This week, Universal Music Group stunned the industry by settling its copyright lawsuit against AI platform Udio and announcing plans for a licensed AI music streaming service launching in 2026.
Meanwhile, the European Commission restarted its probe into UMG’s $775 million Downtown acquisition, setting a new February 2026 deadline for its decision.
Elsewhere, UMG revealed it struck a new YouTube licensing agreement featuring AI guardrails, as the major posted Q3 revenues of EUR €3.02 billion, up 10.2% YoY.
Also this week, DistroKid launched Direct, a new direct-to-fan merch platform allowing artists to sell T-shirts and other products while keeping 100% of revenue.
And it was revealed that OpenAI is reportedly working on its own generative AI music tool, as the company hit a USD $500 billion valuation.
Here are some of the biggest headlines from the past few days…
1. UNIVERSAL MUSIC SETTLES UDIO LAWSUIT, STRIKES DEAL FOR LICENSED AI MUSIC PLATFORM
Universal Music Group announced on Wednesday (October 29) that it has settled its copyright infringement litigation against AI music platform Udio, marking a landmark shift in the industry’s approach to AI. The companies will collaborate on “an innovative, new commercial music creation, consumption, and streaming experience” set to launch in 2026, with the subscription-based platform allowing users to customize, stream and share music within what they describe as a “licensed and protected environment.”
The settlement includes compensatory payments plus new license agreements for recorded music and publishing that will provide further revenue opportunities for UMG artists and songwriters. The news arrives just over a year after the RIAA, on behalf of all three major record companies, sued Udio and peer Suno for “mass infringement” of copyright. UMG’s agreement with Udio comes as Universal and the other majors continue pursuing copyright claims against Suno… (MBW)
2. EU RESTARTS PROBE INTO UMG’S DOWNTOWN DEAL, SETS NEW DEADLINE TO MAKE DECISION
The European Commission has restarted its probe into Universal Music Group’s proposed $775 million acquisition of Downtown Music Holdings after temporarily pausing the inquiry in September while waiting for requested information. With the probe now restarted, the EC has set a new provisional deadline of February 6, 2026 to decide whether to clear the merger (with or without conditions) or prohibit it entirely if competition concerns cannot be adequately addressed. The EC had originally set November 26 as its deadline following its Phase II investigation into the deal, but ‘stopped the clock’ on September 2.
The EC said in July that it had “preliminary concerns that the transaction may allow UMG to reduce competition in the wholesale market for the distribution of recorded music in the European Economic Area (EEA) by acquiring commercially sensitive data of its rival record labels…” (MBW)
3. UMG HAS STRUCK A NEW YOUTUBE DEAL THAT INCLUDES ‘GUARDRAILS’ AROUND AI… AND 3 OTHER THINGS SIR LUCIAN GRAINGE SAID ON UMG’S Q3 EARNINGS CALL
Universal Music Group revealed during its Q3 earnings call on Thursday (October 30) that it has completed a comprehensive new licensing deal with YouTube, marking the company’s third major “Streaming 2.0 agreement” following deals with Spotify in January and Amazon in late December 2024. Chairman & CEO Sir Lucian Grainge told investors the agreement “covers both recorded music and music publishing” and includes “really important guardrails and protection for our artists and writers around gen AI content.” Chief Digital Officer Michael Nash confirmed the deal addresses improved monetization of short-form video, which he called “an objective that we’re actively advancing across multiple deal renewal discussions.”
The announcement came as UMG posted Q3 revenues of €3.021 billion ($3.53bn) across all divisions, up 10.2% YoY at constant currency. Grainge also expressed confidence in AI’s potential to transform the industry, comparing it to the streaming revolution 15 years ago and revealing partnerships with both Udio and Stability AI. Meanwhile, physical music sales surged 23% YoY to €341 million, driven by initial shipments of Taylor Swift releases and strength in new releases, particularly in Japan, with CFO Matt Ellis noting that fans are showing they “want to engage in many different ways with our artists” including through collectible vinyl purchases… (MBW)
4. DISTROKID LAUNCHES NEW PLATFORM FOR ARTISTS TO SELL MERCH DIRECTLY TO FANS
DistroKid has launched Direct, a new direct-to-fan sales platform that marks the music distributor’s expansion beyond audio and video distribution services and into merchandise sales. The feature, rolling out in beta to select artists before a broader release in the coming weeks, allows musicians to set up online stores to sell merch like T-shirts, tote bags and mugs printed with album artwork. While DistroKid will handle production and shipping through on-demand manufacturing, artists using Direct will retain all revenue from sales, with the service costing $6 per month.
The move represents DistroKid’s effort to diversify its offerings to the more than 2 million artists it serves, with the company claiming it handles 30% to 40% of new music releases globally. Direct builds on technology from direct-to-fan platform Bandzoogle, which DistroKid acquired in 2023, with the company planning to add more merch options and fan engagement tools in the coming months. The merch push puts DistroKid in competition with platforms like Bandcamp, which already offers direct sales tools to musicians and recently launched Bandcamp Clubs, a subscription service giving users access to monthly record selections and exclusive artist content… (MBW)
5. OPENAI, VALUED AT $500BN, REPORTEDLY WORKING ON GENERATIVE AI MUSIC TOOL
OpenAI, the $500 billion-valued company behind ChatGPT and Sora, is planning to enter the generative AI music space with a tool that can create music from text or audio prompts, according to The Information. Sources told the publication that OpenAI’s tool could be used to add soundtracks to videos or instrumental accompaniment to vocal tracks, though it’s unclear if the company plans to release a tool that can create complete songs from scratch like Suno and Udio. The company has been working with students at the Juilliard School of music, with students annotating music scores to create training data.
OpenAI’s entry would bring it into an increasingly crowded field that includes Suno and Udio as well as players like ElevenLabs, Boomy and Beatoven.
The move comes as the music ecosystem is already being inundated with AI-generated material, with Deezer reporting in September that 28% of tracks uploaded to its platform were fully AI-generated, up from 18% in April. Some “AI artists” have racked up millions of plays on Spotify, raising concerns about AI songs taking an increasingly large share of the streaming royalty pie… (MBW)
Partner message: MBW’s Weekly Round-up is supported by BMI, the global leader in performing rights management, dedicated to supporting songwriters, composers and publishers and championing the value of music. Find out more about BMI here. Music Business Worldwide
