Two of the three major music companies, Universal Music Group and Warner Music Group, are reportedly nearing licensing deals with AI music companies.
That’s according to the Financial Times, which reported on Thursday (October 2), citing people familiar with the matter, that the companies “could each strike deals with artificial intelligence companies within weeks” in a bid to “set a precedent for how AI companies pay for music”.
According to the FT’s report, the negotiations center on licensing music for the creation of AI-generated tracks and allowing the music to train large language models.
Discussions have reportedly included AI startups ElevenLabs, Stability AI, Suno, Udio and Klay Vision.
The labels are also negotiating with tech companies, including Google and Spotify, according to the report.
News of the reported impending deals arrives against a backdrop of active litigation between the majors and two of those companies: AI music generators Udio and Suno.
Universal, Warner, and the third major music company, Sony, sued these two startups in June last year over allegedly training their systems using the labels’ recordings without permission.
According to the FT’s report, it is hoped the talks with the startups will result in “licensing agreements that would include a settlement for past use of their music”.
One of the other AI companies cited by the FT is London and New York-headquartered AI audio startup ElevenLabs, which launched Eleven Music – a rival to Suno and Udio – in August.
Unlike Suno and Udio, however, Eleven Music has already inked licensing agreements with prominent rightsholders, including Merlin and a potentially precedent-setting deal with publisher Kobalt.
The Kobalt-ElevenLabs deal included a clause ensuring parity between publishing and recorded music revenues. Each side will receive an approximate 50/50 split of royalties generated from the AI platform.
Perhaps most significantly, as reported by MBW at the time, Kobalt secured a Most Favored Nation (MFN) clause in its deal with ElevenLabs, meaning that if any recorded music rightsholder now negotiates better terms than Kobalt’s, the publisher will automatically be upgraded to match them.
Separately, it’s also worth pointing out that Klay Vision, mentioned in the FT’s article, entered into a strategic partnership with Universal Music Group in October 2024 to work on “a pioneering commercial ethical foundational model for AI-generated music that works in collaboration with the music industry and its creators”.
According to the FT’s report, the labels are pushing for a payment model similar to streaming services, where each use would trigger a micropayment.
They want AI companies to develop attribution technology that is similar to YouTube‘s Content ID system to track when their music appears in AI outputs, the FT said.
However, the FT said executives warned that the negotiations face complexities that didn’t exist with streaming deals.
An unnamed senior label executive told the news outlet: “What’s different is when you take the entire history of music and feed it into a model that produces something unrecognizable. The question is: are artists going to get on board?”
The executive added: “It depends on the contract. Most say: ‘I trust you to do the right deals on my behalf.’ It would be impossible to go back to artists each time and ask, ‘Are you OK with this use of your music?’ At some point, there will be a big precedential deal.”
Bloomberg first reported on licensing talks between all three major labels with Suno and Udio in June. At the time, the newswire said the music giants were seeking license fees from the platforms plus “a small amount” of equity in both companies.
While UMG and WMG are reportedly nearing AI licensing deals, the FT cited a statement from Sony Music, which told the FT: “We are in discussions with companies that have ethically trained models and that benefit our artists and songwriters.”
The urgency stems from the flood of AI-generated music on streaming platforms. Last month, Deezer reported that nearly a third, or 28%, of all tracks uploaded on the platform are now fully AI-generated.
Spotify recently said it removed 75 million “spammy” AI tracks over the past year.
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