TL;DR

Warner Music has settled its copyright lawsuit with AI music platform Udio and agreed to license its catalogue for a new subscription service launching next year, which will allow fans to create songs using licensed tracks. The deal requires artist opt-in and represents major labels’ efforts to establish compensation terms in the AI era after learning from the Napster crisis.

Warner Music, the world’s third-largest music company representing artists including Charli XCX, Madonna, and Ed Sheeran, has reached a licensing agreement with artificial intelligence start-up Udio. The deal settles Warner’s lawsuit alleging the company illegally used copyrighted recordings to train its AI models.

The settlement follows a similar agreement between Universal Music and Udio last month, suggesting emerging industry consensus around AI licensing frameworks. Warner also announced a separate licensing deal with Stability AI, an AI music tools specialist, and is close to unveiling additional agreements in the coming days.

Artist Control Preserved Through Opt-In Model

As part of the agreement, Udio plans to launch a new subscription service next year enabling fans to create their own songs using licensed tracks. Critically, Warner’s artists must individually agree for their music to be included in the service, preserving artist control over how their work is used in AI-generated content.

This opt-in requirement addresses concerns from many artists who remain staunchly opposed to AI-generated music, fearing it could undermine the value of their work. High-profile musicians including Paul McCartney, Kate Bush, and Annie Lennox have released a “silent” album protesting UK government copyright law changes, with the track listing spelling out: “The British government must not legalise music theft to benefit AI companies.”

Industry Learning from Past Disruption

After the Napster crisis of the early 2000s decimated traditional revenue models, music companies are attempting to establish favourable terms before disruptive technology becomes entrenched. Labels have spent much of this year negotiating with AI groups to define licensing terms for products creating songs using their music copyrights—and ensure proper compensation.

Elliot Grainge, chief executive of Warner’s Atlantic Records, told the Financial Times in September: “Labels have a responsibility to negotiate the best deals for their artists—and they’re really good at that. They learned from their mistakes in the past.”

Establishing AI-Era Compensation Framework

The agreements represent major labels’ efforts to set payment terms in the AI era whilst balancing artist concerns about creative integrity and economic value. Warner, along with rivals Universal and Sony, sued Udio last year, using litigation as leverage to establish licensing frameworks rather than allowing uncompensated use of their catalogues.

The settlements suggest a template emerging for AI music platforms: licensed access to major catalogues, artist opt-in requirements, and subscription-based revenue models. This approach aims to create sustainable economics for rights holders whilst enabling technological innovation.

Looking Forward

The rapid succession of licensing deals—with announcements expected from additional platforms including music start-up Klay—indicates the industry moving quickly to establish norms. However, artist opposition remains significant, with many viewing AI-generated music as existential threat to their livelihoods regardless of licensing frameworks.

The effectiveness of opt-in models in preserving artist control whilst enabling platform growth will likely determine whether these agreements provide sustainable balance between innovation and rights protection, or merely delay larger conflicts as AI music generation capabilities advance.

Source: Financial Times

Share this article