default consent clauses, or if offers to artists from labels require “bundling” of these rights, participation could effectively become automatic, undermining the promise of a truly voluntary “opt-in” arrangement.
Interestingly, too, the US Copyright Office’s 2023 AI guidance states that only the human elements of an AI-assisted work can be protected, which may limit copyright protection for the newly created songs.
The Australian Copyright Context
Australia’s legal position on AI-generated music currently remains fundamentally unchanged by these international commercial settlements, though they may influence how Australian law develops in response to AI.
It can be expected that the claims made by the US labels in their lawsuits would be equally applicable under the Copyright Act 1968 (Cth) (the Act), while Australia’s “fair dealing” exceptions are considerably narrower than the ‘fair use’ defence available in US copyright law.
As for the new platform, under the Act, copyright protection is currently limited original works where there has been independent intellectual effort by a human author (which is similar to the US Copyright Office AI guidance noted above). This creates significant uncertainty around AI-generated content in Australia, because:
- AI has no legal personhood or rights under Australian law;
- there is no obligation to disclose that a song (or other work) was AI-generated; and
- as copyright protection requires human authorship and independent intellectual effort, if an AI-generated work lacks substantial human involvement (which will not be obvious), it will not receive copyright protection.
Conclusion
While these settlements do not clarify important grey areas under Australian copyright law, they do demonstrate a potential pathway forward – licensing arrangements that compensate human creators whose works are used to train AI systems and generate new works.
The challenge for Australia will be ensuring that legal frameworks evolve in ways that protect all creators, not just major record labels (or their artists) with leverage, while still allowing technology to develop and be utilised in interesting ways.
For now, the message for Australian artists, producers, and businesses is clear: the legal uncertainty around AI music requires expert advice, and a thorough understanding of both the opportunities and risks this technology presents.
Queries
For further information regarding this article, or for specific guidance on AI-generated content, music licensing, or intellectual property matters, please contact the author or any member of our Entertainment, Media, Sports & Technology team.
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