On Wednesday night (Oct. 29), Universal Music Group (UMG) and AI music company Udio announced they had reached a strategic agreement. Importantly, this agreement not only settled UMG’s involvement in the massive copyright infringement litigation the major labels brought against Udio and another AI music company, Suno, last summer, but also paved the way for the two companies to “collaborate on an innovative, new commercial music creation, consumption and streaming experience,” according to the announcement.
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The newly revamped version of Udio is set to debut in 2026, and it will feature fully-licensed UMG sound recordings and publishing assets that are totally controlled by UMG — but only those from artists that choose to participate.
Here, Billboard looks at the deal more deeply and answers some questions that have arisen in the wake of the first-of-its-kind agreement.
Why did UMG and Udio decide to come together and settle this week?
It’s hard to know exactly what happened behind closed doors, but reports that the major music companies had been in talks to settle with Udio — and Suno, which was also sued in a nearly identical lawsuit by the majors — have been circulating since this summer, making it relatively unsurprising to hear that at least one deal has been finalized.
One clue as to why there was incentive to settle here comes from a recent Barclays Research report on the majors’ lawsuits against the AI music firms, which stated that it could be “prohibitively expensive to lose” for Udio, much more than Suno, given the two firms had raised $10 million and $125 million, respectively, at the time the report was published on Tuesday (Oct. 28). Even a tough settlement, the report states, “would likely only mean the disappearance of Udio.”
The timing of the press release about the UMG-Udio deal also arrived the night before UMG’s Q3 earnings call, which took place yesterday (Oct. 30). The company has a history of announcing big news just before earnings calls in general, including one instance when UMG reached an agreement with TikTok the night before earnings in 2024 after a three-month standoff.
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What exactly will this 2026 version of Udio entail?
The new version of Udio will feature a number of tools to allow users to remix, mash up and riff on the songs of participating UMG artists. Users will also be able to create songs in the style of participating artists and use some artists’ voices on songs.
According to Udio CEO Andrew Sanchez, who spoke to Billboard just after the deal was announced, “[Udio is] going to involve all kinds of AI models, like a base model… The best way to explain it, [is it] will have sort of like flavors of the model that will be specific to particular styles or artists or genres. And this, again, provides an enormous amount of control.”
How can UMG artists and songwriters participate, and can they get paid for that?
Yes, UMG artists and songwriters will be remunerated for participating in Udio. According to a source close to the deal, this will include financial rewards for both the training process of the AI model and for its outputs. The details of exactly how that payment will work beyond this are unclear. Sanchez declined to answer a question about whether the model uses attribution (tracing back which songs in a training dataset influenced the outputs of a model) or digital proxies (a selected benchmark, like streaming performance, used to determine the popularity of songs in a dataset against others overall) as a way to determine payment — two of the most often proposed methods of AI licensing remuneration.
This answer is also made more complicated when considering the breadth of AI tools Udio plans to offer on its service. Importantly, artists can pick and choose exactly which Udio tools they “opt-in” to: “We’re going to launch with a set of features that has a spectrum of freedom that the artist can control,” Sanchez said. “There are some features that will be available to users that will be more restrictive in what they can do with their artists or their songs. And then there will be others that are more permissive. The whole point of it is not only education but just meeting artists at the levels they’re comfortable with.”
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Who is the target audience for the newly revamped Udio?
According to Sanchez, it’s fans: “We want to build a community of superfans around creation. As we say internally, it’s connection through creation — whether that’s with artists or that connection with other music fans. We want to lean into that. I think it’s going to be a huge asset for artists and fandoms.”
Are Sony and Warner still pursuing their lawsuits against Udio?
Yes, for now. UMG’s settlement and deal with Udio does not impact Sony Music and Warner Music Group’s lawsuit against Udio for widespread copyright infringement. While some industry onlookers posit that Sony and Warner are more encouraged to settle now that UMG is no longer pursuing litigation against Udio, there’s no indication that these companies are definitely planning to do so yet.
Why are some Udio users upset about this deal?
By doing this deal with UMG, Udio has agreed to a major pivot in its offering to users. Currently, the site is known for helping users make songs from simple text prompts, which they can then export and upload to streaming services, share on social media — or whatever they want to do.
Users are particularly upset because, as part of this deal with UMG, Udio immediately removed its users’ ability to download their work from the service. Angry subscribers gathered on a subreddit to complain. “This feels lie an absolute betrayal,” wrote one user. “I’ve spent hundreds of $$$ and countless hours building tracks with this tool,” wrote another. “No one warned us that one day, we wouldn’t even be able to access our own music. You can’t just pull the plug and call that a ‘transition.’”
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In a statement to Billboard on Thursday (Oct. 30), an Udio spokesperson said that disabling exports on the platform is “a difficult but necessary step to support the next phase of the platform and the new experiences ahead.” On Friday (Oct. 31), Udio relented slightly, writing on Reddit that starting Monday (Nov. 3), the platform will give users a 48-hour window to download their existing songs — and that any songs downloaded during that time will be covered by the terms of service that existed before the UMG deal was signed.
The move to restrict downloads in the long term may prove to be more than just an inconvenience for users — Udio could also be hit with legal claims over it. There could be arguments made that disabling downloads was a breach of the subscription contract that Udio signed with users, or that Udio falsely advertised its services in violation of consumer protection laws. It wouldn’t be the first time this has happened in recent memory: Just last year, Amazon Prime users brought claims like this over changes to the cost of ad-free movie and TV streaming for subscribers.
