The Truth About AI Deals and Musician Pay

Musicians AI compensation is now a federal court question, and it starts with two settlements. In late 2025, Warner Music Group settled its copyright lawsuits against both Udio and Suno. Universal Music Group settled only with Udio — it remains in active litigation against Suno. Both Warner deals worked the same way: the label agreed to let the AI companies train new models on its catalog, and in exchange, the label got paid.

The musicians who actually played on those recordings did not.

That’s the claim at the center of a federal lawsuit the American Federation of Musicians filed against both labels in June, accusing them of breaching their own collective bargaining agreement. “Defendants, two of the largest music companies in the world, have licensed sound recordings on which AFM-represented musicians have worked, without compensation or credit, to two AI companies,” the union’s complaint reads. It also alleges the labels won’t tell the union which recordings, or whose performances, are being handed over.

A Contract Written Before AI Existed

The fight turns on one clause. The AFM’s agreement with the majors includes a “new use” provision — language meant to guarantee musicians get paid when a recording they played on gets used somewhere it wasn’t originally licensed for, like a film or a commercial. The union says training an AI model to generate new music from a recording is exactly that: a new use.

UMG disagrees, and its argument is specific. The new-use clause, the label wrote in its motion to dismiss, “is a rate conversion provision, not an open-ended royalty provision” — it only pays out when some other AFM agreement already sets a price for the new use in question. No AFM agreement sets a price for AI training. By UMG’s own math, that means the label owes the union nothing. Warner called the lawsuit “unproductive” and said it’s still negotiating with the AFM directly, framing its Suno deal as an effort to “architect a healthy AI ecosystem on behalf of artists everywhere.”

The Timing Is the Story

Two days before the AFM filed suit, Suno closed a $400 million funding round that valued the company at $5.4 billion — more than double what it was worth seven months earlier. Suno’s CEO said the money would help more people express themselves through music, and confirmed a new model built on the Warner partnership is coming soon.

The musicians whose recordings are training that model are the ones suing to find out if they’ll see any of it.

Where Musicians AI Compensation Stands Now

Universal and Warner Records (the AFM amended its complaint in August to drop parent company Warner Music Group Corp. as a defendant) both moved to dismiss, and the AFM filed an amended complaint on July 24 pushing back on the labels’ reading of the contract. Both companies filed reply briefs on September 11, closing briefing on the motions to dismiss. No ruling has come down on whether the new-use clause actually covers AI training — that’s still the open legal question the case exists to answer.

Which recordings are actually going into these AI models, and what artists are owed if the union wins, both remain unresolved. But the shape of the dispute is already clear: the money moved first, from the AI companies to the labels. Whether any of it moves again, from the labels to the musicians, is what a court will now have to decide.

Sony Hasn’t Settled — Yet

Sony Music is conspicuously absent from the AFM’s lawsuit, and the reason says as much as the suit itself. Sony sued Suno and Udio alongside Universal and Warner in 2024. Unlike its rivals, it hasn’t settled with either company, so there’s no licensing deal, no training rights, and no AI settlement money for the AFM to argue over — not yet. Warner and Universal only became defendants because they made a deal first.

That’s the pattern this case is really about. The moment a label settles with an AI company, it starts collecting revenue from music its own signed artists and session players made — and under the AFM’s reading of its own contract, that revenue is supposed to flow back to the musicians. Whether it actually has to is now a question for a federal judge, not a negotiating table.