The Labels Made a Deal. Nobody Asked the Independents.

When the three biggest companies in the music business sued artificial intelligence platforms Suno and Udio in June 2024, it felt — briefly — like the industry had found a rare moment of solidarity. Universal Music Group, Sony Music Entertainment, and Warner Music Group filed suit through the RIAA, accusing both AI startups of the mass copyright infringement of their catalogs. The framing was protective: artists were being exploited, and the majors were going to stop it.

Eighteen months later, two of those three labels have settled. Warner Music reached a deal with Suno in November 2025. Universal settled with Udio the month before. The lawsuits, it turned out, weren't the end of the story. They were the opening negotiation.

What followed was a set of licensing agreements that will reshape how AI music tools work, who profits from them, and — critically — whose catalog gets to anchor the new AI music economy. The terms are largely secret. Independent artists weren't at the table. And the precedents being set right now may echo for the next two decades in ways that look uncomfortably familiar.

From Courtrooms to Boardrooms

The deals came quickly once the majors decided they wanted them. Universal and Warner each settled with Udio in the fall of 2025, and Warner separately settled with Suno in November — the same week it announced a partnership with Stability AI. The stated purpose of these agreements was to transition both AI platforms from models trained on unlicensed recordings to models trained on licensed and authorized music. The revenue would flow back to rights holders. Artists and songwriters, the press releases promised, would have control over whether and how their names, voices, and compositions were used.

Warner described its Suno deal as "first-of-its-kind." The agreement included Suno acquiring Songkick, Warner's live music discovery platform, as part of the terms. Universal and Udio's settlement took a different shape: Udio became what industry analysts are now calling a "walled garden." Users can generate and remix music within the platform, but nothing they create can be downloaded or exported. It's less a creative tool than a fan engagement sandbox — which is exactly how Udio now positions itself.

Suno came out of its deal differently. Under its agreement with Warner, the platform retired all models trained on unlicensed music, replacing them with new licensed versions. But users can still download what they create, and Suno's core product — a tool for making original AI music — remains intact. Industry observers at Billboard described Suno as getting the better deal of the two companies.

Sony, meanwhile, is still in court. As of spring 2026, Sony Music has not settled with either Suno or Udio. Its fair-use cases are active in both Massachusetts and the Southern District of New York, with a significant ruling expected sometime this summer — one that could either validate or undermine the entire framework the other majors have built.

The Streaming Playbook, Running Again

The concern isn't that deals were made. It's how they were made, and what questions they left unanswered.

When streaming emerged in the late 2000s, the major labels negotiated the foundational licensing agreements with Spotify, Apple Music, and their early peers behind closed doors. The terms — the royalty rates, the payment structures, the splits between recording and publishing rights — were kept confidential for years. Artists spent most of the 2010s doing forensic accounting to figure out how they were actually being paid. Some never did figure it out.

In streaming, the label's share of the master recording represents roughly 80% of the total royalty. Of that, the artist typically receives somewhere between 13% and 20% before any recoupment of advances. The remaining 20% of the total royalty goes to publishing — split between the publisher and the songwriter through performing rights organizations. For most signed artists, the actual percentage that lands in their account for each stream is somewhere around 10 cents on every dollar a major label collects.

Organizations representing artists and songwriters around the world have now explicitly demanded that the majors provide clarity and transparency about their new AI deals before those deals set permanent precedent. The specific questions — how licensing revenue will be split between recording rights and song rights, whether labels will pass money to artists at their standard royalty rates or negotiate something new, whether equity stakes in AI companies are part of the terms — remain publicly unanswered.

The concern, stated plainly by creator advocacy groups: the majors may have agreed to terms that serve the labels' interests over the artists and songwriters whose work is being licensed.

What Independent Artists Are Not Getting

The major labels control approximately 80% of the recorded music market by revenue. But that concentration doesn't reflect the actual landscape of who is making music. By some measures, nearly half of all Spotify royalty payouts now flow to independent artists — a figure that reflects the explosion of direct-to-platform distribution over the past decade. An independent artist using DistroKid or TuneCore typically retains between 85% and 100% of streaming royalties. They own their masters. They control their publishing. They don't have a label absorbing the bulk of their income before any of it reaches them.

This independence, which has been genuinely hard-won, is also precisely why independent artists have no seat at the AI licensing table.

The deals Warner and Universal negotiated cover their own catalogs. That's legitimate — it's their recordings and their contractual relationships with their signed artists that were allegedly infringed. But the licensing frameworks those deals establish will become the de facto standard for how AI music platforms operate, how attribution works, how royalties are calculated, and which music gets used to train the next generation of models.

Independent artists whose music may have been scraped into those same training datasets have no deal. They have no licensing agreement. They may have no knowledge that their recordings were used at all. And when the new licensed platforms launch — and money begins flowing back to rights holders — the question of who qualifies as a rights holder in these frameworks has not been publicly clarified.

One analysis from Digital Music News put it directly: the actual terms of these deals remain opaque, raising concerns among artists and creators who say they may not have been consulted about how their works or voices might be used in the future. Critics argue that the negotiations blur the boundary between label-controlled and artist-owned rights — and that some of the recordings and compositions in these sweeping deals come from artists signed under complex arrangements that may not grant the label such consent in the first place.

The Pro Rata Problem

Even if independent artists eventually participate in AI licensing revenue, the method of payment matters enormously.

In streaming, royalties are distributed on a pro rata basis: a platform's total licensing revenue is pooled and distributed according to each recording's share of total streams. For artists outside the top tier of plays, this means an almost imperceptible return. The problem is structural — a pool shared among millions of tracks will always concentrate toward the most-played recordings, regardless of individual listens.

There's reason to believe AI training licensing could follow the same logic. If royalties are tied to simple proportional metrics — how many times a prompt references a given artist, or how many outputs are generated in a given style — the payments will concentrate toward the artists whose work was most heavily represented in training data. Those are, almost by definition, the most commercially dominant recordings. The independent artist whose sound was pulled into a training dataset alongside ten million other songs will be mathematically invisible in any pro rata distribution.

The Other Dimension: AI Flooding the Catalog

While the licensing deals play out, independent artists are facing a separate but related threat: the sheer volume of AI-generated music competing for algorithmic attention on the same platforms.

Deezer reported receiving over 50,000 fully AI-generated tracks per day by late 2025, representing roughly a third of all new deliveries to the platform. Spotify removed more than 75 million spam or low-quality tracks over a 12-month period. The economics are straightforward: if an AI can generate a track in seconds at near-zero cost, and that track competes in the same discovery systems as music that took months to create, the signal-to-noise ratio for independent artists deteriorates.

Spotify introduced an opt-in "Artist Profile Protection" feature in early 2026, allowing artists to review releases before they go live on their pages. It's a response to a real problem — AI-generated tracks had been appearing on the wrong artist pages, effectively impersonating or contaminating the catalogs of working musicians. The feature is a start. But it is also evidence of just how far the platform infrastructure has already been reshaped by the AI flood, and how reactive — rather than proactive — the protections have been.

What Should Actually Happen

None of this is to argue that AI music platforms should not exist, or that licensing deals between those platforms and rights holders are inherently wrong. The alternative to licensing — platforms training on stolen recordings with no compensation to anyone — is clearly worse.

But the structure of who negotiates, who benefits, and who gets to shape the rules matters. When streaming was built, the terms were set by a handful of major label executives and platform founders. Everyone else inherited whatever those agreements produced. A generation of artists has spent years navigating payment structures they had no hand in creating.

The AI licensing moment is happening faster and with even less transparency. The terms of Warner's deal with Suno are secret enough that UMG and Sony — still in active litigation — had to formally request them through discovery, and Suno fought to keep them confidential. That's not a system designed for broad artist benefit. That's a system designed for competitive advantage.

Independent artists, songwriters, and the organizations representing them have about one window to push for something different: demand transparency in deal terms, insist on opt-in frameworks for catalog inclusion, and advocate for per-use attribution models rather than pro rata pools. That window exists right now, while deals are still being struck and before the architecture of AI music licensing calcifies into something as entrenched — and as difficult to reform — as the streaming royalty system that came before it.

The labels made a deal. They didn't ask the independents. But that doesn't mean the independents have to accept whatever terms trickle down.