Generative AI start-up Udio has fashioned a licensing settlement with Merlin, a well-liked digital licensing supplier for hundreds of unbiased labels and distributors. The announcement — which arrives a couple of months after Udio signed comparable licenses with Common Music Group and Warner Music Group — will now permit unbiased labels, distributors and artists to earn cash by permitting their recordings for use in AI coaching.
A consultant for Udio declined to supply additional details about the remuneration construction of the deal, and whether or not any backpay could be offered to Merlin members for using their works in AI coaching up till this level, however the firm did verify that Merlin members will solely take part on this licensing on an “opt-in” foundation, which means that Merlin members have the power to decide on whether or not or not they’re a part of Udio’s coaching information.
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The deal comes after Udio, together with competitor Suno, was sued by the three main music firms in the summertime of 2024 for utilizing their copyrighted sound recordings with out permission or compensation to coach their AI music fashions — one thing that the labels argued constituted copyright infringement on an enormous scale. Then, in November 2025, UMG and WMG made amends with Udio, forming licensing offers that permit their artists and songwriters to opt-in to Udio in alternate for a brand new revenue stream. The offers additionally successfully settled WMG and UMG’s a part of the lawsuit towards Udio (Sony Music’s a part of the lawsuit is ongoing). WMG additionally struck a licensing cope with Suno, settling its a part of the lawsuit with Suno.
As a part of its settlement with UMG, which was its first music trade licensing associate, Udio agreed to make main amendments to its platform. Initially, Udio was generally known as a generative AI music service that would create a wholly new tune from easy textual content prompts. These songs may then be downloaded and utilized by Udio subscribers nevertheless they wished. Now, Udio is pivoting away from the creation of recent songs and is specializing in remixing and customizing licensed, pre-existing songs from its music trade companions. Udio will retire its present mannequin a while throughout 2026 and relaunch as this new service with solely licensed songs from trusted companions like UMG, WMG and Merlin. Udio additionally agreed to grow to be a “walled backyard,” which means customers can now not take their AI-generated tracks outdoors of the platform — the entire creation should be executed inside it.
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In an interview with Billboard simply hours after asserting its cope with UMG, Udio CEO Andrew Sanchez stated: “We consider there’s an extremely thrilling market that mixes creation and consumption, each of human-generated songs and of AI-generated songs. We’re constructing a platform that’s going to let you interact in each of these actions, as a result of that’s the place we expect the market and customers need to go. By the best way, we additionally assume that’s the best way that artists are going to learn from this enormously. As a result of should you can go and you are able to do stuff along with your favourite artists, make a tune of their model or remix [a] favourite tune, you’re additionally going to hearken to their very own music. And we wish to have the ability to meet the customers and supply them one place to try this.”
That is the second main AI licensing deal for Merlin. In September, Merlin (together with giant unbiased writer Kobalt) struck an opt-in AI licensing cope with ElevenLabs for its new music mannequin, Eleven Music. This was the primary deal of its variety, and it set the tone for the smattering of AI licensing offers that arrived after it for the music trade.
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The Udio deal additionally marks the primary Merlin licensing settlement to be introduced after the group appointed a brand new CEO, Charlie Lexton. In a press release concerning the deal, Lexton stated: “As AI develops, it’s vital to Merlin that we work with companions who respect artists, their work, and the requirement to license music, For a while, Merlin and Udio have been engaged in conversations targeted on a basis of consent and truthful remuneration. We’re excited by Udio’s imaginative and prescient and the way they clearly respect and worth our members and their artists… Our partnership illustrates that Merlin is dedicated to not merely reacting to AI developments, however to being a participant in shaping the alternatives they promise.”
“Unbiased artists are the driving power of this partnership,” stated Sanchez. “By teaming up with Merlin, we’re making certain they preserve management over their work and are compensated for his or her creativity. Collectively, we’re constructing a platform that provides followers and creators unmatched instruments, actual energy and a deeper connection to the music they love. We’re not simply imagining the way forward for music creation — we’re ensuring unbiased artists are serving to us lead it.”
