AI Music’s Two-Speed Future: Suno’s Legal Storm vs Udio’s Licensed Path

Two Diverging Models

Last week, Denmark’s music rights organisation Koda filed a landmark lawsuit in Copenhagen against Suno, the US-based AI music generator backed by major venture capital. The allegation: Suno trained its model on thousands of Danish works without consent, transparency or payment. Koda described it as “the biggest theft in music history.”

The claim includes accusations of stream-ripping, scraped lyrics, and AI-generated tracks that allegedly imitate protected works by artists such as Aqua, Christopher and MØ. Similar actions have been filed by GEMA in Germany and by US majors in federal court.

Suno argues that its training practices fall under US “fair use.” Yet its own disclosures admit that its training data includes “essentially all music files of reasonable quality accessible on the open Internet”- even those behind paywalls or passwords.

In contrast, Universal Music Group quietly signalled a different approach. It recently settled its infringement case against Suno’s closest competitor, Udio, and agreed to collaborate on a fully licensed AI music platform launching in 2026. This shows that commercial-scale AI tools can be built within an authorised rights framework where artists, songwriters and catalogue owners share in the value.

Legal Risk vs Licensed Growth

Suno’s model prioritises rapid scale and fundraising. Reports suggest it is seeking investment at a $2 billion valuation and claims over $100 million in annual recurring revenue: this despite facing multiple infringement claims across jurisdictions. Legal risk appears to be priced in.

Udio’s pivot, by contrast, shows that settling early and securing licensed access may be a viable route to legitimacy and long-term growth. It also resets expectations: platforms cannot expect to train on global catalogues while relying on legal grey zones.

Implications for Rights Holders

For publishers, labels and CMOs (Collective Management Organizations), the opportunity is now. These cases allow rights holders to hardwire new norms into AI licensing agreements covering attribution, audit rights and royalty mechanisms tied to outputs.

Policy and Investment Signals

For policymakers in the UK and EU, the divergence between Suno and Udio poses a clear choice: follow the US’s open-ended fair use model, or align with rights-led frameworks that prioritise consent and compensation. New laws on text and data mining, creator attribution and dataset transparency are already in motion, including the UK government’s forthcoming Copyright and Digital Creative Industries Bill, which is expected to introduce statutory duties on AI developers to disclose training datasets and ensure human creators are credited, alongside the UK Intellectual Property Office’s ongoing work on a binding code of practice for AI text and data mining.

For investors, this is a reminder that legal exposure is not abstract. It affects platform valuation, user trust and exit strategy. Suno’s raise may succeed, but only because the market believes litigation can be settled later without destroying the model.

The Road Ahead

Either way, the economics of AI-generated music are entering a rights-aware phase. Litigation is not the end game. The future belongs to companies willing to build with rights holders - not at their expense.