Top record labels and start-up Suno hit impasse in talks over AI-generated music

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Talks over licensing deals between the world’s largest record companies and start-up Suno have reached a stalemate, exposing deep divisions over how the industry should respond to the rise of AI-generated music.

There had been little substantive progress in discussions between Universal Music and Suno in recent months, according to people familiar with the matter, and no agreement had been reached with Sony, as the music behemoths reject the start-up’s model for distributing AI-generated music.

“We have ongoing engagement, but there is no path forward with the current proposal,” said a person involved in the negotiations.

People familiar with the talks said there had been little progress since Warner Music, the third-largest label, struck a deal with Suno in November.

Suno, one of the most prominent AI music companies, allows users to create songs in seconds using simple text prompts. It was valued at $2.45bn in a funding round last year and said it had 2mn paying subscribers. 

The impasse goes to the heart of a broader fight over the future of music as companies across the media landscape have wrestled with how to protect their copyrights against AI.

Record labels argue that tools such as Suno rely on music made by human artists, and AI groups should pay for their use. So far, the companies cannot agree on what that would look like.

While executives said discussions remain active, one central disagreement was over what happens to songs once they are created. Universal wants AI-generated tracks to stay inside apps such as Suno and not spread freely across the internet. Suno, however, wants users to be able to share and distribute those songs more widely.

This had become a “major roadblock”, said a person involved in the talks, adding that “there’s no point exchanging conditions to dot I’s and cross T’s” while the two sides remain at odds.

The tensions extend beyond the labels. Earlier this year, a coalition of artists and industry groups urged the music business to reject Suno, arguing its technology uses artists’ work without consent.

Suno said in a statement: “We want to work cooperatively with the music industry to unlock new sources of revenue for artists.”

The stand-off comes at a sensitive moment for the industry. Shares in big music companies have fallen to three-year lows amid fears over AI. Investors are watching closely for licensing deals that could determine whether the technology becomes a threat or a new source of growth.

In June 2024, the three major record labels sued Suno and rival Udio for copyright infringement. Suno fired back, with chief executive Mikey Shulman accusing the music companies of “reverting to their old lawyer-led playbook”. The sides later opened licensing discussions to settle the disputes.

Universal, the largest music company, has struck licensing deals with several AI groups in recent months, including Udio, Klay Vision, Stability AI and Nvidia. Sony has also reached an agreement with Klay Vision.

Universal wants AI music to work like a premium feature that listeners would pay extra for within apps such as Spotify, rather than a tool that lets anyone create and distribute songs across the internet.

As part of Universal’s settlement with Udio, users cannot download the songs they create, so the music stays inside the app.