AI music startup Udio has denied Sony Music Entertainment’s copyright infringement claims while acknowledging that it used audio scraped from YouTube to train its models.
In a filing with the US District Court for the Southern District of New York on Wednesday (April 29), which you can read here, Udio answered SonyMusic’s amended complaint, which also names Arista Music and Arista Records as plaintiffs.
Udio admitted that its models were built by feeding the system with “a vast amount of different kinds of sound recordings” gathered from publicly available sources, from which the models derived “a complex collection of statistical insights about the auditory characteristics of those recordings.”
The startup also acknowledged generating music files within seconds of receiving a user prompt, and that it charges users monthly fees to use its product and produce digital files.
“Udio admits that its product was originally free to users, with a limit of 600 music files per month. Udio further admits that on May 8, 2024, Udio introduced subscription tiers, with options that range from $10 a month for 1,200credits (which equate to 1,200 30-second clips per month), to $30 a month for 4,800credits (which equates to 4,800 30-second clips per month),” according to the filing.
“Udio admits that it obtained audio data from YouTube for use as training data.”
Udio’s answer to amended complaint
On the YouTube ripping allegations, Udio’s response was direct: “Udio admits that it obtained audio data from YouTube for use as training data,” adding that “it acquired some of its training data by utilizing YT-DLP.”
Major record labels sued Udio and its rival Suno in June 2024. In August 2024, Udio and Suno pretty much admitted that they used copyrighted recordings from the recording companies that sued them. However, they claimed that the use of copyrighted materials – owned by Sony Music Group, Universal Music Group and Warner Music Group – falls under the “fair use” exemption to US copyright law.
While Universal Music and Warner Music Group dropped their lawsuits against Udio after reaching settlements in October and in November, respectively, the Sony Music lawsuit against Udio remains.
Before UMG and Warner Music dropped their lawsuits, the labels amended their complaint in September 2025 to include claims that Udio “illegally scraped” YouTube videos in order to collect content on which to train its AI models.
Udio then filed a motion to dismiss the labels’ charge of illegal scraping of YouTube videos in October 2025, arguing that US copyright law doesn’t actually criminalize downloading of videos that are available to the public.
The YouTube scraping claims are “a gambit to try to evade application of the fair use doctrine,” lawyers for Udio wrote in the motion, which can be read in full here.
The record labels then shot back at Udio’s statement, saying the company “mischaracterizes” the labels’ legal arguments “and the legal landscape.”
The amended complaint in October (read here) alleged in paragraph 122 that Udio violated copyright laws by circumventing technological measures implemented by YouTube that controlled access to copyrighted works. In its response filed last week, Udio said “The allegations in this paragraph contain legal conclusions to which no response is required.”
“To the extent a response is required, Udio lacks knowledge or information sufficient to admit or deny the allegations of this paragraph concerning Plaintiffs’ copyrighted sound recordings, and on that basis denies those allegations. Udio admits that it obtained audio data from YouTube for use as training data, but otherwise denies any remaining allegations of this paragraph.”
Udio reaffirmed its “fair use” argument after the labels including Sony in October said “Udio cannot avoid liability for its willful copyright infringement by claiming fair use.”
“Udio admits that it obtained audio data from YouTube for use as training data, but otherwise denies any remaining allegations of this paragraph.”
Udio’s answer to amended complaint
In its latest response, Udio said: “To the extent there is copying of copyrightable expression, that copying constitutes fair use pursuant to 17 U.S.C. § 107. Udio’s AI tool uses a back-end technological process, invisible to the public, in the service of creating an ultimately non-infringing new product. This is quintessential fair use.”
Udio accused Sony of copyright misuse, arguing: “Plaintiffs have engaged in anticompetitive activities that extend an unlawful monopoly over the production and commercialization of music.”
“Plaintiffs have engaged in anticompetitive activities that extend an unlawful monopoly over the production and commercialization of music.”
Udio’s answer to amended complaint
The AI company’s response comes weeks after Judge Alvin K. Hellerstein rejected its motion to dismiss Sony’s Digital Millennium Copyright Act circumvention claim, finding Sony had “plausibly allege[d] that YouTube employs technological measures that regulate access to its content and that Defendant circumvented them,” according to the April 15 order, which you can read here.
However, Judge Hellerstein said whether YouTube’s measures ultimately constitute access controls “requires a greater factual record than the pleadings contain.” The judge left the door open for Udio to renew its arguments “after a factual record is developed.”
Udio is asking the court to dismiss all claims with prejudice.
In March 2020, I watched my entire portfolio move in the same direction at once. Stocks down. Real estate under pressure. Two asset classes, one outcome. I thought I had built something diversified. I hadn’t, not really.
If you own stocks and real estate and consider yourself diversified, this is worth reading carefully. Because diversification has six dimensions. Most physicians are only covering one or two of them.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial, legal, or investment advice. Any investment involves risk, and you should consult your financial advisor, attorney, or CPA before making any investment decisions. Past performance is not indicative of future results. The author and associated entities disclaim any liability for loss incurred as a result of the use of this material or its content.
Most doctors don’t lose money in real estate because they lack motivation.
They lose it by trusting the wrong sponsor or skipping the details that matter.
Passive Real Estate Academy shows you how to vet deals like a pro, so you don’t have to learn the hard way.
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Why Physicians Are More Concentrated Than They Think
Before we get into the framework, there’s something worth naming that most financial content skips over.
Before you’ve made a single investment, you are already concentrated.
Your primary income is human capital tied to one profession, one license, one body showing up to work. That’s a significant single-point-of-failure that most asset allocation models don’t account for. Which means the bar for true diversification, for physicians specifically, is higher than it is for someone whose income is already spread across multiple sources.
That’s not a reason to feel behind. It’s just useful context for why getting this right matters more for us than for the average investor.
The Ray Dalio Standard, And the Honest Reality
Ray Dalio talks about what he calls the holy grail of investing. The idea is that holding enough truly uncorrelated assets can dramatically reduce portfolio risk without sacrificing much in the way of returns. He puts the number at around 13 to 15 uncorrelated assets.
When I first heard that, my reaction was somewhere between impressed and overwhelmed. Most physicians I know are working with two or three asset classes, not 15.
But the number isn’t really the point. The point is the principle. And the honest reality is that finding 13 to 15 truly uncorrelated assets is hard for most of us. We’re not running endowments. We have clinical schedules, limited bandwidth, and we’re building something sustainable alongside a demanding career.
So what do you do with that gap?
You get more intentional within the asset classes you already have. You stop assuming that because you own two different things, they’re actually behaving independently. And you start looking at your portfolio across more dimensions than just asset type.
That’s what this framework is for.
The Six Dimensions of True Diversification
1. Asset Class, And What’s Actually Inside It
This is where almost everyone starts. And it’s the right starting point. But I want to spend more time here than most people do, because even physicians who understand asset class diversification are usually thinking about it too narrowly.
The basic version goes like this: stocks and real estate are different asset classes. They respond to different economic forces. Having both is better than having only one. That’s true. But it stops short of what’s actually useful.
Think about what we mean when we say stocks. You probably already know that owning a single stock is very different from owning a broad index fund. Within equities, you can hold domestic and international exposure, large cap and small cap, growth and value, different sectors. The equity asset class has a whole internal structure to it. Most physicians who invest in the stock market understand this, at least intuitively.
Now apply that same thinking to real estate.
Most people hear “real estate” and think of it as one thing. But real estate has sub-asset classes just like equities do, and they don’t all behave the same way. Multifamily residential. Industrial. Self-storage. Medical office. Retail. Hospitality. Mobile home parks. Each of these responds differently to interest rate cycles, employment trends, demographic shifts, and consumer behavior.
Multifamily held up relatively well through the 2008 financial crisis because people still needed places to live. Retail got hit hard. Industrial and self-storage have had long runs because of e-commerce tailwinds and changing consumer habits. Medical office is driven by a completely different set of forces than any of those.
So when you say you own real estate, what does that actually mean? If everything you own is multifamily in the same market, you’re much more concentrated than the label “real estate investor” suggests. If you have exposure across different property types and different markets, you’re actually using the asset class the way it’s designed to be used.
A lot of physicians build their real estate portfolio deal by deal, chasing whatever looks good at the time. The result is concentration inside an asset class they thought was already diversifying them.
Dimension one isn’t just about owning different asset classes. It’s about understanding the internal structure of each one, and being intentional about where your exposure actually sits within it.
2. Correlation
This is the dimension that March 2020 made visceral for a lot of us.
Correlation measures how much two assets move together. Truly diversified assets have low correlation, meaning when one goes down, the other doesn’t necessarily follow.
The problem is that correlation isn’t static. Assets that look uncorrelated in normal markets can suddenly move together in a crisis. Liquidity dries up, sentiment shifts, and things that were supposed to zig when the market zagged, don’t.
This is why I now think about not just what I own, but how those assets have historically behaved relative to each other, and what happens to that relationship under stress. Normal market correlation is less useful information than stress correlation.
3. Liquidity
Stocks and real estate are not interchangeable when you need access to capital. A publicly traded position you can exit in a day. A real estate syndication with a 5 to 7 year hold, you can’t.
Illiquidity isn’t automatically bad. You’re often compensated for it with better returns. But it means you need to think carefully about whether your assets are liquid at the right times for your life. Are you thinking about a career transition, a sabbatical, a business investment in the next few years? Those questions should inform how much of your portfolio is locked up and for how long.
4. Time Horizon
Related to liquidity, but distinct. This is about matching your investments to when you actually need the money to work for you.
A long-term real estate fund with a 10-year hold serves a different purpose than capital you’re planning to redeploy in 18 months. Both can belong in a well-constructed portfolio. But treating them as interchangeable is how you end up with a mismatch between your investment structure and your actual life.
Ask yourself: what do I need this money to do, and when? Then look honestly at whether your investment timelines actually line up with that.
5. Tax Treatment
This is where physician-specific framing earns its place in the conversation.
The after-tax return is the real return. A real estate investment that generates passive losses and depreciation looks very different on paper than one that doesn’t. The tax efficiency of different asset classes, and the structures you use to hold them, can have a significant impact on what you actually keep.
If you haven’t sat down with a CPA who works with physician investors to look at how your portfolio is structured from a tax perspective, that’s worth prioritizing. A lot of physicians optimize for returns before tax and underoptimize for what stays in their pocket.
6. Geography
This is the most overlooked dimension on this list.
Single-market concentration in real estate is a real risk that’s easy to miss. If you have multiple properties in the same city, or heavy exposure to one regional economy, you’re more correlated than you think. Local job market shifts, population changes, municipal policy decisions, these things affect all of your properties at once if they’re all in the same place. Geography applies beyond real estate too. If your income, your practice, your home value, and your real estate investments are all tied to the same regional economy, that’s a form of concentration risk that doesn’t show up in a typical asset allocation breakdown.
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The Self-Audit
Pull up whatever you use to track your investments and run it against these six dimensions. Not to grade yourself, but to see clearly.
How many asset classes do you hold, and what does the internal structure of each one actually look like? How correlated are they under stress, not just in normal conditions? Do you have the right balance of liquidity for where you are in your career? Are your time horizons matched to your actual goals? How is your portfolio taxed, and is there room to improve that? And is there geographic concentration hiding somewhere you haven’t looked?
Most physicians, if they’re honest, are missing coverage in at least two or three of these. That’s not a failure. It’s information. And information is what lets you build something more resilient going forward.
Stocks plus real estate is a start. But the physicians who build portfolios that actually hold up are the ones who go a layer deeper and ask: how do these things actually behave together, and where am I exposed in ways I haven’t fully accounted for?
If you want to dig into passive real estate, specifically, including how to evaluate deals across these dimensions before you commit capital, the Passive Real Estate Academy is where we cover this in depth. We’re not always open for enrollment, but you can join the waitlist at passiveincomemd.com/prea and we’ll reach out when the next cohort opens.
Disclaimer: I am not a CPA, attorney, or financial advisor. The information in this post is for educational purposes only and should not be construed as tax, legal, or financial advice. Please consult a qualified professional about your specific situation before making any decisions.
Were these helpful in any way? Make sure to sign up for the newsletter and join the Passive Income Docs Facebook Group for more physician-tailored content.
Peter Kim, MD is the founder of Passive Income MD, the creator of Passive Real Estate Academy, and offers weekly education through his Monday podcast, the Passive Income MD Podcast. Join our community at the Passive Income Doc Facebook Group.
On March 31, over a hundred of Baidu’s Apollo Go robotaxis simultaneously froze on the streets of Wuhan. Vehicles stalled on overpasses and elevated roads, trapping passengers for up to two hours.
A few weeks later, Beijing suspended all new autonomous driving permits nationwide. The suspension suspension blocked robotaxi companies from adding to their fleets, starting new tests, or expanding to additional cities, according to Bloomberg.
In the U.S., meanwhile, some autonomous vehicles are driving into street lights and even into the middle of ongoing crime scenes. In just one month in Austin, Tesla’s robotaxis crashed into a fixed object head on and in reverse, while also hitting trees, poles, buses and trucks. Waymo’s robotaxis are incapable of closing their own doors—and the company has taken to hiring DoorDashers to door dash and close the doors after a passenger gets out. In October 2023, a Cruise AV dragged a pedestrian 20 feet.
During the June 2025 anti-ICE protests in downtown Los Angeles, demonstrators smashed, spray-painted, and torched at least six Waymo robotaxis. The cars reportedly honked in unison as they burned, as activists claimed the cars’ camera data was shared with the LAPD and was representative of the surveillance state. As a result, Waymo suspended service in the downtown area and went on to pause service during subsequent protests. Still, no federal regulation followed.
In February this year, a Waymo blew past cop cars at a live crime scene in Atlanta. A month later, another blocked ambulances in Austin during an active shooter situation.
In L.A. in December, a Waymo was observed driving into an active crime scene; the driverless tech was unable to navigate the officer’s directions to reroute and leave the scene.
That month also witnessed probably the closest parallel to what occurred in Wuhan. A major power outage knocked out traffic signals across San Francisco, leading to Waymo’s fleet of 800-1,000 robotaxis blocking roads and impeding emergency vehicles. At a March 2 hearing about what happened to the fleet during the power outage, San Francisco’s Department of Emergency Management Executive Director Mary Ellen Carroll expressed outrage.
“What has started to happen is that our public safety officers and responders are having to be the ones to physically move” the robotaxis, Carroll said. “In a sense, they’re becoming a default roadside assistance for these vehicles, which we do not think is tenable.”
Waymo has since shipped a software update to the AVs, but there’s still no federal regulation.
States are trying to get cars off the road
The U.S. has no federal autonomous vehicle safety law. The SELF DRIVE Act of 2026, a bipartisan House bill, would create the first statute, yet it remains a draft. Earlier versions in 2017 and 2021 died without passage.
While federal regulation stalls, a separate movement is gaining traction at the state level: legislation to reduce how much Americans drive. The Brookings Institution found that California, Minnesota, Colorado, and Oregon now have laws requiring transportation agencies to mitigate vehicle miles traveled. In Colorado, this has already redirected $900 million from highway expansion toward bus rapid transit. Maryland, New York, New Jersey, and Massachusetts are considering similar bills in 2026.
Autonomous vehicles deployed at scale are widely expected to increase total driving: empty robotaxis cruising between fares, commuters choosing longer trips, freight trucks running around the clock.
But Tony Han, founder and CEO of Chinese robotaxi startup WeRide, said at the Fortune Global Forum in Riyadh that AVs likely will never be 100% safe, but they would be 10 times safer than humans within a decade.
Artificial intelligence (AI) is rapidly evolving from an experimental capability into a core production input across industries. Public markets have responded accordingly, with firms perceived as AI beneficiaries experiencing significant multiple expansion—often ahead of any observable improvement in cash flows.
For financial analysts, the central question is not whether AI will transform business operations, but whether it will support sustainable economic profits. This distinction is critical. Markets tend to reward narratives in the short term, but over the long term, valuation converges toward realized cash flows and return on capital.
This blog evaluates AI adoption through a fundamental valuation lens, focusing on its implications for cash flows, risk, and portfolio construction.
And just like that, mortgage rates are back above 6.50% and could be heading even higher.
I’ve been warning folks for a couple weeks now that the worst may not have been behind us.
Between seasonal factors and the ongoing conflict in the Middle East, upward pressure on rates was to be expected.
But they seemed to defy expectations for weeks, nearing the low-6s for a 30-year fixed despite all the goings-on.
Now it seems they’re back to re-testing recent highs and could climb even further this month and next.
Mortgage Rates Rise as Tensions Renew in the Middle East
We knew the conflict in the Middle East wasn’t over, despite a ceasefire and subsequent extension.
While things have been mostly quiet lately, the Strait of Hormuz has remained effectively shut since day one.
And now there are new reports of drones fired at the UAE, a U.S. warship hit, several Iranian boats sunk, and more.
Simply put, there’s renewed fears that things could be ratcheting up again.
That has kept a lot of pressure on oil prices, which remain above $100 per barrel, along with pushing 10-year bond yields up about seven basis points on the day.
First Rising Gas Prices, Then the Price of Everything Else
The conflict has already led to a surge in gas prices, hurting consumers directly. And it’s likely to affect just about everything else soon as well.
Remember, oil and gas touch pretty much everything, whether it’s the production of goods, or the transportation of said goods after they’ve been produced.
In the end, we consumers pay the price in the form of a markup to compensate for the producers and transit companies who face higher input costs.
That tends to lead to inflation, at least initially, even if it can turn into a recession further down the road.
The temporary reaction for mortgage rates will likely also be higher, as increased inflation means fewer or no rate cuts in the near future.
There’s even talk about rate hikes, though I think we just stand pat and maintain a wait-and-see approach.
Bonds and mortgage rates tend to take cues from Fed rate expectations, meaning they stay higher until we know more.
It’s all pretty straightforward. If oil leads to a second wave of inflation, mortgage rates will stay elevated or even move higher again.
Expect Higher Mortgage Rates for the Next Few Months
The takeaway for me is to expect higher mortgage rates for the next several months.
Because even if things get sorted out in the Middle East, which seems unlikely, the damage of $100+ per barrel oil (and all the related backlogs) will take time to work its way through the market.
That means prices will stay high and/or elevated for months and inflation readings could well tick up again in coming months.
Bond traders, MBS investors, and mortgage lenders will all likely invest and price conservatively knowing all this.
Nobody will want to get caught out offering a low interest rate only to see inflation ramp up again.
Adding to this narrative is the fact that mortgage rates tend to be highest in spring and summer.
So it would kind of line up perfectly timing-wise for mortgage rates to rise again in May and June.
However, they could also settle down again in fall, as they tend to, especially with the election midterms on deck.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.
